Outward foreign direct investment in agriculture by Chinese companies: land grabbing or win–win?

Abstract

Using the firsthand materials collected during on-site fieldworks and in-depth interviews, this paper examines the dimensions, especially the motives, for driving Chinese firms to invest in agriculture overseas from the macro (or government’s)- and micro (or firms’)-perspectives, as well as the impact of Chinese firms’ agricultural outward foreign direct investment (OFDI) from the multi-stakeholder perspective. From the perspective of China’s central government, the goal of encouraging domestic enterprises’ overseas investment in agriculture is not to ensure national grain security, but to stabilise the domestic supply of strategic agricultural products. From the micro-perspective, the impetuses for driving Chinese firms to invest in agriculture overseas are diverse and land exploitation is just one of them. They may wish to compete with local producers and some of the enterprises do not have a strong awareness of environmental protection and social responsibility. This is not the whole story. Chinese enterprises’ agricultural OFDI increases agricultural investment and reduces poverty in the host countries, and expands the supply of agricultural products of the local markets. In the long run, the growing presence of Chinese firms with advanced technology will yield the benefits of competition: an expansion of local supplies while providing cheap technology that can be duplicated by local farmers. Only a very small proportion of the agricultural products grown abroad is sold back to China, while a large part is sold domestically or exported to a third market. Therefore, Chinese firms’ agricultural OFDI has offered little direct, but some indirect, help in guaranteeing China’s food security. Perhaps, China’s diplomatic and political benefits obtained through agricultural OFDI outweigh the benefits of ensuring food security. Chinese enterprises’ agricultural OFDI is a win–win situation for the host countries and for China.