What does the mid-1990s soybean liberalization tell us about the role of foreign investment in China’s rural industrialization?

Abstract

This article reassesses the role of foreign investments in China’s rural industrialization in the 1980s and the early 1990s. It draws upon the power disputes between agribusiness transnational corporations (TNCs) and central domestic players in the country’s soybean complex. I follow Chris Bramall’s argument that food processing infrastructure grew progressively since the Maoist era in the 1960s and 1970s, instead of springing from foreign investments or pro-business local state officials during the reform and opening up. However, I go beyond this assumption by suggesting that foreign investments often had a detrimental role in rural industrialization, depending on their political action. I show through in-depth empirical analyses that due to the Maoist industrial legacy, soybean processors from Northeast China consolidated an endogenous form of accumulation based on local circuits of production and consumption under state protectionism. This specific industrialization trajectory has put them on opposite sides from agribusiness TNCs. The liberalization agenda pushed by the TNCs through bilateral and multilateral levels of influence culminated in the opening of China’s soybean imports in the late 1990s, allowing the consolidation of their global trade monopoly to the detriment of domestic players.