China

China's soil pollution: It's much worse than you think

April 18, 2014: 2:25 PM ET

Close to 20% of China's arable land is contaminated by heavy metals, posing severe global economic and political consequences in the coming years.

By Minxin Pei

A polluted field at a black lead mining area in northern China

A polluted field at a black lead mining area in northern China

FORTUNE -- When the Chinese government completed its first national soil pollution survey in 2005, the findings were so alarming that Beijing promptly declared the data a "state secret."

Chinese leaders apparently changed their minds and, a few days ago, the Ministry of Environmental Protection and the Ministry of Land Resources jointly announced the key results of the 2005 survey.

While the rare display of transparency from the Chinese government merits applause, the admission that close to 20% of China's arable land has been contaminated by heavy metal not only demonstrates the severity of China's environmental degradation but also has profound economic and geopolitical consequences for the international community.

Before Beijing's latest disclosure, the most pessimistic estimate of China's soil pollution suggested that perhaps up to 10% of China's arable land had been contaminated. Now, the official data show that the actual amount of polluted land is twice as large. Roughly 66 million acres of arable land are laced with dangerous chemicals and should be taken out of agricultural production. The Chinese government has set 300 million acres of arable land as the minimum amount of land needed to ensure the country's food security. As of 2012, China had 334 million acres of arable land. If the 66 million acres of polluted land were to be declared unfit for food production, the total amount of arable land would fall 32 million acres below Beijing's self-defined "red line."

MORE: Americans have fallen in love with real estate once again

Due to its large population and land scarcity, the amount of arable land on a per capita basis in China is only half the global average. Since China launched its modernization drive 35 years ago, urbanization, industrialization, and rising consumption have further reduced available arable land and increased demand for food production. Although Chinese agricultural output has grown by a factor of 4.5 in this period, demand growth has outpaced production. As a result, Chinese imports of food, particularly grain, have risen rapidly. In 2011, China imported 9.9 million tons of grain. Last year, China imported 22.8 million tons, roughly 7% of total global grain imports. According to the OECD, China imported 6.2% of its food in 2001. That figure rose to 12.9% in 2012.

If anything, this trend will only accelerate in the future if soil pollution forces China to take land out of production and rely on imports to make up for the shortfall. Although Beijing will have ample financial means to pay for its food (it had a net trade deficit of $31 billion in agricultural products in 2012), its efforts to source food from abroad will have disruptive effects on a global food production system that will come under increased strain due to climate change, population growth, and industrialization. In a worst-case scenario, Chinese attempts to increase its food security could encounter an ugly backlash abroad.

Most likely, Chinese officials and private entrepreneurs will pursue strategies that promise to deliver quick results to plug the growing hole in China's food output. Buying well-established Western food companies that own or have access to clean land and water supplies is evidently a tempting tactic. In May 2013, Shuanghui International, a Chinese pork producer, paid $4.7 billion for Smithfield Foods, then the world's largest hog farmer and meat processor. This acquisition, a brilliant business move in its own right, also has the practical effect of strengthening China's food security.

China can also build food-processing factories or acquire such facilities in countries with ample arable land and water resources (preferably countries that welcome and protect foreign investments). In March, a top Chinese baby formula maker, Synutra International, broke ground on a $125 million facility in Brittany in France. It will produce high-quality milk products for the Chinese market, where locally made baby formula is viewed as unsafe because of pollution. Acquiring established food producers and investing in food processing facilities are better options than purchasing arable land abroad (which is more politically sensitive and economically risky).

At the moment, such moves by Chinese companies have been modest. They have raised eyebrows, but not alarms. However, in the future, if soil pollution causes the Chinese public to lose confidence in the safety of food produced in China, Beijing may have no choice but to expand its efforts, which could be viewed as a threat to food security by foreign nations.

MORE: The new war between the states: Are income taxes to blame?

While China's need for food security is understandable and will create enormous opportunities for countries with excess production capacity, Beijing must move carefully. It must devise credible and enforceable safeguard mechanisms that will reassure its trading partners. Otherwise, foreign governments will erect barriers to stymie Chinese efforts.

In light of China's massive soil pollution, such a development would be an epic catastrophe.

Minxin Pei is the Tom and Margot Pritzker '72 Professor of Government at Claremont McKenna College and a non-resident senior fellow of the German Marshall Fund of the United States

  • Fracking's hottest year in China

    A new discovery pushes China closer to meeting its shale gas production goals.

    FORTUNE -- For more than a year, China's goal of recovering 6.5 billion cubic meters of natural gas by 2015 via hydraulic fracturing, or fracking, seemed like a pipe dream. The figure was announced in 2012, along with the government's even more ambitious goal of producing at least 60 billion cubic meters by 2020. How do you grow MORE

    - Apr 11, 2014 6:50 AM ET
  • Asia's fission frenzy

    While the U.S. relies on decades-old nuclear reactors, China and its neighbors go on a building spree.

    FORTUNE -- "A lot of what's constraining nuclear power is economics," says Matthew Bunn, a professor of practice at the Harvard Kennedy School. It's much easier for a large, centralized state than for a private utility to absorb the billions in upfront costs necessary to build a reactor. That, says Bunn, is largely MORE

    Apr 10, 2014 6:51 AM ET
    Posted in: , ,
  • J.P. Morgan's dealmaker in China steps down. Who's next?

    The big question is how many more executives may be caught in the investigation of the bank's hiring practices in China.

    By Scott Cendrowski, writer

    FORTUNE -- J.P. Morgan's (JPM) top dealmaker in China, Fang Fang, a media-friendly executive with close ties to the Communist Party, has stepped down from his role amid the U.S. government's investigation into the bank's hiring practices in Asia, as reported by the Wall Street Journal on MORE

    Mar 25, 2014 10:48 AM ET
  • China's new approach to cleaning its air

    Carbon capture useable storage could alleviate some air pollution in China -- and the U.S.

    By Brian Dumaine, senior editor-at-large

    FORTUNE -- Lost in all the coverage of China's air pollution crisis is that the country continues to build more coal-fired power plants -- with 363 new ones under construction at last count. You can't blame the Chinese; they need all the energy they can get. They've been building out wind MORE

    Mar 21, 2014 11:22 AM ET
  • China's rich make plans to avoid smog

    The country's wealthiest residents are emigrating to other countries, in large part to avoid awful air pollution.

    FORTUNE -- By the 1970s, Central Park was in a state of decay. Bridges were crumbling. Meadows had dried up. Graffiti and vandalism blighted playgrounds and benches. There was an overwhelming feeling that its best days had passed. "Positive use had increasingly been displaced by illicit and illegal activity," is how the Central Park MORE

    - Mar 18, 2014 10:19 AM ET
  • Does China's GDP target hurt the country?

    Economists are questioning whether a published GDP target distracts from the country's bigger issues.

    By Scott Cendrowski, writer

    FORTUNE -- When China's Premier Li Keqiang told a supportive audience of 3,000 delegates in Beijing last week that the country would aim for 7.5% GDP growth in 2014 -- the same target of the past two years -- stocks rose and traders predictably cheered. But the news also produced groans from a MORE

    Mar 11, 2014 11:50 AM ET
  • Is House of Cards Really a Hit in China?

    The show turns out to be less popular than the blitz of media coverage suggests.

    FORTUNE -- Before House of Cards' second season arrived for streaming in China, the show got the type of free publicity that Hollywood producers can only dream of.

    A Hong Kong magazine reported that China's anti-corruption tsar, a member of China's powerful seven-man Politburo Standing Committee, was a big fan of the Netflix (NFLX) drama. The MORE

    - Mar 4, 2014 12:00 PM ET
  • Japan has a major international image problem

    As a nation unaccustomed to being questioned by the outside world, Japan is fumbling over and over in its international spat with China. The nation will need to play PR catchup.

    Feb 21, 2014 1:08 PM ET
  • Q&A with Blackstone CEO Stephen Schwarzman

    The billionaire investor talks about China, the role of culture in foreign affairs, and his Schwarzman Scholars program.

    By Andy Serwer, managing editor

    FORTUNE -- A Year of the Horse Chinese New Year gala hosted by the China Arts Foundation brought together moguls from China and the United States in an event that was highlighted by an interview of one of the evening's honorees, Blackstone CEO Stephen Schwarzman, by Fortune managing MORE

    Feb 5, 2014 2:58 PM ET
Search This Column
View all entries from this: Week, Month
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.