With nine percent of the world’s arable land while supporting 20% of the world’s population, China is very focused on food security. David Mahon explains the implications of this focus

By David Mahon*

‘Farming looks mighty easy when your plough is a pencil and you’re a thousand miles from the corn field.’
Dwight D. Eisenhower

Scarcity and famine

Agriculture has long been and is still central to Chinese civilisation; it is as crucial to China’s future as any other single factor.

China possesses 9% of the world’s arable land while supporting 20% of the world’s population — 50% less arable land per capita than the United States. Between 2010 and 2020, China lost 15 million hectares of agricultural land to urbanisation, an area larger than England. Urbanisation, infrastructure and industry claim a further one million hectares each year. China has only 7% of the world’s freshwater, 65% of which is used for agriculture.

‘We used to question China for storing so much grain until Trump’s trade war in 2018. It accelerated the West’s retreat from globalised trade, and we saw how vulnerable China was, and its obsession with food security began to make sense. Now the situation is even worse. China has trading partners, but no real allies, and the US is pressuring its many allies to help it keep a lid on China. Not many people know of China’s history of natural disasters and famines. It has no choice but to increase its productivity and find reliable global suppliers.’

US agricultural official in Shenzhen

Between 1959 and 1961, an estimated 30 to 45 million Chinese people died in a famine resulting from Mao Zedong’s Great Leap Forward. Hundreds of millions of farmers were diverted from growing food to working in makeshift, mostly inefficient village furnaces, striving to increase steel output. Spoons and pots were melted down to meet quotas. At the same time, the state tried to expand agricultural production by breaking in unsuitable land.

Chinese agricultural officials experimented with schemes such as ‘deep ploughing’, which involved planting seeds a metre below ground in the irrational belief they would produce hardier, higher-yielding crops. This was combined with ‘close planting’, a pseudo-agronomic Soviet theory of clumping crops close together to increase yields. Widespread crop failures resulted. The Chinese Government also confiscated grain for storage, in part to demonstrate to the US and USSR that its mass rural collectivisation was effective. Millions starved to death, many at the gates of full granaries.

Westerners with no experience of hunger, let alone famine, are unlikely to understand why the Chinese Government stores such large reserves and why people focus so much on food in their daily lives. Most Chinese families have a relative who suffered from poor nutrition at some point in their lives or know of someone who starved to death.

The government understands that a core foundation of its power and legitimacy lies in, at a minimum, being able to feed the people.

Private risk, public good 

‘Extreme straightness is as bad as crookedness. Extreme cleverness is as bad as folly. Extreme fluency is as bad as stammering.’

Lao Zi, 5th century BCE

In the late 1970s, a handful of Anhui farmers, risking imprisonment or even death, triggered China’s economic reforms by growing crops to meet market demand rather than just fulfilling state-mandated quotas. In doing so, they challenged what had become a core principle of communist agricultural theory: strictly planned, collectivised farming. Deng Xiaoping subsequently endorsed the Anhui farmers’ initiative, dubbing it the Household Responsibility System. To this day, the state’s agricultural development strategies, aimed at securing China’s future sustenance and security, are based on the Anhui farmers’ principles of assessing supply and demand and ensuring investment returns. Today’s private sector relies on the fact that local officials, on whom farmers depend for credit and the application of market regulations and commercial law, will ultimately respect the free market.

The state has a mixed track record in its attempts to mitigate risks, ensure commercial and social stability, and drive economic growth. Some decisions have appeared to make sense in the long term, but resulted in catastrophic commercial losses in the short term. In the quest for greater independence and food security, many agricultural subsectors are experiencing oversupply and deflation, including the berry, beef, and dairy sectors. While these sectors are in the process of recovering, the damage inflicted on producers and farmers has been severe. Local officials must find a way to balance their longer-term mission of improving sustainable supply and resilience with the need to deliver short-term growth KPIs to their superiors, or risk failing at both.

Both Chinese and foreign analysts often attribute radical changes in the Chinese economy to single choices by powerful individuals like Deng Xiaoping, or today, Xi Jinping. While these leaders have had the vision, and at times courage, to own often radical trends, the initiatives have invariably come from the grassroots of the economy.

Sufficiency

China has learned much from the past, and is ten years into an agricultural revolution that is reshaping international markets. China cannot become totally independent in many food categories; it currently buys 60% of globally traded soya beans (100 million tonnes) and 25% of globally traded wheat annually, more than the combined harvests of Britain, Germany and France. But China is working hard to reduce the degree of its dependence.

The positive impact of Chinese demand on food-exporting nations is already profound. Yet no food supplier to China can take its place in the market for granted. The Chinese Government has been assessing the agricultural sectors most dependent on foreign imports, while expanding domestic production where it can to reduce that dependence, particularly in dairy and beef, and animal feed such as alfalfa and soya beans. This effort to diversify away from the coercive, tariff-prone West has been ongoing since Trump’s first term and what China understood to be a clear and worrying trend of deglobalisation.

Some of China’s trading partners that enjoy preferential market access through free trade agreements — such as Australia and New Zealand — and others hoping to gain better access like the UK, continue to align themselves with Washington and support American attempts to contain China. Small nations like New Zealand and even middle powers like Australia would be better avoiding military alignment altogether, or risk alienating both great powers.

Global exporters dominant in domestic Chinese food sectors should be prepared to see their primacy challenged as Beijing deploys the same private-public sector partnerships it applied in its technology sectors to stimulate growth and forge greater autonomy. Beijing is trying to boost not only local production, but also support local companies establishing premium brands to serve the needs of the rapidly growing middle class. It is partly a matter of face for the government and for the Chinese people that the best of their own products and brands are world-class.

With the exception of staples such as bananas and citrus fruit, global fruit demand was sluggish in 2025, which drove all major producing regions to increase exports to China. This exacerbated existing Chinese domestic oversupply in high-end fruit such as blueberries and cherries, yet within that disruption, established brands such as Driscoll’s held their position as market leaders. Few fruit exporters to China have put in the time and investment needed to establish their brands, and many have tended to underestimate the burgeoning growing power of local competitors.

Consumer rule

The pandemic accelerated the shift in food distribution from traditional retail to online sales. Online distributors’ share of retail sales grew 30% in first-tier cities from 2021 to 2023. Most food exporters to China without teams in the market lost share and brand equity to competitors, both domestic and foreign. Companies need enough resources, not only to manage distributors, but to make independent assessments of market demand and pricing and to observe retailers and engage selectively with consumers.

The Chinese market no longer delivers quick profits and sales surges to new entrants as it once did, and has become more sophisticated and competitive than many foreign companies understand. The opportunities, particularly in the food and beverage sectors, are still good but take patience, resources and deep consumer insights to realise.

‘Our board wants a measure of predictability so they can plan more effectively, but China is so dynamic and tough to forecast. The key is to be flexible and quick to adapt. Our management come to China frequently, and even then it is hard for them to put themselves in the minds of our consumers or competitors. Local teams need to have the resources to know their consumers, adapt to changes and have confidence that their parent companies will respect the need for swift decision-making.’

Sales manager, foreign produce company in Shanghai

African growers have begun taking counter-seasonal advantage to sell fruit to China since Beijing removed all tariffs on African produce from the continent’s less-developed countries. Driscoll’s Zimbabwean-sourced blueberries commanded premium prices this year and helped the brand towards a more certain position to offer 12-month supply — a necessary strategy to endure heavy local competition in the Chinese season.

Beijing identified apples, grapes, citrus (particularly navel oranges) and kiwifruit as categories for local government assistance in the next Five-Year Plan. The choice of kiwifruit was a surprise as the category is so much smaller than the other fruit mentioned, but it is indigenous to China and recognised as a nutrient-dense ‘superfood’.

Imported kiwifruit will come under increased pressure as local supply expands and local competitors challenge foreign plant variety rights while asserting China’s indigenous claims to a number of original cultivars. The need is deepening for all suppliers of scale to be able to offer fruit over their off-season and maintain their brands. Companies must either procure or grow their varieties in China to protect existing sales and compete with those who will have fruit on shelves.

Farmer robots

‘Whoever controls food controls the people.’

Mao Zedong, 1963

Driven not only by a need for food security but also by a dwindling rural labour force, China is applying some of the world’s most advanced farming techniques. Many are not of its own invention, but most are being commercialised at a scale that few markets have been able to meet to date. Chinese farmers deploy 10 times the number of drones in agriculture than their US counterparts.

Privately-owned Shouguang Vegetable and Food Industry Group in Shandong produces 9 million tonnes of vegetables per annum from 600,000 greenhouses, covering 60,000 hectares, dominating supply to Beijing, Shanghai and a significant portion of northern China. Between 2015 and 2025, China spent on agrotechnology the equivalent cost of building 53 Three Gorges Dams: USD 1 trillion. In Fujian, one hydroponic and aeroponic factory farm uses 95% less water than traditional farms and yields 10,000 tonnes of vegetables, 400 times that of traditional farming per hectare per annum. It employs 15 people. Vertical farming of this kind grew 40% in 2025 and is forecast to expand by over 12% for each of the next five years, and will come to characterise produce supply to China’s wealthier cities in the future.

Global producers need not only consider the impact of China’s increasing agricultural prowess in respect of Chinese companies competing in domestic markets, but also these companies’ impact on markets around the world. Toughened by unremitting local and inter-provincial competition, Chinese entrepreneurs in the food industry will soon make themselves felt in global markets.

Collaboration rather than protectionism is key for foreign companies wishing to maintain their domestic and global markets and expand within China. Where collaboration is not possible, foreign firms need to become sufficiently local to compete. US and German companies were early leaders in foreign investment in China in the first three decades following China’s reopening because they invested and formed strong partnerships. In the middle of the last decade, they began to fall behind Chinese competitors, due to domestic political and strategic impediments in their home markets, combined with an inability to grasp the impact of Chinese long-term industrial planning.

China’s need, foreign investors’ gain: knowledge and technology

China’s lack of arable land and freshwater sets hard limitations, and Chinese businesspeople are constantly seeking to acquire new technology and know-how. It is a mistake for foreign investors to resign themselves to the idea that they cannot participate and compete in China now. Some harbour outdated views that intellectual property is widely stolen with little legal recourse. On the contrary, Chinese entrepreneurs and scientists have created a great deal of IP in recent decades, spawning a commensurate legal and, by global standards, thorough arbitration system.

This evolution has finally established a credible basis for engaging China not only as a market for products, but also as a venue for structured collaboration around technology and know-how. Such business is unlikely to encounter the stiffening domestic competition felt in product sales, aligns with Chinese policy objectives, and presents stable, long-term opportunities for profit generation.

Despite the unprecedented pace of China’s agricultural revolution, much of Chinese agriculture and horticulture remains technologically backwards, with horticulture in particular often taking place in remote, hilly, and even mountainous regions that are ill-suited to the application of the unmanned vehicles and robotic systems in which China has specialised. Foreign companies may find excellent opportunities in places that lie outside of China’s wealthiest cities, but still in the hearts of markets where demand is strong and partnerships are welcomed.

The West is rich in agricultural technology and biotechnology, and, equipped with AI tools, will develop further each year. In many fields, the West is still more advanced than China. Coupled with building fresh food brands in China, Western companies need to consider how best to invest their technology and know-how in order to participate in and profit from China’s ongoing agricultural and consumer revolution.

*David Mahon is the Executive Chairman of Beijing-based Mahon China Investment Management Limited, which was founded in 1985. This Briefing is here with permission.