How China’s push to genetically modify more beans could reshape the global agriculture trade

China’s recent decision to expand the pilot planting of genetically modified soybeans has the potential to reshape the global soybean trade.

Soybeans, crucial in animal feed, human food and industrial products, are immensely important in China. Although the country is a major soybean producer soybean production at 20 million tonnes, China is remains the world’s largest importer, accounting for more than 60% of global demand.

The imported soybeans are genetically modified and mainly used to produce cooking oil and animal feed, while locally produced non-GM soybeans are used primarily for direct human consumption such as in tofu and soy sauce.

With more than 88% of soybean consumption as food relying on imports, China is vulnerable to global market fluctuations. In 2021 alone, China imported more than 100 million tonnes of soybeans, mainly from Brazil, the US and Argentina. This was a 13.3% year-on-year increase from 2020. In 2022, China imported an estimated 91 million tonnes.

Systemic competition between the US and China and the ongoing Ukraine–Russia conflict are affecting China’s soybean policy. Beijing is looking to boost domestic soybean production to address concerns about reliance on foreign soybeans exposed during the Trump-era trade war.

Mutual mistrust in US–China relations and the possibility of Donald Trump returning for a second term make questions about the relationship’s trajectory urgent. While China recently bought American soybeans, ostensibly as a gesture of goodwill, it remains to be seen whether the US will maintain its role as a major soybean supplier to China.

This provides Brazil with an opportunity to strengthen its trade with Beijing. A leading soybean exporter and fellow BRICS economic group member, Brazil already sends more than 70% of its soybean exports to China. With new bilateral agreements in place that address agricultural cooperation, Beijing may look to buy more Brazilian soybeans in place of American imports.

The pressure of testy US–China relations has made it imperative for China’s policymakers to increase local soybean production, including through GM seeds. Soybeans play a crucial role in China’s economy and Beijing consistently emphasises the need for increased local production in its policy measures, targets and five-year plans. Recent efforts, like draft rules on registration requirements for herbicides used on GM crops and the 14th Five-Year Plan on Bioeconomy (2021-2025), have highlighted the government’s commitment to exploring agricultural biotechnology for human consumption at scale.

Despite its vast population, China grapples with limited water and arable land, compounded by soil quality issues and the escalating effects of climate change. Although plans to commercialise GM crops as food remain implicit, they align with China’s broader food security strategy.

China’s push into GM soybeans will face obstacles. Public perception is a significant challenge. Despite being an early adopter of GM crops for human consumption, commercialisation in China has stalled partly due to public opposition.

Strong scepticism among consumers has combined with suspicion of Western threats to the country’s food security to create a negative perception of GM foods in China’s population. Recent surveys indicate that 55% of Chinese consumers are opposed to eating GM foods, with nearly 60% lacking trust in scientists studying the issue. Another survey, from 2018, found that only 12% of Chinese consumers viewed GM food positively.

Adding to this public relations battle is a struggle with the effects of social media. Concerns are consistently spread online about GM foods, including that eating them could cause serious illness. This is hindering Beijing’s commercialisation of GM soybeans and other crops, but with 40% of Chinese respondents willing to accept GM-labelled foods, there is still hope that this is enough demand to get things off the ground.

Still, addressing public opinion will be critical to China achieving better food security through GM agriculture. Responding to public concerns, China’s Ministry of Agriculture and Rural Affairs dismissed these claims and asserted the safety of approved genetically modified products.

Having acknowledged the need for better public understanding of biotechnology, Beijing is using state media to try and dispel some scepticism. Articles published in 2022 by Xinhua and China Daily, for instance, showcased the successful outcomes of a GM food environmental and food safety assessment.

The Chinese central government is showing that it’s aware of China’s complex food security challenge. To achieve a higher usage of GM technology in agriculture it has commenced GM pilot programs to gradually introduce domestically-produced GM soybeans and other crops into the market for human consumption.

It has also sought to diversify soybean import sources to ensure a stable supply, and prioritised agricultural trade relationships with ‘China-friendly’ countries like Brazil and others with significant Belt and Road projects.

Importantly for Australia, this could have flow-on effects that reshape global and regional trade flows. A reduced dependence in China on imported non-GM soybeans could result in greater supply, lowering prices and affecting the bottom line for other exporting countries. It may also provide opportunities for other countries to import China’s surplus soybeans, influencing global market dynamics. And amid escalating global food insecurity concerns, it could also pave the way for greater Sino-Brazilian bilateral trade in other areas and trigger closer food cooperation among BRICS members.

While not itself a major soybean exporter, Australia could benefit from indirect changes to China’s soybean and edible oil consumption. Additionally, Australia could harness China’s interest in yield-increasing technologies to export agricultural expertise and equipment.

In the longer term, the likely commercialisation of GM crops that extend to major Australian exports like barley are the most concerning and cast uncertainty over the future of these commodities in the Chinese market.

With more resilient local food supplies, China could reshape agricultural exports more generally, affecting Australia across the sector. Aside from Australia potentially having to find alternative markets for its products, a well-fed China could also export more of its own agricultural products in competition with Australian exporters. Whatever the exact impacts of China’s GM food push, a more food-secure China is always worth watching by Australian policymakers.