China : macroeconomic focus

• Capital: Peking
• Change: yuan Ren Min Bi
• Yards(average 2009) 1€=10CNY 1CNY=0,1€
• Surface: 9 598 050 km2
• Density: 137 hab/km2
• Official language: Mandarin
• GDP: 4 522 billions USD (forecasts)
• GDP/inhab: 3 405 USD / INHAB / YEAR
• Population: 1 313 000 000 inhabitants
   

Source: Atlas Eco 2008/Bulletin Economique 1

China’s arable land represents 120 million hectares, which only covers 12.5% of the land area. However, only 7% of China’s land is suitable for cultivation to feed 20% of the world population. The development of the country’s agriculture has become a crucial factor for social stability and the stability of the world food industry.

China is an agricultural giant traditionally focused on crop production (more than 50% of agricultural production by value). Animal production has developed rapidly, however, since the beginning of the decade and currently accounts for 1/3 of the value of agricultural production. Nevertheless, food industries are not yet very developed.
 

Major crops:

Rice is, of course, the most developed crop in China with 25% of arable land given over to rice fields. Most of the rice is cultivated south of the Huai River, in the Yangtze valley, the Zhu Jiang delta and in Yunnan, Guizhou and Sichuan provinces.

Wheat is the second most important crop after rice, especially in the North China Plain, the Wei and Fen valleys, the Loess Plateau and in Jiangsu, Hubei and Sichuan provinces. Maize and millet are major crops in the north and northeast of China, as oats are in Mongolia and Tibet.
 

Livestock and poultry:

Source : China national statistics bureau, China meat association

Pork production:

The FAS (Foreign Agriculture Service) in Beijing forecasts that pork production will increase steadily in 2010, reaching an output of more than 50 million tonnes. The increased production coupled with a fall in sales prices will mean a fall in Chinese imports of pork. Currently, there is very little trade in this sector between France and China. In 2009, only a few French breeder pigs were sold to China for the sum of 727,000 US dollars (source: Global Trade Atlas). France is China’s 3rd supplier behind the United States and Denmark.
 

Poultry farming takes off:

China is the world’s largest egg producer, accounting for 40% of the world total, and poultry represents 23% of Chinese meat consumption. In 2009, the sector generated 41.75 billion dollars, 3.1% more than in 2008 and it has grown yearly by more than 7% for the last 7 years.

The basic source of revenue for Chinese poultry farmers is sales to slaughterhouses. In 2009, this market represented more than 50% of revenues for the sector.

Eggs also represent an important part of the sector’s revenues. Producers generally sell their products to wholesalers who then redistribute these to retailers. In 2009, sales to wholesalers came to about 42.4% of revenues. At present, hardly any revenue is generated by breeding or poultry exports.

Although it is relatively fragmented, poultry production in China is one of the most modern agri-food industries in the country. The sector’s four leading companies represented 10% of revenues in 2009 but around 765,000 businesses work in this sector.

The sector needs, however, to improve on integration with upstream food and downstream transformation sectors. Nevertheless, increasing consumer demand for quality products will drive the development of the sector in this direction.
 

Beef and sheep meat production:

The revenues generated by this sector represented 47.10 billion dollars in 2009 and went down by 10.7% with respect to 2008.
 

This is the first drop in 10 years and it is mostly due to falling prices and consumption during the year.
Around 1.5 million businesses work in this sector, generating 4.57 million jobs and salaries totalling 4.7 billion dollars.
The demand for beef and sheep meat has steadily increased over the last few years partly as a result of the growing purchasing power of the Chinese and also of rising prices for pork.
 

Dairy production:

In the last 10 years, dairy production in China has developed significantly. From 1998 to 2004, it has grown by 17%, which is largely explained by the change in Chinese dietary habits. The Chinese population now regard dairy products as a good source of calcium and proteins, resulting in an increase in demand which for the last few years has been backed by incentives from China’s Ministry for Agriculture.

Despite the melamine crisis leading to stagnating production in 2008 and 2009, the dairy industry is still among the Chinese food industries showing the strongest growth. According to the China Ministry of Industry and Information Technology the dairy industry accounted for 20% of revenues generated by the agri-food industry in 2008.

Dairy-derived products are also fast-growing sub sectors. More than 2,000 Chinese companies are now producing UHT milk, accounting for 78% of milk sales in China. The cheese sector is also developing but at a slower pace because food habits have to change as well. The developing cheese sector is basically linked to the emergence of ready meals or western style restaurants (pizzas, cheese cake, etc). Cream cheeses have also appeared on the market recently and a French brand has even adapted a recipe to suit Chinese tastes (Pikofu).

The yogurt market has also grown by 20% since 2000 but powdered milk production has fallen in inverse proportions since the melamine crisis. When it comes to infant formula milk, American and European giants such Nestlé and Aspen monopolise the sector.

Some niche sectors within the dairy industry have also cropped up in recent years, such as flavoured milk-based drinks geared to the younger population, organic milk and long life yogurts. A real effort to diversify milk products is apparent.
Even if trade with China has shrunk, this market still represents real potential for developing French exports. The Chinese should, in fact, consume more dairy products. In China, the yearly consumption of dairy products per inhabitant is about 18k per person as opposed to a world average of 80k/person and 200k/person in developed countries.
 

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