Global Times - 01.08.2019

(Jacob Rumans) #1

BIZCOMMENT


Thursday August 1, 2019 B7

China rebuilds farming supply chain amid trade war


Only taxes can close aviation’s carbon gap as move to biofuel is an unrealistic outcome


Aviation’s dreams of a green future rest
on second-hand cooking oil and wishful
thinking. By 2050, the industry wants
to halve net CO2 emissions from 2005
levels, even though traffic is set to treble.
It’s hard to see electric planes or jet fuel
made from plants or kitchen grease fly-
ing to the rescue. Instead, governments
may have to squash demand by impos-
ing carbon taxes.
Unlike carmakers, which can switch
to zero-carbon batteries, or power sta-
tions that can run on wind, nuclear or
solar energy, airlines are stuck with fos-
sil fuels. Basically, nothing matches jet
fuel in pound-for-pound punch. Nor are
there signs of that changing much by
mid-century.


In 2017, airlines produced 850 million
tons of CO2, just 2.3 percent of human-
ity’s total. But rapid expansion of routes,
mainly in Asia, means emissions are on
course for 2.7 billion tons annually by
2050, the International Civil Aviation
Organization (ICAO) estimates. That’s 8
times the industry’s mid-century target
of a net 325 million tons.
Various things can reduce that 2.7 bil-
lion-ton figure. The ICAO assumes fuel-
efficient engines will cut 700 million
tons a year by 2050. More direct routes
and letting planes cruise at higher alti-
tudes should remove another 200 mil-
lion tons, and carbon off-sets like tree-
planting another 200 million. To hit
their mid-century environmental goal,

airlines must therefore find another 1.3
billion tons of collective CO2 savings –
in itself over 50 percent more than the
850 million tons pumped into the atmo-
sphere in 2017, when airlines collectively
burnt nearly 2.5 billion barrels of jet fuel.
Replacing that amount of jet fuel –
3.8 billion barrels – with biofuels looks
a stretch. Jatropha, an easy-to-grow plant
seen as a promising source of oil, yields
perhaps 10 barrels of jet fuel per hect-
are. Switching entirely to jatropha would
thus mean plowing 375 million hectares,
more than a third of the US.
That points instead to a demand-led
drive to cut the appetite for air travel. A
study commissioned for the European
Commission last year estimated that 10

percent on ticket prices – considerably
more than the 1.5 euros ($1.67) per flight
outlined this month by France – leads to
an 11 percent demand drop while having
minimal impact on economic growth.
Europe could start by enforcing its 0.33
euro per liter duty on jet fuel. Convinc-
ing others to follow might be easier than
growing all those plants.

The author is Ed Cropley, a Reuters
Breakingviews columnist. The article was
first published on Reuters Breakingviews.
bizopinion@globaltimes.com.cn

Page Editor:
zhouzheng@globaltimes.com.cn

By Wang Jiamei


L


ast week, China’s Gen-
eral Administration of
Customs announced it
had approved soybean imports
from all parts of Russia and
wheat imports from the Kur-
gan region of Russia.
The move came as an
obvious indication of the two
economies’ deepened bilateral
trade in agricultural products.
Currently, Russia and China
are reportedly negotiating their
cooperation in agricultural
trade. In April, Russia’s deputy
prime minister Yury Trutnev
traveled to Beijing to discuss
Russian exports of soybeans,
dairy products and meat to
China. Trutnev also stated that
Russia will increase its soybean
exports to China to 2 million
tons per year by 2024.
China’s strengthened trade
cooperation with Russia for
soybeans and other agricul-
tural goods is not only in line
with the requirements of the
China-Russia comprehensive
strategic partnership of coordi-
nation for a new era, but is also
in line with the Chinese need
to rebuild the import supply
chain of agricultural products
amid the simmering US-China
trade war.
Take the high-profile
soybean trade as an example.
China has been making efforts
to seek diversified overseas
soybean suppliers. In July,
Rusagro, one of Russia’s larg-
est agricultural companies,
shipped its first bulk vessel,
or 4,400 tons, of soybean to
China, with China’s COFCO
Trading being the buyer.
Yet, it is undeniable that
Russia’s soybean exports
to China remain quite low
due to the country’s limited
output. According to data from
customs authorities in Harbin,
Northeast China’s Heilongji-
ang Province, the imports of


Russian soybeans through the
nine ports in Heilongjiang
totaled around 800,000 tons
in 2018, up 60.1 percent year-
on-year and marking a record
high, but the volume only
accounted for about 0.9 per-
cent of China’s total soybean
imports during the year.
Imports of Russia’s soybean
can hardly fill the gap left by
the US in the Chinese market,
but from the perspective of
import diversification, it still
makes sense for China to
explore the soybean supply
potential in Russia.
In fact, China has already
managed to diversify its soy-
bean imports away from the
US, with Brazil replacing the
US to become China’s largest
supply source of soybeans.
According to China’s Ministry
of Commerce, China imported
24.39 million tons of soybeans
in the first four months of this
year, down 7.9 percent year-on-
year. While imports
from the US plum-
meted by 70.6 percent
to 4.31 million tons,
soybean imports from
Brazil rose by 46.8
percent to 15.5 million
tons, and the imports
from Argentina soared 23-
fold to 2.15 million tons.
China’s import diversifica-
tion effort is not limited to

soybeans, but covers a wide
range of farmed goods. For in-
stance, COFCO Corp, China’s
state-owned agricultural giant,
has been investing in coun-
tries along the Belt and Road
route to improve the position-
ing of its supply chain assets
for years. By 2020, it aims to
have invested 10 million yuan
($1.45 million) in Belt and
Road countries, trading 30 mil-
lion tons of grain, controlling
10 million tons of first-hand
grain sources, and importing
5-billion-yuan worth of food.
Moreover, since Chinese
customs authorities in June
removed the requirement for
cherries to be held in low-
temperature storage for 16
days before shipment, Turkey
will likely boost its cherry
exports to China in the coming
months. China previously
imported cherries mainly

from the US during the month
of July, but this summer US
cherry exports are expected to
face fierce competition from
a newcomer in the Chinese
market.
While China hasn’t com-
pletely stopped US imports of
agricultural goods, its attempt
to make proper and targeted
adjustments to its agricultural
import supply chain, largely
motivated by the trade ten-
sions, could still place pressure
on the Trump administration.
It should be pointed out that
such import diversification
efforts are not simply intended
to be bargaining chips in the
trade war. By taking the oppor-
tunity that trade disputes with
the US have provided, China’s
rebuilding of its agricultural
import supply chain is not

only conducive to the country’s
food security, but may also
further improve the quality of
agricultural products, bring-
ing its people more choices of
high-quality farm goods.
For instance, although Rus-
sia’s soybean output may be
quite limited at present, all are
non-GMO soybeans. Russia is
one of the few countries in the
world that explicitly prohibits
the planting of genetically-
modified crops, which is why
it is generally expected that the
green, non-GMO character-
istics of Russian agricultural
products will attract plenty of
Chinese customers in the near
future.

The author is a reporter with
the Global Times. bizopinion@
globaltimes.com.cn

Illustration: Luo Xuan/GT
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