The ominous drumbeats of a trade war underscore the critical juncture of US-China relations. It is a good example of, what business theorists call coopetition—the complex game of competing and cooperation at the same time. An illustrative example might be Samsung-Apple’s dog-eat-dog global competition in smartphones and patent litigation, while maintaining a supportive and lucrative supplier-customer relationship. It’s just business.
The US and China face the same complex partnership: increasingly tense competition that needs to be balanced by cooperation. China’ rise to Great Power status creates competition for geo-political influence, national security, territorial control, global prestige, and influence over the many mechanisms of the international order that has evolved– without China– since 1947. Not seeing eye-to-eye is not surprising for two nations with such different histories and cultures. The problem is that disagreement can turn into conflict. An intense trade war could stumble out of control. John Merscheimer, Dean of international relations realists, puts the historical probability of a significant military clash at only 70 percent.
As cyber-espionage, human-rights disagreements, tensions in the South China Sea, and now in-your-face tariff skirmishes fuel the competitive flames; the cooperative components become critically important to avoid the incomprehensible—military conflict. If over the next 5 years the cooperation elements do not overwhelm the growing competition, Merscheimer may well prove disastrously prescient.
One area with vast potential for cooperative progress, ironically, is trade in agriculture. Or, framed more precisely—and more positively– collaborative integration of the U.S-China food systems. Agricultural trade has been a steady source of conflict between the United States and China (as it has among all countries). It is, almost inevitably, among he hottest fronts in the current trade hostilities. President Trump’s trade war started with steel and aluminum. China quickly retaliated with agriculture. Current U.S headlines highlight the pain targeted to American farmers. Trump is raising the ante.
However, food production is a commercial relationship in which the world’s two largest economies have an opportunity for stunning economic gains. Perhaps more important, if framed properly, successful cooperation in food presents an opportunity for a partnership that could undergird a broad foundation of trust and collaboration for years to come. Success here could offer a much-needed model for building trust and inclusive commercial integration between these two giants. It could be a model for others.
U.S.-China agriculture trade is among the most rapidly growing commercial relations in the world. U.S agriculture sales to China have grown 5-fold in the past two decades. Demand for food is growing rapidly in China in the face of serious production constraints posed by China’s limited arable land (much contaminated by toxic chemicals), rapid urbanization, and extreme water shortage. China has steadily increased agricultural exports to the United States. The interdependence of the U.S and China food systems can only increase.
China’s is adding to growing global demand. Global population is increasing by more than 200,000 each day. It is expected to hit, and with luck plateau at, 9.2 billion by 2050. That is, over the next 32 years the equivalent of another China and Africa will be added to the current pool of mouths to feed. More than 95 percent of that population growth will occur in what are currently low-income countries without the arable land and water to provide the food they will need. Equally important, most will be born in cities. In 2011, half of humanity lived in cities. By 2050 it will be 70 percent; 73 per cent in China. China has plans to have 1 billion people living in cities by 2030.
The second major driver of food demand is income; specifically whether one is poor, middle-class, or rich. Today, 1.8 billion people, or 28 percent of the global population, are “middle class,” Fewer than 2 percent of the world’s people are rich. The remaining 70 percent are poor. Fortunately, this is changing. Hundreds of millions are rising out of poverty into the middle class.
This demographic shift is where the problem becomes especially sticky and the opportunities for US-China collaborations particularly valuable. Asia, notably China, has the fastest growing middle class. If present trends continue, according to a recent Brookings study, by 2021there will be more than 2 billion Asian middle class consumers, and 3.2 billion by 2030.
As the middle class grows, food consumption patterns will shift dramatically from basic staples toward food that is more appetizing, nourishing, varied, consistently available, reasonably priced, and, especially, safe. Rural Chinese survive on a starch-based diet. Not so for urban China. Food consumption increases 20 percent immediately for the Chinese farmer who moves to the city. Since 1990, Chinese consumption of beef, pork, and poultry has increased 300 percent. Chinese spending on food is expected to increase another 150 percent by 2030.
Food shortage quickly becomes a global phenomenon. The United Nations Food and Agricultural Organization (FAO) predicts a 60 percent increase in demand for meat, milk and eggs by 2050; primarily in Asia, Africa and the Middle East. The consequences could be dire. Producing one pound of protein requires the production of seven pounds of grains. Meat consumption alone, by 2030, will require a doubling of global grain production. The unavoidable prognosis is rapidly rising prices that will cause significant pain for the poor around the world. The food shortage in 2008, for example, pushed 44 million people back into poverty.
Why is this grim news useful? To meet the rapidly growing global demand for high-quality, varied, reliable and safe food without jeopardizing the poor, a revolution in agriculture policy is needed. This revolution will require collaborative efforts by world leaders to maximize innovation, productivity, and trade. China and the United States can take the lead. China will have to abandon its food self-sufficiency obsession and open its markets further to America’s rich supply. The United States must open its protected markets. Leaders in both countries must encourage joint innovation efforts, collaboration on safety standards, and face down formidable special interests. This can only be achieved by clear goals presented as a collaborative effort at the very highest levels. They must work jointly to link food security to trade. This link assumes building substantial trust in ‘others.’ It is this trust-building that undoubtedly will prove to be the hardest and yet most valuable part of the initiative.
If bold enough, Xi Jinping and Trump should invite Japan to join. Japan is desperately in need of both agriculture reform and a collaborative enterprise with China to balance growing military tensions. Powerful special interests in Japan were a critical barrier to completion of the Trans-Pacific Partnership (TPP). The TPP remains a cornerstone to the Free Trade Agreement of Asia-Pacific (FTAAP) proposed by China. Estimates have put the economic value of an FTAAP at more than $1 trillion. What better way to begin capturing those benefits than for the leaders of the United States, China and Japan to call for a comprehensive Reforming Global Food negotiation– aimed at opening markets, collaborative innovation, regulatory coherence, and safe and secure food for all? Rather than a source of conflict, agriculture could become a bridge to the future.
Pie in the sky? Yes, of course. But for the moment, just imagine. Innovative integration between China and the United States could rapidly embrace others. It would spur coordination of numerous disparate international efforts addressing food security. And it is a model program to build trust and mutual reliance on a critical sector of human need and could easily spillover into other sectors in dire need of creative collaboration. Quite frankly, it could be the best way to avoid conflict with China. If demographic predictions are correct, it may be the only way to avoid a grim future for the billions of poor around the world.