History of Soybean Production and Trade in China (1949-1980s) - Part 2


by William Shurtleff and Akiko Aoyagi

A Chapter from the Unpublished Manuscript, History of Soybeans and Soyfoods: 1100 B.C. to the 1980s

Copyright 2007 Soyinfo Center, Lafayette, California

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New Era of Pragmatic Economic Policies (1977-80s). After 1976 there was a reassessment of Maoist policies together with a power struggle between Mao's heirs, the leftists led by Hua Guofeng, and the pragmatists led by Deng Xiaoping. This culminated in the downfall of the radicals, personified by the Gang of Four (including Mao's widow, Jiang Qing), who were arrested in October 1976 and finally convicted in January 198l of "committing crimes during the Cultural Revolution." In June 198l Hua Guofeng, Mao's handpicked successor, was ousted in another step to redefine Maoist policies. The Party itself, under new leadership, repudiated the Cultural Revolution as a catastrophe to the people of China--a move reminiscent of Khruschev's criticism of Stalin in 1956. The giant portraits of Marx, Engles, Lenin and Stalin were taken down from Beijing's Square of the Gate of Heavenly Peace. The Party gently phased out Maoism, while working to regain the authority and prestige it lost during the Cultural Revolution. According to the People's Daily , 100 million people, roughly one in ten, suffered from political harassment, jail, or labor reform camps without trial during the decade from 1966 to 1976. China's people were ready for a more stable era.

Out of the post-Maoist power struggle and ideological battle there emerged a new leadership, committed to economic growth through pragmatic economic and managerial policies, and various incentives. Deng Xiaoping, who represented the pragmatic school of his mentor Zhou Enlai and who had previously been purged twice (1966 and 1976), asserted his predominance in the Party in 1978. He soon launched the Four Modernizations program, which became the country's central policy for the early 1980s. It placed foremost emphasis on agriculture, followed by light industry (for consumer goods), science, and defense. From 1966-1978, some 55% of China's capital investment had been spent on heavy industry, with only 10% on agriculture and 5% on light industry (Foreign Language Press 1983a). Now the priorities would be reversed. Turning away from Mao's strongly ideological orientation, Deng put economic growth before class struggle and consumer goods over steel production. Two of his most popular slogans were "Seek truth from facts" and "Take experience as the sole criterion for truth." Many colleges and universities, formerly closed, were reopened and entrance exams restored. The Party hoped that the population, now showing a clear lack of enthusiasm for revolutionary and ideological politics, would devote itself heart and soul to the Four Modernizations.

As part of its 1978 program to give top priority to agriculture and expand food production, China made at least three major policy changes. (1) Greater emphasis on material incentives and greater use of the price mechanism. The Party raised the prices paid to peasants for their crops by 20-25% in March 1979 and sanctified the controversial private plots (up to 15% of farmland) and free markets. In 1980 it went even further by letting peasants in some of the poorer production teams farm their own land, abolishing the system of collective work points, and allowing the peasants to keep (and in some cases sell) whatever they produced above a fixed quota. A system of free markets began to flourish in the countryside. Many of these incentives were first tried and proven in Sichuan province in the late 1970s by Zhao Ziyang, then governor and party secretary. As the main advocate of the if-it-works-its-good nonideological school of thought, he later became China's premier. (2) Decentralization of control and diversification of production. Peasants and local production teams were allowed a much greater role in the decison-making process, including a greater control over which crops they planted. The former one-sided emphasis on grain production was shifted toward broad diversification, which included oilseeds, soybeans, and export cash crops. (3) Greater commercialization, mechanization, and specialization in agriculture. These forms of modernization became one of the keystones of the new agricultural policy. There was also a big push to export some crops and products (including soy oil) to get hard currency needed to import more cereal grains. After 1980 making profits became both legitimate and praiseworthy.

In addition, the emphasis placed on the growth of agricultural inputs, started in the early 1960s, was strengthened. In the roughly 25-year period from 1955-57 to 1977-79, although cultivated area decreased by 0.5% a year and total crop production grew at only 0.3% a year, rural electricity consumption grew at 26.6% a year, power irrigation and drainange at 24.1% a year, chemical fertilizer usage at 22.6% a year, tractor use at 18% a year, and chemical insecticide output at 9.8% a year. Fertilizer usage per hectare of cultivated land doubled (from 64 to 128 kg/ha) between 1977 and 1980, and was probably the single most important reason for the sharp rise in grain yields during this period (Surls and Tuan 1981). Yet much of Chinese agriculture remains unmechanized--perhaps a plus in a country with surplus labor facing a future of fuel shortages. While machines plow some 46% of China's productive land, only 10% is sowed and 3% harvested by machine, according to USDA estimates. In central China much of the crop is still sun dried then threshed with a stone roller pulled by horses or a small tractor (Mangold 1980; J.L. Wang 1982).

China's recent agricultural reforms have been compared with Lenin's extremely successful New Economic Policy of 1921-26 in the USSR, which brought a "golden era" but which was abolished by Stalin in 1929 as "rotten liberalism." In China, largely as a result of the new policies, per capita crop production which had been stagnant for 20 years, finally in 1978 surpassed the former post-revolutionary high of 1958 and began to rise rapidly. In 1980 average per capita grain consumption was 213.5 kg, up 8.2% over 1952. Peasants and farmers, increasingly prosperous and happy, strongly supported Deng's new farm policies.

The farm structure in China, which had changed little from 1961 to 1978, being composed of communes, rural households, and state farms, underwent extensive reappraisal from 1978 on. In 1978 China's 53,000 communes produced about 79% of the total agricultural output, households on communes produced about 17%, and 20,047 huge state farms (located mostly in the northeast, with its large reserves of undeveloped land) produced 3.7%. On over 97% of the communes, production teams were the basic units of decision-making and accounting. An average team in 1979 cultivated about 17 ha (42 acres) and had approximately 34 households, 157 people and 57 farm workers. From the 1970s on, many communes built up small-scale rural industries, such as grain mills, oilseed presses, etc. (USDA Economic Research Service 1982; Foreign Language Press 1983a).

After 1977, with the reestablishment of the State Statistical Bureau (SSB) and with more open attitudes toward the release of data, fairly reliable official statistics on Chinese agriculture started to become available. By the early 1980s agricultural statistics were released through annual SSB communiques and in yearbooks. The yearbooks, the first of which was published in 1980, come in various types (including an English language translation of the Statistical Yearbook of China ) and are the most comprehensive source of data. In addition, China's press began to carry much more specific discussions of agriculture and the economy, based in part on information released by MinAg (Ministry of Agriculture, Animal Husbandry, and Fisheries). The best US source of information on Chinese agriculture and soybean production is the USDA Economic Research Service's series titled China: Review of Agriculture in 1981 and Outlook for 1982 , a new edition of which is published yearly. USDA/Economic Research Service and USDA Foreign Agricultural Service (FAS) both keep current data on Chinese soybean production, imports, and exports on their computers in Washington, D.C. These are available to interested parties upon request, by phone or mail.

The late 1970s also saw the rise of more positive attitudes toward the West and toward freer speech and religion in China. In late 1978 China and the US (under President Carter) reestablished diplomatic relations. American tourism to China began. In November 1978 the Democracy Movement started. Posters and tracts by the people, posted on Democracy Wall in Beijing, stressed the need for democracy (which some called the essential Fifth Modernization) and science. Underground publications blossomed and there was a more liberal policy toward the arts. Considerable criticism was directed at Deng's opponents in the Politbureau. But in January 1980, only 14 months later, the movement was squelched; the Party thought things had gone too far. Religious tolerance however continued to flourish as did foreign exchange programs. By 1983 there were 10,000 Chinese students in the USA (including a handful studying soybean production) and several hundred US students in China. In 1979 major US publications ( The New York Times , Time magazine) first opened their bureaus in Beijing. That year Deng became the first post-revolutionary leader to visit the USA.

Soybean Production Since 1976 . Soybean production, yields, and hectarage increased substantially after 1976. From 1976 to the peak year in 198l, production rose 41%, yields climbed 18%, and hectarage increased by 20%. Yet production was still about 7% below the post-revolutionary peak of 1957. In 1980 China produced a mere 9.3% of the world's soybeans, down from 44% in 1954 and 38% in 1957.

In 198l China's State Statistical Bureau published official figures for soybean hectarage for 1949-198l, and for production and yields for 1949, 1952, 1957, 1962, 1965, and 1978-81. The figures for 1949-57 were the same as those from Ten Great Years (Ref??), published in Beijing in 1959. However those from 1958 to 1976 were, on average, roughly 20% lower than USDA and FAO estimates, and in some cases more than 50% lower. This made the soybean production situation during the Maoist period look less favorable than was previously thought. Figures after 1976 were only 5-10% lower than Western estimates. (USDA Economic Research Service 1982; Statistical Yearbook of China 198l).

Before discussing production of soybeans and (other) oilseeds, it is important to point out that China does not count soybeans and cottonseeds as oilseeds, whereas the USDA does. In China oilseeds include peanuts, rapeseed, sesameseed, sunflowerseed, and "others," mainly linseed. To this the USDA adds soybeans and cottonseed, but omits sesameseed. In most USDA reports the distinction is clearly made to avoid misunderstanding.

The rather rapid rise of soybean hectarage, yield, and production after 1976 was caused by a number of factors, mostly related to governmental policy and research. First, China worked to shift land out of grain production and into cash crops such as oilseeds, cotton, and tobacco. Soybeans, which China counts as a grain, were also expanded in area. It was hoped that this shift would, among other things, ameliorate the previous shortage of oils in China. Second, to stimulate soybean production, in April 1980 the federal government lowered soybean procurement quotas, making more of the crop eligible for the higher above-quota price, then in September 1980 announced a 50% price increase for soybean procurements. Farmers responded by planting soybeans on former grain fields and newly reclaimed land. Total hectarage and production rose by some 10% in 198l--despite flooding in major producing areas. In 1982 soybean procurement prices were again raised, so that farmers were paid about the same amount for 1 kg of soybeans as for 3 kg of corn. Also soybean growers were given priority in fertilizer disbursements, especially phosphorus. Third, the government hoped to produce soy oil for export, replacing it in the domestic market with oil from other oilseed crops such as rapeseed, peanuts, and sunflowerseed. It also hoped to export some soybeans and soybean meal. And fourth, a major commitment was made to expanding research and extension work related to soybean production, in order to substantially increase yields. In fact, from 1976 to 1981 average soybean yields in China rose by 18%, from 989 to 1,163 kg/ha. Yet there is still great room for improvement in this area, since in 1981 the average world soybean yield was 1,749 kg/ha; countries with high yields included Argentina with 2,072 kg/ha, the USA with 2,047 kg/ha, and Brazil with 1,668 kg/ha.

The gains in soybean production made in the early 1980s were mainly in central China, in Henan and Anhui, both of which nearly doubled their production in 1981. That year, China's leading soybean producing provinces were Heilongjiang (2.01 million metric tons), Henan (1.54), Anhui (0.91), Shandong (0.83), Jilin (0.79), and Liaoning (0.63). Note that all of these, as was the case in 1948-49, are in the northern half of China. By regions, the northeast (Heilongjiang, Liaoning, and Jilin) was the leader, producing about 40% of all China's soybeans, followed by the north (centered in the North China Plain river valleys), east, and central regions. The smallest producing region is the South (Guangdong, Guangxi, Fujian), followed by the Southwest, then the Northwest. Heilongjiang (which means "Black Dragon River"), by far China's leading soybean producing province, has rich soil and huge flat farms, with most of the soybean production under the direction of the State Farm Bureau, which uses modern mechanized farming methods on some 650,000 ha. Yet Heilongjiang also has major inherent obstacles to expanding soybean yields. a growing season that is very short (there are only 80 frost-free days in northern Heilongjiang), little irrigation, and a latitude that is mostly above 45*N--about the same as Maine in the USA! Nevertheless in 1982 soybean production in Heilongjiang reached 2.55 million tonnes, up 27% over the 1981 figure. Yields averaged about 1,500 kg/ha, some 29% above the national average.

Detailed descriptions of China's soybean cultivation zones, cropping patterns, planting and harvesting times, and related nutritional composition and plant structure have been given by J.L. Wang (1982, 1983), Ma and Zhang (1983), and Hymowitz (1970). Wang identified five cultivation zones, as shown in Figure ??. Soybeans are spring sown in one-crop-a-year rotations in the north, spring or summer sown in multiple cropping patterns in central China, and sown in spring, summer, or Autumn in the south. In the northeast, soybeans are used chiefly for oil (they have a high oil content and moderate protein content), in the southerly Yangtze River Valley for foods (they are high in protein, up to 48%), and in the Yellow River and Huai River Valleys for both oil and food. A very high percentage of China's black soybeans are grown in the Loess Plateau of north Shanxi and Shenxi provinces. In north China, soybeans are usually yellow with light hilum colors and indeterminate in growth pattern; in South China they have mostly dark hilums and are determinate.

Since the founding of the People's Republic of China, soybean research has been conducted solely by public institutions, largely those under the national Ministry of Agriculture or under provincial academies of agricultural sciences. This research, which helped in expanding yields during the 1960s and early 1970s, became much more active and effective after 1975, with the increased national commitment to expanding soybean production. Perhaps the most active and best known center is the Soybean Research Institute at the Heilongjiang Academy of Agricultural Sciences, near Harbin. It was founded in 1975 under the administration of this provincial academy and under the direction of Professor Wang Jin-ling. The active elder statesman of Chinese soybean research, Prof. Wang taught many of today's leading researchers at Harbin's Northeast Agricultural College. The Institute's main goals were (1) to breed soybeans for that province that were high yielding, had high protein and/or oil content, and were disease resistant, and (2) to develop improved farm equipment and cultivation techniques/ management practices for local farmers. By 1983 the Institute, with a staff of 71 professionals (building toward 100) and a yearly budget of 200,000 yuan ($100,000), had developed several fine new cultivars and created a package of practices that allowed farmers to get yields of up to 3,000 kg/ha. In 1983, when Prof. Wang became Governor of Heilongjiang province, Zhang Guodong became director of the soybean institute. To help improve soybean production and utilization in northeast China, the United Nations Food and Agricultural Organization (FAO) established a project to increase the competence of the staff of this soybean institute. With $525,000 in funding, the program ran from February 1982 to August 1984. Several US soybean consultants were brought to Harbin and six students were sent abroad for training; laboratory and farm equipment was purchased.

In Jilin province, as in Heilongjiang, a soybean research institute was established under the administration of the Jilin Provincial Academy of Agricultural Sciences. Construction started in 1979 and the institute was inaugurated in August 1983 in Gongzuling, just southwest of the provincial capital, Changchun. Its first development was an inexpensive soybean harvester. Soybean research laboratories have been established at the Crop Breeding Institute and the Oil Crop Institute under the Chinese Academy of Agricultural Sciences, and also in Nanjing Agricultural College (Jiangsu province; Prof. Ma Rhu-hwa), which is under the administration of the Ministry of Agriculture's Bureau of Education. Finally, there are soybean research institutes in Shandong, Henan, Anhui, and Jiangsu provinces, and also in the district agricultural institutes in major soybean producing provinces, especially the northeast. Between 1949 and 1982 Chinese researchers developed more than 200 new soybean cultivars that were used in production (Ma and Zhang 1983). Little is known about the extension activities that communicate these research findings to farmers, except that some findings are communicated to the leaders of commune production brigades.

To help expand soybean research, the first China/USA Soybean Symposium was held at the University of Illinois in July 1982. More than 220 scientists participated. The Proceedings, published in 1983 as INTSOY Series Number 25 (Irwin 1983) contained the most extensive information available to date in English on soybean research in China. A second China/USA symposium was held in August 1983 at Changchun, capital of Jilin province. The 60 papers presented were published in 1984 by the USDA Office of International Cooperation and Development.

A number of books on soybeans and their production have been written in Chinese since 1949. These include (giving English translations of the titles) The Story of Making the Family Prosperous by Growing Soybeans (Hsing 1951), Soybeans (Sun 1956), Soybeans (Ch'en Min-jen 1958), Chronology of Literature on Beans in China (C.N. Li 1958), Soybean Breeding and Breeding of Good Strains (Jilin Academy of Agricultural Sciences 1976), Soybeans: Historical Stories (Liu 1981), and Soybeans (Wang 1982). The last work, by Prof. Wang Jin-ling of Heilongjiang, is a 321-page review of research work to date, with an extensive bibliography, mostly in Chinese. It is the best book on the subject in China. The best works in English are those published by the USDA Economic Research Service.

How does the future of soybean production in China look? Unquestionably the key factor will be the country's political and economic climate and stability. Directors of the Soybean Research Institute in Harbin see a very bright future, since yields are still low and the Ministry of Agriculture is committed to expanding production and to using soybeans as food, not as feed. They add that the World Bank is now helping to finance reclamation of 2 million ha of farmland in the Three Rivers area of Heilongjiang, one-third of which is slated to be planted to soybeans. USDA and ASA analysts, however, remain less optimistic, foreseeing slow growth at best. Why??

Soybean Trade (1949-80s) . The earliest post-revolution statistics on soybean trade with China appeared in the FAO Trade Yearbooks of 1958 and 1960. These show that Chinese soybean exports jumped from at least 190,500 tonnes in 1954 up to 950,200 tonnes in 1955. They averaged about 950,000 tonnes a year from 1955 to 1958, when the Great Leap Forward began. Thus China was then exporting about 11% of its domestically grown soybeans. In 1959, the first year after the Great Leap, exports rose to 1,338,000 tonnes (18% of production). Main trading partners during this time, in order of importance, were USSR, Japan, West Germany, Hungary, and Denmark. Soybean imports were negligible. FAO export/import statistics, gathered from China's trading partners, stopped after 1959. Exports may have fallen sharply at that time, as did soybean production, in the lean years after the Great Leap. During the 1960s China exported an estimated 10% of its domestic soybeans.

Statistics resumed in 1970, this time from the USDA Foreign Agricultural Service (Oilseeds and Products Report, 1982). Exports during the early 1970s were at about half of the level of the late 1950s, reaching a peak of 460,000 tonnes in 1971. In 1973 China made its first significant soybean imports ever (255,000 tonnes) and in 1974, for the first time in Chinese history, became a net soybean importer (279,000 tonnes). This shift from a net export to a net import position in soybeans helped to limit the decline in per capita edible oil availability to less than l% per year. Nonetheless, by the late 1970s this oil availability was about 17% below that of the mid-1950s (Surls and Tuan 1981). Throughout the 1970s and early 1980s China both imported and exported soybeans. Exports had declined to 5% of domestic production. Most of the exports (avg. 125,000 tonnes/yr) went to Japan for food use, and most of these were shipped from China's northeast provinces. Because it is difficult to transport food inland across China, it is less expensive to ship northern-grown soybeans to nearby Japan and import foreign soybeans to south China. After 1977 China was a net importer of soybeans every year but one (1979), with maximum net imports of 163,000 tonnes in 1980 (which was 8% of domestic soybean production). Large soybean imports were usually accompanied by large imports of soy oil as well. Yet imports were difficult, since China's 7-9 international ports were woefully inadequate for grains and beans. After 1980 net imports steadily decreased, as domestic soybean and oilseed harvests increased rapidly.

China first imported soybeans from the USA in 1977. These reached a peak of 810,000 tonnes in fiscal year 1980, then declined to zero after spring 1982. (China also imported huge amounts of wheat, plus some corn and cotton from the USA.) In January 1983, in a largely symbolic gesture, China banned US soybean imports in retaliation against unilateral quotas on Chinese textile sales to the US and, perhaps, to underscore China's dislike of continued American diplomatic recognition of Taiwan.

In 1978, following US diplomatic recognition of China and the first large imports of US soybeans, the American Soybean Association began to wonder if China's 1 billion people and 200 million hogs might not be the next big market for American soybeans. ASA's marketing publication Soyworld discussed this exciting prospect in the February 1979 issue. After ASA's first trip to China in mid-1979, Chief Executive Officer Bader announced that China seemed sincere in wanting to expand and improve its livestock industry (primarily swine and poultry), in part by feeding more soybean meal, and that US and Chinese agricultural officials had agreed to exchange delegations and scientific personnel in the areas of soybean research, production, and utilization ( Soyworld , June 1979). Subsequent ASA delegations visited China in August 1980 and April 1981, and when imports of US soybeans shot to 810,000 tonnes in FY 1980 the future looked rosy, especially if Chinese hog farmers could be convinced to adopt US hog feeding practices and use a soy-based milk replacer to feed baby calves (Harrison 1980). In November 1980 Bader predicted optimistically: "We can expect China to become one of our major customers within 3-5 years" (Mangold 1980). In August 1982 ASA opened an office in Beijing, under the direction of Terrence Foley, a specialist in East Asian history and culture, who spoke fluent Chinese. Various programs were designed to stimulate imports of US soybeans for both food and feed. Many teams of Chinese professionals in soybean crushing, soyfoods manufacturing, and livestock and human nutrition, were sponsored by ASA to visit other Asian countries and the US, and US specialists were sent to China to teach. Foley saw great potential in the soyfoods area, since there were five times as many people as hogs and most hogs were fed only scraps and waste inedible to people. In late 1983 ASA hired a human nutritionist. Even though China had imported no US soybeans since spring 1982, ASA was in it for the long pull, believing that if China prospered, it would not be able to produce for itself all the soybeans it needed for food, feed, and oil.

ASA's future in China seemed to lie in the development of a modern livestock industry (with modern compound feeds, modern breeds of animals, confinement methods, and disease prevention) and in the development of a modern soybean processing industry for traditional soyfoods such as tofu, and for oil, meal, and modern soy protein products.

Major policy questions in China's trade future are self sufficiency in soybean production versus expansion of protein and oil consumption through imports; export of domestic soybeans, oil, and meal to gain hard currency versus using these to upgrade the national diet; use of soybeans for food or for feed; exporting soybeans or exporting products (oil and meal). On this last point, major soybean producing provinces hope to export more oil and meal (rather than soybeans) to other provinces. By 1990 Heilongjiang hopes to process (crush) two-thirds of the province's soybeans before they are exported.


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