How China-Russia grain corridor can help Beijing safeguard food security and boost agricultural trade
- By using the grain corridor with Russia to further diversify supply routes, China can reduce its reliance on global chokepoints while ensuring a more secure food supply chain
- However, challenges remain, including the small volume of Russian exports, different approaches to collaboration, tariff policies and a lack of infrastructure
Last month, Russia announced it would boost its grain exports to China via the New Land Grain Corridor. Proposed by Beijing in 2012, the corridor aims to develop infrastructure and increase grain production, connecting Russia’s far eastern regions to Inner Mongolia in northern China.
In June 2022, Russia’s New Land Grain Corridor Group of Companies and the state-owned China Chengtong International Investment Company signed an agreement to jointly work on the project, with a focus on settling transactions in national currencies.
The new grain corridor can potentially offer multiple benefits for China, particularly in the context of food security.
Second, the corridor can attract more Chinese agricultural investment in Russia’s fertile far east. Despite joint initiatives such as agricultural cooperation parks and free-trade zones being in place, agricultural transport infrastructure issues and regulatory barriers make Chinese investment in the Russian agricultural sector difficult. However, the grain corridor’s promise of reduced transport time is expected to attract more Chinese investment in Russia, particularly in the far east.
The concentration of corn, wheat, rice and soybean trade – some of China’s main staples and agricultural imports – in a handful of countries creates vulnerabilities for the country’s food security. By using the grain corridor to further diversify supply routes, China can reduce its reliance on these chokepoints amid increasing pressure on them while also ensuring a more secure food supply chain.
The new grain corridor faces several challenges and also has potential global implications. While Russian grain exports to China have doubled in the past five years, the volume remains relatively small compared to China’s overall imports.
China and Russia also have different approaches to agricultural collaboration. The Russian strategy is centred around its government and major companies, aiming to penetrate the Chinese market.
What is the trade, investment relationship between China and Russia?
Other barriers also stand in the way of Sino-Russian agricultural partnership, including Russian tariff policies, protective market strategies, a lack of adequate infrastructure and a sluggish customs clearance system. To overcome these hurdles and ensure the import-export process is efficient on both sides, China and Russia will have to work together to jointly set standards in each of these areas.
The grain corridor provides China with opportunities to strengthen agricultural trade, safeguard food security and further diversify supply routes while also mitigating risks associated with chokepoints in global trade.
Looking ahead, the expected expansion of grain and fertiliser exports from Russia and Central Asian countries to China and other Asian markets could challenge the long-standing dominance of the US and Australia, particularly in the regional wheat and barley markets, while also strengthening China’s role in global and regional food trade and security.
Dr Zhang Hongzhou is a research fellow with the China Programme at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore
Genevieve Donnellon-May is a researcher at Oxford Global Society, the Asia-Pacific analyst for The Red Line podcast and a 2023 Pacific Forum Young Leader