China eats about 20 percent of the world’s food, reasonably expected for its 1.3 billion people. But the country only has nine percent of the world’s farmland.
For decades, the disparity was tolerable. China found ways to maximize its domestic food supply with its agrarian society. Now as China’s population continues to rise, fueled by rapid industrialization, the country is running into a wall. Numbers like that simply aren’t sustainable.
It’s a common reality faced by industrializing countries. At a certain point in the development process, nations face a perfect economic storm. Population increases, which fuels consumer demand. Housing more people means building homes where crops might normally grow. And environmental changes tend to limit the food output. South Korea, Egypt and the United Arab Emirates have all been in that position over the past five years. They could use more farmers, but what they really need is more land.
What’s the solution? In short, to buy more land—and to buy it from countries that either don’t need it, or could use the money instead. In 2008, UAE brought 324 hectares (1.25 square miles) of land in Pakistan. A year later, South Korea bought nearly twice that amount in Sudan. This week, China announced the biggest land lease ever: 3 million hectares (11,500 square miles) of Ukrainian land. Or put more simply: 1/20th of all Ukraine.
Deals like this aren’t a win-win. Land is inherently zero-sum, so terrain that China is harvesting in the Ukraine won’t be used to feed the future appetite of Ukrainian people.
But the Eastern European country doesn’t entirely lose, either. The deal will funnel $2.6 billion into Ukraine annually for the next 50 years. China will also send seeds and fertilizer, as well as build some vital infrastructure in Crimea, an autonomous part of Ukraine.
Still, it seems to raise the prospect of a new type of colonialism, where wealthy countries extract resources from poorer ones all under the guise of an economic transfer. According to a study in January, between 0.75 and 1.75 percent of the world’s farmland has been transferred from locals to foreign investors. Those aren’t just transactional relationships. Over the next 50 years (the length of the China-Ukraine agreement) the relationship may play into policy matters, too—when, for example, China tries to build support for a new trade policy or against a military action.
Countries conduct economic transactions everyday, perhaps none more than the U.S., which is one of China’s largest debtors. But Ukraine may be the biggest case study of what will happen when a creditor moves from the financial ether of computers into a country’s literal backyard.