- The Amazon rainforest has been seized by massive fires as Brazilian farmers cut down trees for farmland.
- China’s desire for more soybeans and agricultural products is helping drive the need for more farmland in Brazil.
- China’s need for more agricultural products form non-US countries is partly being driven by the US-China trade war.
- Sal Gilbertie is the president, CEO, chief investment officer, and founder of Teucrium Trading.
- Visit Business Insider’s homepage for more stories.
The Amazon rainforest is burning, and it’s sparking outrage around the world. One reason for this growing ecological tragedy may be the escalating US-China trade war.
Brazilian President Jair Bolsonaro has been accused of not acting forcefully enough to fight the fires because he is said to be beholden to Brazilian farmers and ranchers eager for new hectares of income-producing arable land.
US President Donald Trump has also been linked to the Amazon fires, thanks to his resolve in the US-China trade war. It is reasonable to assume that China would still be buying soybeans from the US if Trump hadn’t started the trade war in the first place.
But this narrow viewpoint risks underestimating the dangers that China’s long-term plans for securing a global food-supply chain pose to places like the Amazon. When viewed strategically, it becomes clear that the trade war is simply providing China’s Communist Party the cover it needs to secure the future supply chains it will require as the preeminent global superpower.
The trade war has accelerated China’s food push, endangering the Amazon
Recall that the trade war began over theft, espionage, and strong-armed commercial practices on behalf of the Chinese. Practices that include forcing intellectual-property transfers, intentional patent infringement, embedding commercial and military spyware in technology exports, dumping of government subsidized goods, and a host of other unscrupulous tactics. These are the things at the heart of the trade war and why a majority of Americans support confronting China on economic issues.
The heart of China’s trade war strategy has been to target US farmers in order to politically pressure what was Trump’s strongest base of support in the 2018 election. By placing tariffs on American soybeans, Beijing has artificially priced the US out of the Chinese market.
Chinese importers are instead turning to Brazil for their soybeans, which has in turn driven up demand for farmland. This desire for more planting area has helped fuel the fires burning thousands of acres of Amazon rainforest.
China has no problem with the burning of the Amazon, nor does China care to reign in its economy for the sake of appeasing those concerned about the environment and climate change.
The Chinese know that Brazil has far more land available for new farmland than perhaps any other country on earth; that land just happens to be covered by rainforest. In Nero-esque fashion, China is gleefully watching the rainforest burn with eyes toward a new Brazil, one with more soybeans for China.
The trade war is also enabling the Chinese to advance its plans of securing non-US-sourced food supplies long into the future by conveniently providing both cover and opportunity to create a more globally diversified food supply for its people.
China’s push for Brazilian land goes beyond the trade war
The leadership in China is not too old to remember the Great Famine of 1959-61, when tens of millions of Chinese starved to death, primarily as a result of government policies preventing private ownership of land and businesses. China has come a long way since then, partially embracing free-market policies that have helped transform the country into an economic powerhouse. But not even its rapidly growing economy can help China domestically produce all the food it requires.
Despite recent efforts to improve its internal supplies, there is not enough available farmland in China to grow the food required to sustain its massive population. Chinese central planners have a very long-term plan to solve this issue, which they can implement with ruthless efficiency because of China’s one-party totalitarian political system.
Under President Xi Jinping, China has embarked on an investment plan of epic proportions to achieve its long-term food-security goals.
Relatively small transactions like the purchase of US-based Smithfield foods to secure both supplies of pork and advanced agricultural technologies, and direct investments in agricultural land in South America and Equatorial Africa, are examples of China’s food-security plan unfolding before our eyes.
Of course the crown jewel of its plan is the Belt and Road Initiative, which involves more than 60 countries and will extend China’s economic and military reach across the globe, creating a super supply chain able to support China’s needs for as long as earth’s resources last.
The trade war is providing convenient cover for China to advance its long-term plans of securing food supplies long into the future. Those plans include decreasing Chinese reliance on single-source suppliers, such as US soybean farmers.
China is adroitly exploiting a double opportunity: It is undermining support for Trump by imposing tariffs on US soybeans hurting the farm belt (Trump’s political base), while perhaps weakening the US resolve to win the overall trade war. And it is cultivating new supply chains by turning to Brazil to fulfil its demand for soybeans.
By using the trade war as a cover to accelerate its plans in Brazil, China is exacerbating ecologic pressures in the Amazon jungle by motivating farmers to burn and clear more land, all fulfilling a plan that’s been in place long before the trade war began and will remain long after the trade war ends.