Will political and public opposition to genetically modified food stop China’s market from developing?

It’s the Cold War again, only this time the caches are filling with grains, not missiles, and battles are mapped out on wet rice paddies instead of dry plains. At least that’s how People’s Liberation Army Major-General Peng Guangqian seems to view the fight between genetically modified crops and traditional farming techniques in China.

From Peng’s point of view, the West’s “ultimate battle strategy” is to drive up the cost of seeds and grain by making China utterly dependent on its patented versions of genetically modified (GM) seeds, or seeds that have been genetically engineered to include genetic material from other organisms that it would otherwise not have encountered in nature.

Until August, when the high ranking military man railed against GM food in an editorial in state-run newspaper The Global Times, the Chinese government had maintained a united front on genetic technology and bioengineering for nearly 30 years. During that time, China spent more in GM and biotechnology research than any other country, outlaying $3 billion in 2008 for a single project alone.

“Since the founding of New China, the facts have proven that no enemy can conquer us by force,” General Peng proclaimed. “However, these kinds of subtle and underhanded biological weapons are likely to make us lose our vigilance. GM crops could become just such weapons, and the consequences could be greater than those of the Opium War.”

Fitting Peng’s article into the narrative of China’s agricultural development over the past few decades is not easy. The modernization of agricultural technology has been a key stated aim of many Chinese leaders such as the late Deng Xiaoping and has featured in many of China’s policy plans. In 1986, the government launched what it called the High-Tech Industry Development Plan, which cited bioengineering as a key area of focus.

GM development has garnered support in consecutive five-year economic plans between 1991 and 2005. So from the outside, support for GM at the top level of the government seemed undivided, even a few years ago, given the rigor of the programs delving into GM research, China looked like it was on the path to becoming a major GM food producer.

“We always thought that China would move boldly into GM food crops,” says Scott Rozelle, an Agriculture Professor at Yale and a former researcher at the Chinese Academy of Sciences. “Obviously we missed that one. I don’t see it happening anytime soon.”

The pessimism stems not just from the PLA’s anti-GM statement, which touched on everything from economic objections to safety hazards. Years of delayed approval on experimental crops sitting in Chinese laboratories are a clearer indication that China’s GM program is facing significant opposition that goes far beyond technological glitches. Amongst other things, China’s leaders are facing a public increasingly vocal in opposition to GM food on safety grounds, which is no doubt one reason why regulators are dragging their feet with approvals.

Meanwhile, companies are waiting. The area sown with GM products in China in 2012 rose by 3% to about 4 million hectares in 2012, according to a report from the International Service for the Acquisition of Agri-Biotech Applications (ISAAA).

And firms like Origin Agritech, a Beijing-based bioengineering company, are poised to take advantage of what they see as massive commercial potential in the country, which produces 20% of the world’s food. Desertification also teases companies that have designed drought-resistant seeds and are salivating at the chance to exploit vast areas of traditionally non-arable land.

The result is a multitude of organizations in the research and experimentation area of GM product development, waiting for a political breakthrough.

Not your Father’s Papaya

There are a few exceptions to the GM ban. Chinese diners would mostly be surprised to learn that the chunks of papaya floating in their sago puddings may be from a homegrown genetically modified crop. Papaya is one of the few GM products, along with tomatoes and sweet peppers, approved by the government to be commercially produced and consumed domestically.

Most of the papayas that Chinese eat today are not GM variants, as the amount cultivated is only 6,000 hectares according to the ISAAA. But the journey of genetically modified papaya in China is illustrative of the slow march of GM food toward China’s dinner plates.

Why engineer papaya, or indeed many others plants? A genetically modified organism is one that has had its genes changed with the hope of improving it—at least that’s the philosophy. For example, scientists can add genetic material to a plant in order to make it resistant to some pests or herbicides, or remove a gene that makes it susceptible to a virus. Crops can be designed to withstand drought or even yield more nutrient-rich harvests.

In the late 1980s, The Los Angeles Times told the story of Steve Lindow, now Monan American pathologist and professor in California, and his discovery of a mutantstrain of bacterium in 1977 which lacked a particular protein that was fundamental in ice-formation, in other words, the protein primarily responsible for the collection of frost on organisms in cold environments.

Lindow was able to isolate the mutant-strain of the bacterium he called P. syringae, and apply it to plants, thereby allowing them to resist frost. Under the initial commercial name of Frostban, the substance went on to be developed and field tested in 1987 on a crop of frost-resistant strawberries, with successful results, becoming the first GMO to be released in the environment. The test drew the ire of the public, ensuing vigilant protests and lawsuits opposing the use of Frostban, derailing the product’s commercial progress.

Genetically modified tobacco was introduced in 1983, with China becoming the first country to commercially cultivate the genetically modified crop. In 1993, China approved GM tobacco and by 1995 it had grown 2.5 million hectares of the cash crop, according to the ISAAA. However, that approval was withdrawn in 1997, reportedly due to a lack of demand for GM tobacco in export markets.

Grey Harvest

Since then, GM crops have become the norm rather than the exception in countries like the US. The vast majority of US corn, wheat and rice are genetically engineered. That trend has swept into other regions like South America, where Brazil and Argentina produce and export large amounts of GM corn and soybeans. Farmers cultivated an estimated 170 million hectares of bioengineered crops globally in 2012, a year-on-year increase of 8%, according to the ISAAA. That’s a 100-fold increase from 1996. The forerunners in the industry have been US-based firms Monsanto and DuPont Pioneer.

While not considered a primary GM exploit, the genetically modified version of papaya has become so ubiquitous in global markets that imports during the past 15 years slowly seeped into China under the nose of regulators. Huang Dafang, the former Director of the Biotechnology Research Institute in Beijing, said tests he participated in showed the GM version of the fruit had already entered the market in large volumes.

“In the beginning, by no means were we paying attention to papaya,” Huang says. However, the large amount of the GM fruit coming into the country—coupled with the scant regulations at the time—led the government to approve it for cultivation and consumption simply because it was already here, he says.

GM imports didn’t stop with papaya. But the approval to cultivate on Chinese soil did. In the past four years, huge quantities of GM soy products have entered the China market, much of it in the form of edible oil. One anti-GM activist, Chen Yiwen, says up to 50 million tons of Monan santo-developed soybeans, which are resistant to powerful herbicides, are already found on Chinese store shelves, though he did not cite the source for this figure.

The Ministry of Agriculture in 2002 said all GM food must be labeled as such. Some bottles of soy oil indeed note that the product was made with genetically modified crops, although according to Chen, many bottles are not accurately labeled.

Like the papayas, the soy imports started without official approval only to be officially ushered in later. China likely started importing GM soybeans in 1997 as US yields of the crop increased, Chen says. It was at this time that GM beans slowly infiltrated supply chains that were already in place. The product wasn’t formally approved by Beijing until 2004, by which time GM soybeans were commonplace in shipments from the US. For many of the imported GM crops such as soybean, corn, rapeseed and canola, the government has held off on approving cultivation at home. At present, the only commercial GM crop that is grown in China at any scale of significance is cotton.

Standstill

Industry watchers are puzzled by the delays. Beijing has outspent all other countries on research into genetic modification, genomics and bioengineering, according to Rozelle. Several products are ready for commercialization, Huang says. Yet policymakers continue to shirk the final step: approving cultivation and consumption of GM foods.

“It’s a mystery,” Rozelle says over the phone from Beijing. “How do they spend more money than any other country in the world on public biotech research but they don’t extend it?”

In theory, China has good reason to put GM crops into practice as soon as possible. Arable land is shrinking due to desertification and has approached what Huang calls the “red line”, or around 0.087 hectares of arable land per capita. That’s 40% lower than the world average. China feeds 20% of the world’s population on 7% of the world’s arable land.

Harkening back to the mindset of Deng Xiaoping in the 1980s, Huang says only advances in technology, such as GM products that supposedly increase yields, will secure China’s grain supply for generations to come. Some of the products are also designed to carry more minerals, something that could help alleviate the hunger of some 12.7 million children that UNICEF estimates suffer from malnutrition in China.

Aside from keeping Chinese well fed, GM food could also earn the country some cash. Researchers in China have focused on several niche products such as flowers, peanuts and fish, according to a paper from the US Department of Agriculture. The paper noted that this could give China a competitive edge in smaller markets at home and in other developing countries.

Securing the Rice Bowl

Ironically, while food security is the main argument for GM foods in China, it’s also the fodder for the fight against it. This is exactly the note that Major-General Peng sounded in his August rant.

If China were to approve the cultivation of new GM crops today, the patents for many of the seeds used in growing those crops wouldn’t be held by China. Peng’s rhetoric may sound better suited for before the fall of the Soviet Union at the end of the Cold War, but trepidation over a level of foreign control over China’s staple crops isn’t all military rabblerousing.

If Chinese farmers became dependent on foreign-produced seeds for their crop, this could put the country’s rice basket at the whim of US and European companies. The global commercial seeds market is consolidated with the top four companies accounting for over 50% of the total share in 2011 according to a 2012 Transparency Market Research report on the global GMO seed market. Monsanto was the largest company in the market and accounted for a share of over 20% in 2011, followed by DuPont Pioneer and Syngenta.

“Diversity and flexibility are critically important in a food system. If a large variety of seeds is available from a large number of companies, then you still have options if there is a shock to the system or you need to change,” says Jim Harkness, director of the Washington DC-based Institute for Agriculture and Trade Policy. “GMOs have been associated with a very small number of companies that have forced out or bought up their competitors until farmers can only buy from those companies.”

Sticky Residue

The opposition to GM foods isn’t all political and economical.

Globally, there is considerable resistance to GM products due to safety concerns. Chen Yiwen, an Advisor for the Committee on Natural Disaster at China’s Geophysics Society, has led a loosely organized campaign since 2009 to try and keep GM foods out of public schools. Sentiment against GM rice flared in August 2012 after a US-China research team was found testing a product on primary school students in Hunan province without the consent of parents, state media reported. Parents expressed worry over the lasting effect of the beta carotene-enriched rice.

The fears are understandable. Many studies have raised concerns over the safety of genetically modified products around the world. China has conducted several of its own. One performed at the Northeastern Agricultural University showed that genes from Monsantoʼs Roundup Ready (Roundup is a Monsanto herbicide) entered the surrounding soil, disrupting the balance of bacteria. The effects on human health are unknown. International research to date has been inconclusive about the safety of crops grown in Roundup-soaked soil.

Still, Roundup Ready crops have caused much distress for the health conscious. As the name implies, ample amounts of the herbicide can be sprayed on the crops without hurting the plant, while killing off any other harmful weeds. Chen says that the active ingredient in Roundup, glyphosate, could be found in actual foodstuffs, heightening the possibility that consumers could end up ingesting the herbicidal ingredient.

Public opinion is highly divided on the use of GM products in China. Netizens often rant on the dangers posed by GM crops and Monsanto’s dominance in the field in particular. But others are less concerned with the proliferation of genetically engineered food.

“The government supports [GM]. It’s a necessary development not just for China but for the world,” says a retired professor, surnamed Yao, at a restaurant in downtown Shanghai. “I’m not afraid to eat it.”

Seeding the Market

Despite the worries surrounding Roundup Ready products, entry into the China market is extremely important for brands such as Monsanto and DuPont Pioneer. In 2013, both companies saw some developments that showed China was moving closer to overall acceptance of GM products.

In June, Chinese officials approved Roundup Ready soybeans for import, along with a German-developed version of the crop. In August, it cleared shipments of GM corn from Argentina and Brazil, a sign that GM products were gaining traction. Monsanto stocks rose on the announcements.

For a foreign company to plant its GM seeds on the mainland, the Ministry of Agriculture requires it to establish joint ventures. Monsanto entered a joint venture with SinoChem in 2001. Since then it has started several other JVs and has primarily developed different types of seeds that it hopes will eventually be planted in China. DuPont runs several joint ventures with Chinese firms in developing similar products. Its seed company, Pioneer Hi-Bred International, signed a joint venture with one of China’s largest seed distributors, Dunhuang Seed, in 2011.

Now these major international firms are waiting to move forward on the products they have developed in China as domestic research continues to grow.

China’s agriculture sector is, by most measures, extremely fragmented. The vast majority of crop production occurs on small, family-run farms as opposed to industrial-scale plantations prevalent in most developed countries. If GM products are approved by the central government, several of the country’s massive seed companies, such as state-owned China National Seed Group and Biocentury Transgene, will look to sell to these numerous small-scale farms.

While the seeds might be ready, ownership is still a muddy issue. China National Seed, like Monsanto, also partners with Sinochem and has co-developed seeds with the Chinese company. Before cultivation, the companies must sort out who owns the rights to specific seeds.

Some Chinese companies are determined to innovate away from foreign technology. Origin Agritech, a Nasdaq-listed firm, has developed a GM product called phytase corn, mainly for use as pig feed. Origin owns the patent on the corn variety but DuPont Pioneer owns the patent on the technology used to modify the genes, Huang notes. Origin must pay Du-Pont royalties on the technology to make the seeds, but not on the seeds themselves, showing at least some independence from Western-developed technology. Origin is still waiting for commercial approval. “We are getting more and more patents in this area,” Huang says. “This shows that local companies will compete with the US some day.”

Some 80 Chinese organizations, which include companies, research labs and universities, are working on GM products that could one day compete with bigger foreign firms.

Zhejiang Wuwangnong Seedling and its long-term partnerships with the China National Rice Research Institute and Zhejiang University is one Chinese company that has drawn on domestic research to move closer toward commercialization. It has produced a long list of GM foods including rice, cotton, pumpkin and beans, but, like its cohorts, is waiting on government approval to cultivate.

Later, Rather than Sooner

Companies, domestic and foreign, will continue to wait for the market to open. China has spent far too much time and money to abandon genetically modified crops. But as time passes without approvals for the new products, industry watchers are increasingly pessimistic. Rozelle at Yale sees no date in sight.

The recent controversy at the highest reaches of China’s leadership hasn’t brightened the outlook. Instead, opposition from the Chinese military has only shown that the country’s position on GM products is not as united as previously thought. Huang says the genetic modification debate has been taken up by political factions as a tool to hurt rivals.

Still, from the perspective of scientists who have worked on GM technology for more than a decade, like Huang, the obstacles have little to do with the issues of food security and consumer safety.

“I’m a scientist. From a scientific angle, commercialization could start tomorrow,” he says. “Politically, there are many more things to think about. I believe that [GM] will be approved sooner or later. That’s because without new technology, agriculture in China will not develop.”