After microchips, what's the next big (small) thing on Beijing's self-reliance list?

Implications for Dupont, Monsanto, Syngenta, and genetic modification in agriculture

Highlights:

PART I: Seeds have been publicly identified by Beijing as strategically important, on a level similar to microchips;

PART II: Chinese mainstream view is one of dissatisaction and urgency with regard to its companies and capabilities in seeds, calling for govt intervention/support;

PART III: Could this, FINALLY, mean genetically modified crops would have their day in China?

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PART I

That Beijing has designated the tiny microchips as strategically important, and tries manufacturing them at home (WSJ) and shake off its chip dependence on the United States (NYT) is no longer news.

But there is something else that Beijing has also raised to strategic levels and believes having national security importance, AND it has yet to be internationally recognized.

As Pekingnology analyzed in the Comprehensive Review of the Central Economic Work Conference (CEWC) readout on Dec. 19, Beijing lists solving the problem of seeds and arable land as one of eight economic priorities for 2021.

The reference is unusually specific. In the past five years, the economic priorities outlined in CEWC readouts either did not give agriculture a dedicated paragraph, or used broad language when it did:

The 2019 readout (CHN) included six economic priorities but agriculture did NOT make a standalone priority;

The 2018 readout (CHN) included seven priorities and one of them is 扎实推进乡村振兴战略 Steadifastly promote the rural revitalization strategy;

The 2017 readout (CHN) included eight priorities and one of them is 实施乡村振兴战略 promote the rural revitalization strategy;

The 2016 readout (CHN) included four priorities and one of them is 深入推进农业供给侧结构性改革 Deepen the supply-side structural reform of agriculture;

The 2015 readout (CHN) included five priorities and agriculture did NOT make a standalone priority.

The part of the 2020 CEWC readout on seeds is:

五是解决好种子和耕地问题。保障粮食安全，关键在于落实藏粮于地、藏粮于技战略。要加强种质资源保护和利用，加强种子库建设。要尊重科学、严格监管，有序推进生物育种产业化应用。要开展种源“卡脖子”技术攻关，立志打一场种业翻身仗。

Fifth, (we shall) solve the problem of seeds and arable land. To ensure food security, the key lies in the implementation of the strategy of storing food in the land and storing food in technology. (We shall) strengthen the protection and use of germplasm resources, strengthen the building of seed banks. We shall respect science and conduct strict supervision, and orderly promote the industrialization of biological breeding applications. (We shall) carry out the “chokeneck” technology research in seeds, and be determined to fight a war to achieve a turnaround for the seed industry.

If that is still not a clear enough signal, here is a Xinhua analysis on this subject:

“解决好种子和耕地问题”引人注目。回顾党的十八大以来，在中央经济工作会议层面提到解决种子问题，还是首次。

"Solving the problem of seeds and arable land" is eye-catching. Since the 18th Party Congress (2012), it is the first time that solving the problems of seeds has been raised to the level of CEWC.

生物育种 Biological breeding is also now listed, alongside artificial intelligence, quantum technology and integrated circuits (the formal name of microchips in Chinese official documents) and others, as one of the eight frontier areas in which China will implement major national science and technology projects.

From the Communist Party of China Central Committee’s Proposals for the 14th Five Year Plan (2021-2025) and Long-Range Objectives Through the Year 2035 (CHN), adopted in late October, 2020:

瞄准人工智能、量子信息、集成电路、生命健康、脑科学、生物育种、空天科技、深地深海等前沿领域，实施一批具有前瞻性、战略性的国家重大科技项目。

Aiming at the frontier areas such as artificial intelligence, quantum information, integrated circuits, life and health, brain science, biological breeding, air and space technology, deep earth and deep sea, etc., to implement a number of major national science and technology projects with foresight and strategy.

Most recently, China held its 中央农村工作会议 Central Rural Work Conference on Dec. 28-29, where the readout (CHN) says

习近平指出……要坚持农业科技自立自强，加快推进农业关键核心技术攻关。

中共中央政治局委员、国务院副总理胡春华在总结讲话中表示……坚决打好种业翻身仗……

Xi Jinping pointed out ...... insist on self-reliance and self-improvement in agricultural science and technology , accelerate research and development of the key, core agricultural technology.

Hu Chunhua, member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, said in his concluding speech ...... fight a war to achieve a turnaround for the seed industry......

Now that the 打好种业翻身仗, which your Pekingnologist translates as fight a war to achieve a turnaround for the seed industry, has appeared twice in two central-level work conferences in one month, a bit of dissection of the term is in order.

The key Chinese characters are 翻身, which literally means turning one’s body around, suggesting Beijing believes the body of China’s seed industry is now in a highly uncomfortable, face-to-the-ground position.

In another comparison that shows how senior Chinese officials now view the importance of seeds, 韩文秀 Han Wenxiu, 中央财经委员会办公室分管日常工作的副主任 Executive Deputy Director of the General Office of the Central Financial and Economic Affairs Commission, put it this way:

种子是农业的“芯片”，我国种业有了很大的进步，但与国际先进水平还有很大的差距。

Seed is the “microchip” of agriculture. Our country’s seed industry has made great progress, but still falls far behind the advanced level in the international community.

Now, Why - why is Beijing putting so much emphasis on seeds?

***

PART II

The simplest answer can be found in the words of Xi Jinping, China’s top leader, during a trip to Hainan (CHN, Xinhua), where he visited 国家南繁科研育种基地 National Nanfan Scientific and Research Breeding Base (ENG), in April 2018:

十几亿人口要吃饭，这是我国最大的国情。良种在促进粮食增产方面具有十分关键的作用。要下决心把我国种业搞上去，抓紧培育具有自主知识产权的优良品种，从源头上保障国家粮食安全。

More than one billion people have to eat. That is the biggest national situation in China. Good seeds has a very critical role in promoting food production. We must be determined to get our country's seed industry up, and urgently cultivate excellent varieties with independent intellectual property rights, to protect national food security from the origin.

Beijing takes grain production extremely seriously. Xi, in his New Year speech on Thursday (ENG, Xinhua), Dec. 31, hailed the country's 17 consecutive years of bumper harvest in grain production, as a major accomplishment of the "extraordinary" 2020.

As Pekingnology noted in the Dec. 11 newsletter China announces another bumper harvest, there are no signs on the ground of a supply squeeze: but throughout Chinese history, food shortages appeared many times, leading to instability, uprisings, and regime changes. Many older Chinese citizens nowadays retain memories of being hungry in their childhood or youth.

Therefore, the concern for food supply, especially among the leadership, is rooted in the perspective of not only today but also history and politics. 

瞭望, Outlook Weekly, a magazine under Xinhua, published a report entitled 洋种子会否成为农业“芯片” Will foreign seeds become “microchips” in agriculture (CHN) in September 2020, with a paragraph

近年来，国际种业巨头控制我国种业市场来势凶猛。包括全球种业前十强在内的70多家国际种企进入中国，一大批洋种子渗透到田间地头。美国先锋公司20余个玉米品种已全覆盖我国粮食主产区东北、黄淮海地区。

In recent years, the international seed industry giants’ trend of entry to control China's seed market has been strong. Over 70 international seed companies, including the top ten globally, entered China, with a large number of foreign seeds penetrating the farmland. More than 20 varieties of corn from Pioneer (of the United States), have full coverage of China's major grain-producing areas in the Northeast and the Huang-Huai-Hai Plain

朱启臻 Zhu Qizhen, a professor in Renmin University, is quoted - as representing a consensus among experts interviewed for the article:

“没有优良的种子，不仅粮食安全保证不了，农业安全也可能被别人扼住要害。”

“农业安全很大程度上也表现为种子安全。一些重要品种如果过分依赖国外，一旦发生‘断种’，就会威胁国家农业安全。”

"Without good seeds, not only food security is not guaranteed, agricultural security may also be strangled by others."

"Agricultural security is also largely expressed as seed security. If some important varieties rely excessively on foreign sources, once the seeds are embargoed, it will threaten the national agricultural security."

One caveat is the article, and another one appearing on Outlook Weekly in mid-December (CHN), both admit:

在我国的主要农作物中，水稻、小麦种子基本为国产品种，大豆种子国产化率也较高。玉米、马铃薯等种子部分依赖进口，不少蔬菜品种也依赖“洋种子”

In China's major crops, seeds of rice and wheat are basically domestic varieties, the nationalization rate of soybean seeds is also high. Corn, potatoes and other seeds partly depend on imports, many vegetable varieties also rely on "foreign seeds."

Citing《2019年中国种业发展报告》Development Report of China’s Seed Industry in 2019, the mid-December article on Outlook Weekly says

2018年我国进口农作物种子7200余万公斤，进口额4.75亿美元，其中蔬菜种子进口额2.28亿美元，来自近50个国家和地区。

In 2018, China imported more than 72 million kilograms of crop seeds, worth $475 million, including $228 million of vegetable seed imports from nearly 50 countries and regions.

China’s total imports in 2018 was $2.14 trillion. But whatever reasoning or rationale, the mainstream narrative has already been built, as the two articles cited above are very representative.

The two articles called for a number of policy moves to shore up China’s own seeds industry, including

1) stringent intellectual property rights protection because many small-scale seeds companies in China copy from one another and infringe on IPR, instead of doing original research;

2) government support to R&D in seeds, and incentivizing universities and research institutions - largely under the government - to work with companies in the market;

3) government-directed merging of smaller seeds companies, to compete with international titans;

4) collection and protection of domestic seed resources, as many local seeds are disappearing.

Some of the calls have apparently been heeded by Beijing - recapping the CEWC readout and the proposal for the 14th Five Year Plan here:

(We shall) strengthen the protection and use of germplasm resources, strengthen the building of seed banks. We shall respect science and conduct strict supervision, and orderly promote the industrialization of biological breeding applications. (We shall) carry out the “chokeneck” technology research in seeds,

implement a number of major national science and technology projects with foresight and strategy.

It would be interesting to see if more concrete policy moves would come, for example in the full 14th Five Year Plan, or any industry-specific or govt department-specific initiatives.

But one more thing deserves a deeper dive - the industrialization of biological breeding applications.

***

PART III

To be precise, the Chinese term 生物育种, literally translated as biological breeding, includes not just what is commonly known in English as genetic modification, but other breeding methods as well.

For example, the 杂交育种 cross breeding led by 袁隆平 Yuan Longping has long been credited for contributing enormously to China’s food production, and cross breeding is seen in China as one form of biological breeding.

But in recent years, biological breeding has become increasingly synonymous with breeding by genetic modification. That was a judgment call from your Pekingnologist after browsing numerous Chinese-language articles in recent years, but also refer to this from 张文 Zhang Wen, a mid-level official with China’s agriculture ministry on Dec. 29, as reported by Caixin, China’s premier financial news outlet

中国是世界第二大种业市场，但还不是种业强国，打好种业翻身仗，关键是要大力推进育种技术创新。当前以全基因组选择育种、转基因技术、基因编辑等为代表的生物育种技术已成为国际育种的前沿和核心。

China is the world's second largest seed market, but not yet a seed power. To fight a war to achieve a turnaround for the seed industry, the key is to vigorously promote breeding technology innovation. At present, the whole genome selection breeding, genetic modification, gene editing and other biological breeding technology have become the frontier and core of international breeding.

One of the potentially market-moving and internationally significant unknown is whether Beijing’s stated emphasis on seeds and in particular the industrialization of biological breeding applications NOW will lead to relaxations on genetically modified organisms (GMOs).

As in the U.S., the public discussion in China about GMOs is highly polarizing. On one side, there is a big and vocal group fiercely doubting and denouncing GMOs as fundamentally unsafe, often without scientific basis. Conspiracy theories that GMOs are a Western gene weapon to target the Chinese nation abound online from time to time, despite that the United States itself is the world’s largest grower of commercial GM crops and China has been importing GM soybeans for years.

(Full disclosure: having published Chinese-language reports including 更多诺奖得主力挺转基因 More Nobel laureates support GMOs and 专访：转基因科普力度亟待加大——访“挺转”诺奖得主理查德·罗伯茨 an interview with Sir Richard John Roberts, the 1993 Nobel laureate in Physiology or Medicine and a vocal advocate, your Pekingnologist is an on-the-record supporter of certified GMOs.)

On the other side, a small but dedicated group of scientists, researchers, companies, and journalists have been trying to shape public discussion on the issue towards a more scientific and reasonable fashion, with very limited success so far.

Regulators have so far treaded extremely carefully, saying scientific research is highly encouraged while not allowing the commercial growing of GM crops even after granting biosafety certificates to the same GM crops, to the frustration of scientists and companies that have poured time and money into research but can’t recoup the cost from the market.

As of now, the only GM crops approved for commercial cultivation in China are cotton and papaya (so yes we Chinese have indeed been directly eating GMOs!), and the approved imported GM varieties include soybeans, corn, rape, cotton, and sugar beets, but they can only be used as processing materials and are not allowed to be grown in the farmland.

After a hiatus of ten years, China at the end of 2019 granted biosecurity certificates to two corn varieties and one soybean variety (CHN, Caixin). But judging from history, they are still a long way from commercialization thanks to the prolonged and vague regulatory process.

However, the recent emphasis on seeds and in particular biological breeding have renewed hopes for China’s advocates for GMOs. Some are already jumping on it, according to the Caixin report. Zhang, the mid-level agriculture official, told an unofficial forum hosting journalists on Dec. 29:

发达国家在加强生物育种技术创新、加大新品种研发力度上不断加码积极布局，抢占国际市场先机，生物育种技术已经成为世界上许多国家抢占科技制高点增强国际竞争力的战略重点。

Developed countries have deployed resources and taken the initiative in the international market by strengthening biological breeding technology innovation and enhancing the R&D in new varieties. Biological breeding technology has become a strategic focus of many countries around the world to seize the high ground of science and technology to enhance international competitiveness.

In other words, China must catch up quickly, lest it wants to fall behind.

That Caixin report also says, as background, that

2020年12月召开的中央经济工作会议确定，2021年要解决好种子和耕地问题。要尊重科学、严格监管，有序推进生物育种产业化应用。这被社会普遍认为是转基因农作物将要放开的一大信号。

The Central Economic Work Conference held in December 2020 determined that the problems in seed and arable land should be resolved in 2021. We shall respect science, regulate strictly, and promote the industrial/commercial application of biological breeding in an orderly manner. This is widely regarded by the society as a major signal that genetically modified crops will be liberalized.

Your Pekingnologist not so sure of the widely regarded by the society part, as the stubborn conservatives apparently do not have a habit of staying up-to-date. If history is any guide, as the Caixin report itself pointed out:

国务院于2006年发布的《国家中长期科学和技术发展规划纲要（2006-2020年）》有16个重大专项，转基因生物新品种培育名列其中。国务院于2016年下发的《“十三五”国家科技创新规划》细化了转基因重大专项的内容，包括推进新型抗虫棉、抗虫玉米、抗除草剂大豆等重大产品产业化。然而，种业和生物育种界普遍认为，到2020年底，国产玉米和大豆转基因产品仍然停留在获得农业转基因生物安全证书的阶段，转基因产业化并未得到实质性推进。

The National Medium and Long-Term Science and Technology Development Plan (2006-2020) issued by the State Council in 2006 has 16 major special projects, among which breeding new varieties of GMOs (genetically modified organisms) is listed. The National Science and Technology Innovation Plan for the 13th Five-Year Plan, issued by the State Council in 2016, detailed the contents of the major special projects for genetic modification, including promoting the industrialization of major products such as new insect-resistant cotton, insect-resistant corn, and herbicide-resistant soybeans. However, the seed industry and the biological breeding community generally believe that by the end of 2020, domestic corn and soybean GMOs remained at the stage of having obtained biosecurity certificates, and industrialization has yet to take off.

But at least China International Capital Corporation, a leading Chinese investment bank, is bullish, writing in a Dec. 30 research note, albeit in the professionally reticent fashion:

我们认为……国内育种技术以常规杂交为主，我们判断包括转基因育种在内的生物育种技术仍有长足发展机会，且当前国内3例玉米种子已经获转基因生物安全证书，若未来玉米转基因制种商业化落地，或有效拉升玉米单产，且玉米制种市场也将因此扩容；

We believe that…(China’s) Domestic breeding technology is mainly conventional hybrid. We judge that biological breeding technology, including genetically modified breeding, has long-running development opportunities. Besides, three corn varieties have obtained biosecurity certificates as GMOs. If the commercialization of genetically modified corn seeds can be implemented in the future, it may effectively boost corn yields and expand the corn seed market.

So, we shall see.

***

On the last note, your Pekingnologist would like to make a small observation: the “framing” or “selling” of public policy is always fascinating. If the old framing/narrative doesn’t work, shrewd professionals should try shaping the public discourse towards current, widely-agreed paramount policy priorities.

In the case of GMOs, the pro arguments has largely been: GMOs are safe; the science behind GMOs is solid; GMOs are helpful in reducing pesticides, raising output; etc.

Apparently, that old framing/narrative hasn’t worked well so far. But now it has a perfect chance to link with ensuring food supply (hence security!) and the technology competition between China and others, a whole different level.

***

Sometime in the last decade, your Pekingnologist came across a spectacular big read on The New York Times and now feels obligated to recommend it: A Lonely Quest for Facts on Genetically Modified Crops, by Amy Harmon, a deserving winner of Pulizter.

Thank you for reading this lengthy newsletter sent on the first day of the year 2021. Here is a sincere wish to all of you for an entirely different year from the last one.

Penned by Zichen Wang, founder of Pekingnology, a personal newsletter that does NOT represent the views of anybody else.

Errors may well exist, so suggestions for corrections and feedback are welcome - feel free to reply or send an email to zichenwanghere@gmail.com .