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by Stewart Truelsen

We’re entering what is becoming known as the Chinese Century, and that brings mixed news for American farmers and businesses. China is already the fourth largest market for U.S. agricultural exports, but not all American industry appreciates China the way farmers do.

William J. Jones, chairman of the U.S. Business and Industry Council, complained at a federal hearing about China’s "predatory" competition. He said much of America’s technology and management know-how has been going to China. Within 20 years China is expected to surpass the United States and become the world’s largest economy, according to Dr. Oded Shenkar, international business and management expert and author of the new book, "The Chinese Century."

China is now the dominant manufacturer and exporter in labor-intensive industries, and it’s moving quickly to establish dominance in technology-driven industries. It already builds half of the world’s microwave ovens, one-third of its television sets and air conditioners, a quarter of the washers and one-fifth of the refrigerators. Shenkar said these products are its fastest-growing exports. "Business reaction to the China challenge has been mixed so far. Many industries and firms have been caught unprepared, failing to realize the threat to their current business model or the sudden acceleration of structural shifts that in the past took decades to consummate," said Shenkar.

For American businesses and their workers, Shenkar’s book raises many concerns. But for U.S. agriculture the outlook is better. Shenkar noted that American job losses caused by a flood of Chinese imports will be less in states that have a strong agricultural base. China’s rapid economic growth is leading to a surge in agricultural imports. Its demand for raw materials is also causing commodity prices to rise. U.S. farmers took advantage of this over the past two years as agricultural exports to China doubled in value. Soybeans accounted for a big share of the increase and so did cotton for use in China’s manufacturing sector.

The U.S. government is pressuring China to let the value of its currency float upward, but in Shenkar’s opinion that won’t matter much. "Even under a radical scenario of a 30 to 40 percent increase in the value of the yuan, China’s labor-intensive products would continue to enjoy an enormous price advantage," he said.

China is becoming the factory to the world, but don’t expect it to become the food producer to the world, even if it tried. China’s economy grew 9.5 percent in 2004, but much of this growth was in manufacturing and construction. China’s agricultural output grew in value by only 6.3 percent. China is more likely to be the world’s largest food shopper, and that’s good news for American agriculture.