China 'to rent five percent of Ukraine'
Comment of the Day

September 26 2013

Commentary by David Fuller

China 'to rent five percent of Ukraine'

Here is the opening for this interesting report from The UK Telegraph's Diplomatic Correspondent
Ukraine has agreed a deal with a Chinese firm to lease five per cent of its land to feed China's burgeoning and increasingly demanding population, it has been reported.

It would be the biggest so called "land grab" agreement, where one country leases or sells land to another, in a trend that has been compared to the 19th century "scramble for Africa", but which could now spread to the vast and fertile plains of eastern Europe.

Under the 50-year plan, China would eventually control three million hectares, an area equivalent to Belgium or Massachusetts, which represents nine per cent of Ukraine's arable land. Initially 100,000 hectares would be leased.

The farmland in the eastern Dnipropetrovsk region would be cultivated principally for growing crops and raising pigs. The produce will be sold at preferential prices to Chinese state-owned conglomerates, said the Xinjiang Production and Construction Corp (XPCC), a quasi-military organisation also known as Bingtuan.

XPCC said on Tuesday that it had signed the £1.7 billion agreement in June with KSG Agro, Ukraine's leading agricultural company. KSG Agro however denied reports that it had sold land to the Chinese, saying it had only reached agreement for the Chinese to modernise 3,000 hectares and "may in the future gradually expand to cover more areas".

Any sort of "land-grab" deal can be highly sensitive politically. Madagascar was forced to scrap a plan to lease 1.2 million hectares to South Korea in 2009 after angry protests against "neo-colonialism". The Philippines has also blocked a China investment deal.

David Fuller's view Some will regard this as either a smart move or a desperate move. It is certainly an important insurance policy for a country which is not blessed with abundant arable land.

Food shortages have plagued China's history. Modern farming has reduced this risk but it is still regarded as the main threat to social stability by authoritative governments. Additionally, China has problems of drought, pollution and desertification, which are a threat to food supplies in an otherwise increasingly wealthy country with a rapidly growing middle class.

How this will play out in the Ukraine is another matter. I think it is very likely to result in another neo-colonialism backlash, well before China's rental of farmland in the Ukraine approaches five percent

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