Fears in the West over the safety of genetically modified (GM) crops for human health and the environment have so far provoked little reaction in China.
Chinese officials are far more concerned about food scarcity. The government views GM crops as an important means of enabling it to continue feeding one-fifth of the world's population on seven percent of the world's agricultural land. Famines, such as the one that killed as many as 40m Chinese in the early 1960s, are still within living memory and tend to overshadow the complex and multifaceted arguments used in the West against GM crops.
Beijing's receptive attitude to GM crops is also profoundly influenced by the fact that China itself has a stake in crop biotechnology – having released up to 13 categories of genetically altered crops since 1986, according to an article in Far Eastern Economic Review. China's development of GM crops such as cotton, tobacco, tomatoes, potatoes, rice, peppers, sugar beet and oilseed rape has gone 'largely unchallenged by the kind of environmental and consumer group campaigning seen in Europe and the US.
Chen Zhangliang, vice president of Beijing University and director of the National Laboratory of Protein Engineering and Plant Genetic Engineering (PEPGE), estimates that 40 percent of China's major crops will be genetically engineered within 15 years.
Majority stakes banned
While China has established a regulatory regime covering GM crops, there are political fears that foreign agrochemical and seed companies could one day dominate China's food production system. These fears are reflected in recent regulations that prohibit foreign firms from taking a majority stake in seed joint ventures. Despite this restriction, the prospect of providing the seed that feeds China's huge population is an irresistible draw for foreign biotech firms such as Monsanto, Pioneer Hi-Bred and Novartis.
However, there are other hurdles facing foreign investors. On top of seed testing regulations, there is widespread anxiety that the investment of technology required for producing high value-added GM seeds will not be recouped easily.
Fundamentally the biggest problem is the poverty of China's farmers, which throws into doubt the commercial viability of selling GM seeds in China. This lies at the root of another problem for foreign firms – the fear that the intellectual property associated with patented seeds cannot be protected. Finally there is the ever-present problem of distribution, especially the difficulty of channelling revenues through state-owned provincial seed companies.
Among foreign companies seeking to introduce genetically modified crops into China, the US-based agricultural conglomerate Monsanto has taken a lead. In 1996 Monsanto, along with fellow US company Delta Pine & Land, took a 67 percent stake in a US$4.2m cottonseed joint venture in Shijiazhuang, Hebei province. The venture, which also involves investment from Hebei Provincial Seed Company, received approval to sell cottonseed in Hebei province in late 1997. In the following year, the Hebei Cotton Bureau purchased the entire crop of GM cotton.
Pilot planting of the firm's genetically modified `bollguard' cotton seed carried out over three years produced a 20 percent increase in yield over ordinary local seeds, claims Ji Junqun, director of the Hebei Provincial Seed Administration Station. The seed sells for about Yn900 (US$108) per hectare (including a technology licence fee) bringing the company US$8.64m. The 80,000 hectares planted in 1998 were expected to yield up to 90,000 tonnes of cotton, accounting for 20 percent of the Hebei crop.
The cotton strain, which sells under the brand name of Bollguard, is designed to be resistant to cotton bollworm attacks – a destroyer of as much as 30 percent of China's cotton crop each year. Monsanto estimates that savings of as much as US$1.8bn could be made if its seeds were used in all of China's cotton fields.
Genetically modified crops are regulated by the Ministry of Agriculture's National Safety Management Committee for Agricultural Biogenetic Projects. The committee is in charge of implementing the ministry's ‘Measures for the Safety Management of Agricultural Biogenetic Projects' – regulations issued in 1996, updating 1993 administrative rules.
The regulations for GM cotton first require extensive laboratory tests. The second step is to monitor the effect on the environment and to make sure that the cotton oil can be used safely in crush feed, says Mr. Charles Martin, chief Mainland representative at Monsanto. These tests are carried out over a period of three years covering progressively wider areas. Currently Monsanto is conducting GM field tests in Shandong and Anhui provinces and the giant life sciences firm has recently established a second cottonseed joint venture in Anhui.
Monsanto also plans to test market GM wheat and corn seed in China, according to company sources. Trials of GM corn strains are now underway in Jilin, Liaoning, Shandong and Hebei provinces. The corn seeds have been genetically engineered by adding the gene of a bacterium called Bacillus thuringiensis (Bt). Protein from the Bt gene is damaging to cotton pests such as the Asia corn borer.
But commercial sales of Monsanto's corn seeds in China are not expected to begin for another two or three years. In the meantime Monsanto will have to contend with a new government regulation which bans foreign firms from taking majority stakes in seed production ventures. Globally, Monsanto is involved in developing GM maize, potatoes, tomatoes, soybean and oilseed rape.
Scientists employed by the ChineseAcademy of Agricultural Sciences have also been developing genetically modified cottonseeds. Two breeds of GM cottonseeds have been created after spending Yn40m (US$4.8m) on research and development.
Insect-resistant cotton was first developed in China in 1993 by a team working under Guo Sandui at the Beijing-based Biotechnology Research Centre (BRC), reported China Daily last July. By 1997 China's own insect-resistant cotton was being grown on 10,000 hectares of test sites in Shanxi, Hubei, Shandong, Anhui, Hebei, Xinjiang, Jiangsu and Henan provinces. Guo expects the test site area to be expanded to 80,000 hectares this year.
The 863 programme
This Bt cotton was developed as part of China's ‘863' programme. Biotechnology including research into genetically modified crops was one of the seven priority areas outlined in the China Hi-tech Research and Development Programme launched in March 1986. "In some senses the Chinese are our competitors in GM cotton, although we do carry out joint research in other areas," comments Monsanto's Martin.
The Beijing-based PEPGE laboratory currently has five GM crops in field testsincluding rice, tobacco, tomatoes, peppers and sweet peppers. The laboratory's director Chen Zhangliang now expects the tobacco and tomatoes to be commercially distributed by the end of this year.
The BRC's Laboratory of Plant Biotechnology has also developed virus-resistant varieties of tobacco, chilli pepper, tomato, potato, oilseed rape and rice. GM tobacco varieties are a particular speciality and more than 40,000 hectares of tobacco resistant to ‘TMV' and ‘CMV' viruses have been planted.
Another form of GM tobacco is designed to make the crop resistant to bacterial wilt disease. A third trait developed by the laboratory is the production of salt-tolerant tobacco – a modification which has also been applied to maize.
Work on GM rice is also underway, reported Nature in 1996. Researchers inserted genes from a locally-grown weed relative of cultivated rice into high-yield rice varieties in 1993. Fifteen percent of the resulting hybrid yielded more tonnes per hectare than China's top-performing rice strain. Weed-killer resistant GM rice has also been developed by scientists from China's Institute of Rice, it was announced last July.
Hot and cold tomatoes
Tomatoes have been genetically altered to modify their ripening properties and make them more resistant to frost. In July 1997 China approved its first genetically modified tomato plant for commercial distribution. The hybrid, which was created by the horticulture department of Central China University of Agriculture in Wuhan, can be stored at temperatures of between 20 and 34 for up to 90 days – nearly 10 times longer than ordinary tomatoes.
Beijing's PEPGE laboratory was also said to be working on genetically modified tomatoes and sweet peppers. The strain with modified ripening properties was said to involve the transplant of human protein genes, according to the magazine Popular Science in 1996. Firms such as Monsanto, Calgene, Zeneca, Agritope and DNAP have already patented varieties of delayed-ripening tomatoes in the US.
In the cold north-eastern provinces the emphasis has been on making tomatoes resistant to frost. Last May Xinhua reported that researchers in Harbin, Heilongjiang province, had received approval for a tomato plant incorporating genes from a fish that lives in cold water. The GM tomato plant, it was claimed, could resist temperatures of for up to six hours – allowing it to survive a late frost. The seeds, which sell for Yn200,000 (US$25,000) per kilo, compared with Yn400-800 per kilo for ordinary tomato varieties, are also said to be cold-resistant, permitting earlier planting.
Fish gene splicing has also been used to introduce frost-resistant properties into sugar beet – an achievement hailed by Chinese scientists as a world first. Xinhua reported last April that scientists in Inner Mongolia had succeeded hi creating a new strain of beet with seedlings able to withstand temperatures as low as -6.5. The new variety also enables sugar beet to be planted up to 15 days earlier, extending the harvest period by a similar duration.
Pioneer Hi-Bred, headquartered in Des Moines, Iowa, is introducing hybrid corn seed into China. In 1997 the firm invested
Yellow River carp
Transgenic animals are also being 1 developed in China. Zhu Zuoyan, director of the Institute of Hydro Biology in Wuhan, claims to have created a genetically modified Yellow River carp. Introducing growth hormones cloned from different fish species is said to have resulted in a doubling of fish body weight as well as an increase in its protein con-tent, Zhu believes the new fish may be commercialised as soon as 2000.
Meanwhile scientists at the Shanghai Research Institute of Genetics and Fudan University announced last year that China's first transgenic goat had produced milk containing a plasma thromboplastin component. Scientists hope that this milk will be useful in treating haemophilia.
US$700,000 in establishing a research centre in Tieling, Liaoning province. "We have had about 20 varieties of hybrid corn in government trials since 1994. None of them are genetically modified, but we do plan to intro-duce GM varieties in future," says China business development manager Sue Jarvoe.
Pioneer Hi-Bred is encouraged by the passing of the New Plant Variety Protection regulations in 1996 which it expects to be enshrined in a new seed law this year. "We are very glad about the law and hope by our participation and presence to positively influence the implementation of the law," adds Jarvoe.
The new Tieling centre will concentrate on evaluating the corn hybrid's performance in local growing conditions, with Pioneer Hi-Bred hoping to market its first products in China by 2001.
Building a seed network
Introducing genetically modified rice strains into China is a priority for Hoechst and its seeds business subsidiary, Hoechst Schering AgrEvo. "We at AgrEvo are trying to improve our genetically modified organism activities and improve our access to the distribution of seeds," says Mr. H. Merkelback of AgrEvo's Beijing office.
Its biggest problem, he believes, is the commercial viability of .GM crops. "You have to get access to the government because in many cases the seed price is controlled and the Chinese government would not normally allow foreign companies to take a majority stake in a seed business unless it is clearly a research-based project," he explains. "Even if you have a good trait, it is questionable whether you can get a short-term return."
Distribution in China is another issue."The major crops such as wheat, corn and oilseed rape are still dominated by provincial seed companies," says Merkelback. "Each province has different growing conditions and requires a different permit. When you have three or four provincial registrations, including a variety of different growing regions, then you can apply for nationwide registration."
Globally AgrEvo (particularly through its Plant Genetics Systems subsidiary) is developing genetically modified oilseed rape, maize, cotton, rice, vegetables, soybean and wheat. The genetic modifications are aimed at creating high-yield hybrids – varieties with resistance to insects and fungal diseases as well as strains tolerant to dosages of AgrEvo's broad-spectrum herbicide Liberty. AgrEvo was granted permission to carry out field tests of GM rice in Brazil last December.
Sunseed, part of AgrEvo's Nunhem Zaden group, already has a hybrid vegetable seed joint venture in China with the China National Seed Corporation, although the venture is not specifically dealing with genetically modified hybrids. Sunseed specialises in hybrid carrot and onion seeds and is also active in marketing tomato, watermelon and cucumber seeds.
Like AgrEvo, Novartis is developing its own genetically modified crops but it has also chosen to focus for the time being on non-GM vegetable seeds. Last November, the Swiss-based multinational set up a US$500,000 joint venture vegetable seed business with Shouguang Vegetable Seeds.
"The aim of the venture is to test and market vegetable and flower seeds and is not directly connected to genetically modified crops," says Mr Arthur Einsele, head of communications for the Novartis Seeds enterprise in Shandong. "The current JV partner only allows for distribution within Shandong province and other alliances would be required for nationwide distribution."
Novartis already has worldwide patents for a variety of insect pest-resistant GM crops such as Bt corn. The firm recently announced an investment of US$600m in plant genomics research with the development of new varieties taking place in research facilities in the US, the Netherlands, France, South Korea and Taiwan. Links between the new China venture and the research network are now being created.
UK-based Zeneca also has a long-term plan of introducing GM crops into China. It hopes to introduce GM strains of rice and wheat with enhanced yield, fungal control and quality traits through its Zeneca Plant Science unit – a subsidiary of Zeneca Agro Chemicals. "Although there are no crops in the ground, the Chinese government is proving very receptive in talks," says Zeneca Agro Chemicals spokesperson Stuart Shields. While Zeneca already has some sales and marketing teams in place in China, he believes that it will probably be five-to-ten years before seeds are commercially distributed in the country.
Meanwhile a variety of research linkages between China and the UK are underway. Britain's Biotechnology and Biological Research Council (BBSRC) funds some of these programmes. Bi-monthly scientific exchanges funded over the past five years have covered topics such as diseases of oilseed rape and the genetics of phosphate-efficient wheat. British and Swedish research institutes have been 'working since 1997 with the Zhejiang Agricultural Research Institute and the Wuhan-based Central China Agricultural University on an US$800,000 project to adapt GM oilseed rape to Chinese conditions. The BBSRC China visit in March 1999 focused on issues surrounding the measurement and evaluation of the biosafety of GM-crops.
While many of the genetically modified crops being introduced into China are ostensibly designed to reduce the need for fertiliser, most of the foreign firms involved are also manufacturers of agrochemicals. In many cases the new strains are designed to be marketed together with specific chemicals as part of a package.
Monsanto has been trying to set up a joint venture fertiliser plant in China since the 1980s, with its most recent plans centring on establishing a Roundup glyphosate herbicide facility. Roundup has long been Monsanto's best-selling product. However, with the US patent for Roundup due to run out in 2001, Monsanto is searching for ways to replace its lost income. Genetically modified Roundup-tolerant crops sold as part of a package with branded fertiliser could be one solution.
Despite recent co-operation, the relationship between Monsanto and China's Ministry of Chemical Industry may not always have been harmonious. Industry observers cited in China Agriculture Newsletter believe that Monsanto's frustration at rampant piracy of its patented fertiliser products led it into a predatory pricing war with Chinese fertiliser producers. The confrontation spilled out into the international arena and ended up with Monsanto filing an unsuccessful anti-dumping suit against Chinese producers in the Australian courts. For a time, believe some, there was even a secret Ministry of Chemical Industry ban on Chinese companies dealing with Monsanto.
Terminator gene controversy
Despite the expected passing of a new seed law this year, the protection of the intellectual property associated with GM crop varieties remains a concern for many foreign firms. An important development in this area was the patenting in March 1998 of ‘terminator gene' technology by Delta Pine & Land. This particular genetic trait could eventually lead to varieties containing an inbuilt mechanism that renders seeds infertile just before the plant reaches full maturity.
The technology, which could increase the reliance of farmers on seed companies by preventing ‘brown bagging' (the saving by farmers of seed for the next year's planting), is highly controversial. In January 1999 India moved to ban the introduction of terminator gene technology into the country, placing explicit prohibitions on Monsanto and Novartis.
Will China follow India's lead here? "This is an interesting question," says Einsele of Novartis. “The Indian government has placed a virtual moratorium on research in this area but there are no signs at present that the Chinese government will take a similar line."
While there is little consumer concern about genetically modified crops being voiced in China, the Hong Kong Consumer Council has recently lobbied the SAR government to introduce mandatory labelling of genetically engineered food. "Unless comprehensive labelling is adopted, consumers are prevented from exercising choice in relation to fundamental values when buying food," said a consumer council spokesperson.
The labelling of genetically modified food was discussed at a recent meeting on the Biosafety Protocol – a proposal which came out of the 1992 Rio de Janeiro earth summit. Interestingly, China was not among a group of five nations – the US, Canada, Australia, Argentina and Chile – which opposed the mandatory labelling of GM food.
Restrictions on the trade of genetically modified crops are already indirectly influencing the China market. In 1998, for example, China was expected to buy GM canola from Canada to make up for domestic shortfalls. Exporting to China is a particularly attractive option for the Canadians since the EU has not yet permitted imports of GM canola.
Growing demand for organic alternatives
A reaction to the increasing use of biotechnology in fanning is a growing demand among consumers in developed countries for organic food grown from natural strains and with minimal use of fertilisers. Some Chinese farmers are rejecting the use of high-technology in order to supply the growing demand for organic produce, especially in the Japanese market.
While it is not known exactly how much organic produce is grown in China, the China Green Food Development Centre estimates that 6.2m tonnes of produce was grown on 5.2m acres of organic or 'light-chemical' fields in 1997. The centre, set up in 1992 by the Ministry of Agriculture, has been actively promoting organic and low-chemical farming. It is also charged with establishing an organic certification system – Chinese organic farmers will have to conform to global certification standards due to be introduced next year.
Gonghe, a village of 17,000 people and two hours south of Nanjing by car, now has 20 percent of its 29 sq km of farmland certified as organic, reported Nikkei recently. The shift to organic techniques including crop rotation was prompted in 1996 by the enquiries of an organic produce firm based in eastern Japan. The Japanese firm bought the village's entire 110-tonne organic rice crop in 1998 and plans to purchase a substantial quantity of organic barley this year. The village also grows organic carrots, tea and plums and plans to expand the proportion of organic fields to 30 percent by 2004.
Kirin International, an affiliate of the Japanese brewer, has been developing organic suppliers in China since 1993. It now produces organic soybeans, tomatoes and rice on 570 hectares, mostly in Inner Mongolia. Sales in 1998 were expected to reach US$7m, with the company planning to expand its organic field acreage to 700 hectares this year. The China-sourced crops are frozen or processed for use in Japanese restaurants.
Nissho Iwai has also been sourcing organic products from China since the early 1990s. In 1998 it shipped about 500 tonnes of crops, including organic spinach from Shandong province. The firm expects this trade to increase to 10,000 tonnes, worth US$22m, by 2001.
The global picture
The US is by far the world's biggest grower of GM crops, accounting for more than 73 percent of the acreage grown in 1998, according to the International Service for the Acquisition of Agri-Biotech Applications (ISAAA). China is excluded from official
ISAAA estimates because of unreliable data, but a recent estimate that 250,000 acres of GM crops were grown in China in 1998 would make it the fifth-largest grower in the world.
The global crop biotechnology industry is dependent on just two engineered traits and two crops. More than 99 percent of the GM crop acreage is devoted to just two traits – herbicide and insect resistance. In 1998 herbicide-resistant crops were planted on nearly 50m acres, about 71 percent of the total, while Bt insect-resistant crops were planted on 19m acres or 28 percent. Less than one percent of the acreage was devoted to quality traits. In 1998 soybean and corn accounted for more than 80 percent of the GM crop acreage.
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