China Turns to Romania for Meat Supplies

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Dec. 3 – While all eyes have been on British Prime Minister David Cameron and his entourage in Beijing this week, a much subtler yet nonetheless far reaching agreement was being penned in Bucharest. While many in the British delegation have been sold on theories of mass Chinese investment in the West, it is to Eastern Europe that China is looking for bargains. Chinese Premier Li Keqiang has just signed a deal with Romania to import 500,000 cattle and 3 million pigs from the country over the next three years – a huge number of animals, and reminiscent of China’s recent agricultural deal with Ukraine.

Further deals may be in the offing as Premier Li was reported to have told his counterpart Victor Ponta “We can buy all you deliver.” Analysts are suggesting that China is also looking to import sheep and other food produce.

China’s need is very real. As its domestic consumption increases, so does the transition from a largely vegetarian diet to one including more meat products. In their 2013 Agricultural Outlook, the OECD and the UN both concluded that meat demand in China would rise in the next 10 years, interestingly roughly in line with the growth curve of sales of household refrigerators.

The deal with China has raised some eyebrows – the number of cattle currently in Romania is estimated at 1.5 million, with the China deal taking a third of that current stock. This means that opportunities exist for Romanian farmers to use EU funds and potentially establish joint ventures in Romania with Chinese agricultural investors, exactly the sort of deals that David Cameron would like to see in the UK – Chinese investing in Great Britain.

“I get asked a lot if I can bring Chinese investors to the West,” says Chris Devonshire-Ellis of Dezan Shira & Associates. “My answer is ‘probably not.’ The massive commodity assets purchasing angle aside, China is looking to secure other supplies – such as agriculture – and countries like the UK and the United States are just too expensive. In terms of Chinese investment we see this directed more at Asia than any particular desire to expand into the EU or the United States and we feel that many Western businessmen expecting Chinese money to roll up on their shores may well be disappointed. It is a competitive market out there and the likes of Romania and Ukraine are simply offering far better economic deals than is possible in Western Europe. A far better strategy for the business people on David Cameron’s trip would be to deal with China at an arm’s length reach and work out where they are buying. Then use EU subsidies to help invest in and upgrade Eastern European technologies in selling better quality to China.”

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