ChinaWatch: Colonel Tops Ronald

Food Fears Grow

China faces great pressure in securing its food supply in the next five years because of accelerating domestic demand, a senior official says.

Chen Xiaohua, a vice agricultural minister, says he expects China's consumption of grains to grow by 4 billion kilograms a year between 2011 and 2015.

Consumption of vegetable oil will grow by 800,000 tons a year over that period, while meat demand will rise by 1 million tons annually.

“Our country is facing great pressure in the supply of agricultural products,” the Shanghai Securities News quoted Chen as saying at an agricultural meeting.

To meet increasing demand, Chen says the government would try to boost food supply through policy measures including higher investment spending and subsidies for farming activities.

Beijing is wary of any strains to China's food supply because that could intensify already high consumer inflation, which ran at an annual pace of 4.6 percent in December, not far off from November's 28-month high of 5.1 percent.

Big City Blues

Authorities in southern China's Guangdong province deny reports of plans to unite nine towns to create the world's biggest city in the Pearl River delta, according to state media.

“The reports were totally false. There is no such plan,” Guo Yuewen, spokesman for the Communist party's provincial committee, was quoted as saying by the official China Daily.

Media had reported on a project to unite nine urban areas – including both Guangzhou and Shenzhen – into a megalopolis with a population of 42 million, according to the China Daily.

The Pearl River delta was one of the first Chinese regions to open up to foreign business in the 1980s and is now among its richest, a giant manufacturing hub that produces around 10 percent of the country's GDP.

Cash Crop Here

China has purchased more than $6.5 billion in soybeans, and the Minnesota Soybean Growers Association says this sets a good tone for the year.

“Looking forward looks great with China already purchasing this much bushels in this time of the year,” the association says, “It looks like it's going to be fantastic year for exports to China for Minnesota farmers.”

Last year, Minnesota exported around 800 million bushels, and the contract just signed with China is for over 400 million bushels – almost half of what the Chinese purchased last year – all in just the first month of 2011.

Colonel Tops Ronald

Though KFC is struggling stateside, in China it is dominating over all other fast food rivals, even global juggernaut McDonald's.

In some parts of China, the image of Colonel Sanders is more ubiquitous than Mao's, reports Bloomberg Markets magazine. That's no mean feat in a country that has proven resistant to foreign penetration.

The secret is in the sauce, using local ingredients in the food as well as its management team, building up partnerships with local suppliers and catering menus to include regional dishes.

The strategy has worked. Yum brands, which owns KFC along with Taco Bell and Pizza Hut, opens a new store in China every 18 hours and has a 40 percent market share in the country. McDonald's has just 16 percent.

Chinese KFCs offer the “Dragon Twister,” a Peking duck-sauce soaked chicken wrap, as well as spicy tofu chicken. But bending to meet local tastes doesn't just stop with the menu.

While McDonald's in America often host birthday parties, the KFCs in China advertise that they will host parties for the parents of boys who have just undergone ritual circumcision.

ChinaWatch: Food, Autos, Tech

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What’s On Tap

The Chinese government plans to invest $30 billion in 2011 on water conservation projects, with the announcement made in the wake of Greenpeace report that China's food supply would be inadequate by 2030.

In 2010, China experienced widespread floods and draughts – and the net effect on the Chinese population was severe inflationary pressure on basic food prices.

Additionally, a recent report by Greenpeace concludes China's food supply “would be insufficient by 2030 and its overall food production could fall by 23 percent by 2050,” according to Digital Journal.

As the world's most populous country – more than 1.3 billion people – China has struggled to feed its people without assistance from other food producing nations.

China also faces challenges posed by desertification – as 20 percent of the nation's land mass is currently desert, according to the Pulitzer Center on Crisis Reporting. The desertification question is considered China's most important environmental concern.

“We have to accelerate the construction of water conservation facilities as one of the key infrastructures the country needs to secure increasing grain production,” water resources minister Chen Lei says.

Autos Drive Promotion

China will actively promote auto imports over the next five years to help the country restructure and upgrade its auto industry, an official from the Ministry of Commerce says.

Qian Jingfen, in charge of imports at the MOC's Industrial Department, told an auto imports forum in Beijing that the auto import-promotion strategy will be implemented from 2011 through 2015 via corresponding financial, taxation and trade policies.

Qian said China will encourage the imports of advanced auto equipment, key technologies and components of energy-saving and new-energy vehicles in the period, according to crienglish.com.

The MOC decided to transfer to provincial-level government departments its power of granting automatic import licensing of 16 auto components, including automotive chassis, brakes and drive axles beginning 2011.

China's auto sales in the first 11 months hit 16.4 million units and were expected to reach 18 million units this year, according to the China Association of Automobile Manufacturers.

China overtook the United States last year to become the world's largest auto market by selling 13.65 million vehicles, up 46 percent year on year, while production that year jumped 48 percent to reach 13.79 million units.

Despite the auto sales surge in China, imports of completely built units account for less than 5 percent of market share as world's major automakers set up joint ventures with Chinese partners to satisfy the vast Chinese market.

Flexing Industrial Muscle?

China is targeting growth in industrial output of 11 percent next year, slowing from an expected 15 percent pace in 2010, the official Xinhua news agency reports, citing Li Yizhong, minister for industry and information technology.

Li also estimates that investment in industries under the ministry, including information technology, will rise 19 percent next year, according to Bloomberg News.

The MIIT is targeting a 4 percent reduction in energy consumption per unit of industrial output next year, reports say.

The ministry also aims for an average 10 percent growth in industrial output over the next five years, and a 16 percent cut in energy use and emissions per unit of output, Xinhua says.