Lenin Versus Kautsky in China: A Case Study of the Chinese Insertion into the Global Soybean Commodity Chain – Tomaz Mefano Fares

1. Kautsky’s Concept of Imperialism

Since the second half of the 19th century, advanced capitalist economies have unleashed unprecedented expansion that culminated in colonial empires in Africa, Asia and Central America. The reasons why such expansion took place and its implications for the global relations of power were the object of analysis of authors such as Hobson, Lenin, Hilferding, Rosa Luxemburg, Bukharin, and Kautsky.

For most of these authors, such international expansionism had a direct relation to domestic social and economic transformations. Rather than reflecting purely a tendency towards the military conquest of foreign lands, they identified new dynamics of capitalist development that have propelled these countries to go global. Therefore, although the former colonial system has perished, imperialism is still alive. This is essentially because central economies are still reproducing most of the expansive dynamics described by the authors above.

However, China has recently emerged as a new economic power, and its investments in global commodity chains have recently been among the world top investors. For instance, in the soybean commodity chain, Chinese enterprises have merged and acquired agri-food transnationals, becoming one of the leading world players in different segments of the downstream and upstream production. This article verifies whether the development trajectory of China’s soybean complex has followed the same premises of other imperialist countries, or whether it has followed different dynamics.

Before addressing this question, we need to take into account the different interpretations of imperialism in the related literature. Among the authors cited above, Lenin and Kautsky, who were prominent leaders of the international workers’ movement, had contrasting views on this matter. This article will examine both authors’ analyses and will relate them to China’s internationalisation path. Through a theoretical contrast, this article suggests that Kautsky’s notion of imperialism is relevant to understand China’s industrial expansion and its inclination to seek resource control overseas. However, the development trajectory of enterprises like China National Cereals, Oils and Foodstuffs Corporation (COFCO) goes beyond Kautsky’s theoretical approach. It is only through Lenin’s lens on what he calls the upper phase of capitalism that we can find a parallel to COFCO’s growth and international expansion.

2. Kautsky in China

Starting with Kautsky’s theory, he saw imperialism as a political strategy that corresponded ultimately to the industrial expansion of the central capitalist countries. In order to realise surplus value, industrial capital has sought control of agrarian resources and new markets in non-capitalist countries (Kautsky, 1914). In his work The Agrarian Question (Volume 1 and 2), Kautsky argued that resource control had a mutual effect on the advanced capitalist economies: on the one hand, agricultural imports would lower production costs, serving as cheap industrial inputs and, on the other hand, would foster the scaling-up of agricultural production throughout European industrial development. Regarding the latter phenomenon, low-value food crops from the regions of “oriental despotism” (Russia, Turkey and India) and the “free colonies” (USA and Australia) – who enjoyed abundance of available land and low wages – would put pressure on domestic production, contributing eventually to intensifying the agrarian differentiation in favour of large petty commodity producers and agro-industrial capital (Kautsky, 1988: 236-297).

Kautsky’s formulations regarding the domestic changes and international expansion of imperialist countries correspond, to a certain extent, to China’s economic development and its recent internationalisation path. Just like the European countries in Kautsky’s day, China has demanded large amounts of natural resources and agricultural products to facilitate its industrial growth for exports and increasing domestic food consumption. Therefore, China’s investment overseas follows the same industrial needs to control resources and secure expanding consumer markets through products from overseas (Lopes Ribeiro, 2017; McKay et al., 2016).

The reproduction of such a model of expansion has been enabled by an historical configuration where the Chinese Communist Party has preserved a strong state ownership while promoting economic reforms. This has placed the state in an advantageous position to guide industrial modernisation throughout China’s integration into the capitalist world. As Belesky and Lawrence (2019) notice, this type of political and economic formation, which they classify as state capitalism, has developed through a neomercantilist relation to world markets. That is to say, China’s industrial development has relied, on the one hand, on export-led economic growth under state support and, on the other hand, on increasing reliance on raw materials and agricultural products from abroad (Belesky and Lawrence, 2019).

The development trajectory of China’s soybean complex up until the Xi Jinping era reproduces this form of economic growth. Accordingly, China’s rapid urbanization, rising incomes and improvements in living standards have transformed its consuming habits towards diets high in protein, fats and sugar. Although cereals are still the foundation of the diet in China, there has been a consistent increase in meat and fish consumption in recent years, as it is shown in the graphic below.

1

The “meatification” of the diet in China has been followed by the boom of its livestock and feed industry. McKay et al. (2016), Oliveira and Schneider (2014), and Sharma (2014) attribute such an industrial boom to state efforts to locate China’s economy in the most relevant activities in terms of added value within the food industry. Accordingly, since the 1990s, the Chinese government took clear steps to increase the provision of feed crops from world suppliers, linked to an industrialisation effort in the livestock and feed sectors.

Between 1995 and 1999, the Chinese government has gradually cut off soybean import tariffs and eliminated its import quotas (Gale, 2015: 5). Soybean and maize are considered the two primary crops for feed purposes (Weis, 2007: 17). After the soybean oil is pressed, its hardened mass – the soybean cake or soybean meal (SBM)– provides protein-intensive feedstock. The SBM is responsible for an average of 75% of protein meal, as it is one of the key components of animal feed (Sharma, 2014: 16).

At the same time, the Chinese government has put great effort into protecting the national ownership of its feed and livestock industry. It has imposed taxes on processed soybean imports and provided massive state investments to Chinese enterprises, particularly after the international price peaks that affected this sector in the mid-2000s (Oliveira and Schneider, 2014; Sharma, 2014; Yan et al., 2016). Earmarked loans, subsidies and public offerings have stimulated the domestic soybean processing industry to compete and surpass the North Atlantic-based transnationals, as is shown in the figure below.

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Source: Data compiled by the author on bases of “Qichacha – Enterprises Investigation” (2019), and “Sublime China Information (SCI) – Database” (2018).1

On the other hand, the overflow of imported soybeans has changed significatively China’s agricultural production by introducing capitalist imperatives of growth. Accordingly, after the market liberalisation, China’s soy farmers switched to corn plantation or engaged in other economic activities – if not becoming idle (Yan et al., 2016). Similar to the transformations described by Kautsky of the European rural economy, the devaluation of profits and stagnation of China’s soybean production was followed by the integration of agri-food enterprises into the national and international supply chain.

Thus, the economic growth guided by the Chinese state has consolidated a domestic processing infrastructure with strong national ownership. At the same time, the activities with less value addition, such as greenfield production, have come into the control of agribusiness and have mostly been relegated to agricultural exporting countries like Brazil, as shown in the table below (extracted from USDA, 2017). Thus, in order to obtain value-addition at the domestic processing segment, Chinese companies have sought control over price and supply through better access to food-producing resources overseas.

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3. China goes Global with the Soybean Commodity Chain

Following China’s development trajectory in the soybean commodity chain, its earlier investment projects overseas were directly linked to China’s domestic processing industry. However, in recent years, Chinese companies have diversified their investment strategies and transferred a considerable portion of their industrial assets and trading infrastructure to leading exporting countries. This shift has revealed the limits of Kautsky’s theoretical approach to understanding China’s international expansion.

From the beginning of the 2000s to 2012, Chinese enterprises have concentrated great effort in purchasing farmland abroad. They mainly sought benefits from geographical advantages and more favourable land prices in Brazil and other exporting countries (Escher et al., 2018; Myers and Guo, 2015; Oliveira and Schneider, 2014).2 Nevertheless, this type of investment has not been as successful as expected. China’s direct engagement in agricultural production was particularly sensitive worldwide. It encountered a disproportionate negative media coverage, along with other political obstacles related to environmental and sovereignty issues (Oliveira, 2015: 18-24). For this reason, a significant number of farmland purchases and other related investments that were previously announced had to be cancelled, while transnationals from Europe, U.S., Argentina and Japan acquired 750.000 hectares in Brazil for soybean production for export (Oliveira, 2015).3

According to Oliveira (2015), Myers and Guo (2015), and Escher et al. (2018), this has contributed to a diversification of investments from 2012 onwards. Since then, Chinese enterprises engaged in a wide range of activities abroad, such as production and commercialisation of agrichemicals, construction of ports and logistics infrastructure, holding of shares, mergers and acquisitions of multinational companies, and loans and financial services.

At the downstream level, the most prominent enterprise to invest in the global soybean commodity chain has been COFCO. This is a SOE member of the state-owned Assets Supervision and Administration Committee (SASAC), an administrative agency of China’s State Council. COFCO’s engagement in the global soybean commodity chain has been accomplished mainly through mergers and acquisitions of multinationals that already operate in this field. In 2014, COFCO acquired the Dutch company Nidera (for USD 1.2 billion) and the Asian company Noble Agri (for USD 1.5 billion).

The integration of Nidera and Noble provided a direct entry “into the procurement and marketing of soy in the whole of the Southern Cone” (Myers and Guo, 2015; Oliveira, 2015). In 2018, COFCO controlled over 11 percent of the Brazilian grain exports, becoming the fourth largest trader in the country, ahead of Dreyfus. It also became the second largest trader in Argentina, only behind Cargill, and it claims to be the leading grain exporter of Paraguay, and Uruguay (Escher et al., 2018; Saul et al., 2018; “Zhongliang jituan zai agenting dazao shijie daliangshang [COFCO builds the largest international grain merchant in Argentina],” 2018).

However, COFCO’s investment strategy has set the company in a position that goes beyond the needs of guaranteeing supply control for China’s industrial growth. COFCO has inaugurated and intensified capitalist dynamics of accumulation abroad and has operated and sought profit from sectors that are not directly linked to the Chinese soybean complex. COFCO has integrated into different segments of the commodity chain with the claim of optimising “resources and assets to create and apply different profit models aiming to maximise revenues” (“Our strategy,” 2018). Only in Brazil, it operates two main port terminals in Santos that import and export agricultural and processed products to and from Asian and European countries,4 along with 12 silos with 1.18 million tons of storage capacity, one transfer centre, two soybean crushers, four sugar mills as well as their associated farmland, estimated at around 120,000 ha of both owned and leased sugarcane fields (Oliveira, 2017: 9; “Zhongliang jituan kaikuo baxi shichang chujian chengxiao [COFCO’s success in opening up Brazil market],” 2015).5

Therefore, COFCO became a wholly internationalised enterprise. Its businesses have reached over 140 countries and regions in the world, where it obtains 50 per cent of all its earnings (“About COFCO” 2018). Regarding the soybean processing sector, one third of COFCO’s soybean crushing capacity is currently located abroad – 30 million out of 90 million tons (“About COFCO” 2018).

COFCO’s international constitution and its integration into all segments of the soybean commodity chain reveal a scenario that goes against Kautsky’s description of imperialism. China’s international expansion with COFCO, although it meets its industrial needs by securing resources abroad, is not based purely on a form of industrial capital neither on an exclusive neomercantilist trading relation. In order to understand COFCO’s prominence in the soybean commodity chain, we need to review Lenin’s concept of imperialism and its distinction from Kautsky’s.

4. Lenin’s Concept of Imperialism

Lenin, in his work “Imperialism, the highest stage of capitalism”, interpreted the international expansion of advanced economies as more than a political aspiration of industrial capitalism. He identified a series of changes in the capitalist class that culminated in what Hilferding had earlier called financial capital. This is the junction between industrial and banking capital in its concentrated form. For Lenin, financial capital contrasts with the early period of “free competition” as monopolistic enterprises dominate large shares of market and production (Lenin, 2015).

The surplus capital generated by financial monopolies has propelled the shift from simple forms of commodity export to the export of capital. Through processes of capital accumulation beyond a given national territory, the capitalists from central countries were able to obtain huge amounts of profit and repatriate them to their home countries. This would not be possible, though, without a political and military effort to seize the world into areas of influence (Lenin, 2015).

The following sections will review each aspect of the economic transformations described by Lenin and will verify their applicability to the actual insertion of China into the global soybean commodity chain.

5. The Concentration of Capital in China’s Soybean Complex

A common feature of capitalist economies in Lenin’s analysis is the tendency towards concentration of capital. Concentration can be accomplished either by a combination of different production processes and/or by scaling-up (Lenin, 2015: 17). The former occurs through the integration of a single enterprise into consecutive stages of production or into branches that are auxiliary to one another, while the latter is accomplished through technical improvements and an increase of the volume of production.

The scaling-up and combination of agricultural production in China has been accomplished through the penetration of capital in commodity chains and the integration of different sectors, such as processing, farming, and trading by agri-food enterprises. Taking the processing sector as an example, it has undergone rapid expansion over the last two decades. Chinese soybean crushers – that produce animal feed and edible oil – have been able to build large and modern plants with state support, expanding rapidly the scale and geographic scope of their activities (Gale, 2015: 9; see also Oliveira and Schneider, 2014, and Sharma, 2014). At the same time, soybean crushers have grown by forward-integrating into livestock production (Fang, 2011, in Gale, 2015), as well as, in the case of the largest ones, integrating into crop farm production (China Securities News, 2015, in Gale, 2015: 10) – through direct engagement in farming and/or by selling services and providing credit to farmers (Yan and Chen, 2015; Zhang and Donaldson, 2008).6 In addition, some companies have also started to supply branded meat products to self-operated supermarkets and specialty shops in an attempt to convert themselves from “feed companies” to “food companies” (China Feed Industry Association, 2014; in Gale, 2015).

The modernisation and vertical integration of Chinese processing plants have shaped and have been shaped by a powerful domestic constituency of companies vested in the entire supply chain and with a huge production capacity even by international standards (Sharma 2014). According to Feed International, among the world’s top 101 companies in the feed processing sector, 23 were Chinese (Roembke, 2015, in Gale, 2015).

Among these companies, COFCO has the leading position. This achievement has also been accomplished through a strong concentration of capital integrated into consecutive stages of the production chain. Besides processing, COFCO extends its operations to all activities of the upstream and downstream levels of production. The former entail seeds, technological development and distribution of inputs, while the latter involve engagement in agricultural production through sales platforms, technical support, financial services, storage services (“Marching onto the Global Scene,” 2018), distribution, and online food retailing (Ma, 2017). COFCO is also strongly engaged in livestock production. It holds leading industries, such as Wuhan COFCO Meat and COFCO Meat (Jiangsu). In addition, COFCO owns one of China’s largest food and drink brands, delivers rebranded food products,7 and owns 65% of shares in Coca-Cola Beverage in China. Moreover, COFCO has horizontally integrated into branches beyond the foodstuff business.8

6. The Financialisation of China’s Agriculture

From an historical perspective, the formation of financial capital in advanced capitalist countries has been accomplished by the increasing merger of banking into industrial activities, enabling its direct or indirect control over production. This includes the purchase of shares and the presence of bank representatives on the boards of directors, as well as the establishment of holding companies, concerns and ‘influence groups’ (Lenin, 2015). At times, the accumulation of enormous profits has enabled corporations to expand primarily by self-financing, freeing themselves of bank tutelage (Mandel and Germain, 1966).

Regarding China’s agricultural and processing sectors, existing literature shows that Chinese agri-food corporations have increasingly relied on financial mechanisms to grow and specialise in financial services at the production level. For instance, Yang et al. (2016) argue that national players have obtained most of their earnings through the provision of farming loans. They “mobilize and pool the savings of producers and use it for reinvestment in the supply chain” (Yang et al., 2016: 18). Gale (2015) notices that agricultural enterprises have seen their borrowings soar – mostly from financial firms and investment funds. As the figure below shows, the weight of liabilities in the sources of corporate financing have become more and more significant among China’s feed enterprises (Gale, 2015).

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In COFCO’s case, its level of indebtedness has propelled the creation of financial instruments to raise funds. Since 2000 it has accelerated a finance reform that culminated in the creation of China Agri-Industries Holdings Limited, a subsidiary listed in Hong Kong that has been in charge of most of the financial operations of the entire group (Escher et al., 2018b: 311; Ma, 2017: 11). At the same time, COFCO has expanded its financial activities by investing in banking, securities, futures9 and insurance in China and abroad – in partnership with many foreign financial companies (“COFCO Capital,” 2018).

7. The Formation of Monopoly Capitalism in China

As it has been seen previously, Lenin noticed the formation of great capitalist monopolies derived from the processes of concentration and financialisation of capital. These are classified as huge capitalist enterprises or unions of capitalist enterprises that gather the most important part of the production or sale of a given product (Lenin, 2015). As Marx has underlined in Capital Volume 3 (chap. 23), the rapid growth of these corporations represented a new form of expropriation by a small handful of big capitalists. Accordingly, the mechanism which enables this process is an increase of the amount of capital from the accumulation of surplus value. After reinvesting part of the surplus value appropriated in the production, capitalist enterprises become the owner of an ever-increasing capital and, throughout market competition, are able to ruin and absorb small and medium capitalist enterprises.

This process opens up possibilities for the concentration of capital in the hands of a few large enterprises with the capacity of limiting competition and setting high monopoly prices for goods. The competition between monopolistic enterprises, though, does not overcome competition. Monopoly capitalism merely raises the competition to a higher level that encompasses new and bigger competitors (Mandel and Germain, 1966).

Monopolistic formations can be verified throughout all sectors of China’ agri-industry. Taking the feed sector as an example, although small and medium enterprises are still numerous, a small number of leading companies have increased their control over a significant part of this sector. By 2010, 16 companies were producing 33 percent of total output in China – each with an individual output greater than one million tons annually (Sharma 2014: 21, see also Reuters, 2010, in Sharma 2014: 18). Only three years later, this portion had changed to 10 companies accounting for 36 percent of the total feed output. Still, the Chinese central government has publicised its will to reduce the number of small firms with inefficient facilities, striving to transform China from a “big feed country” to a “strong feed country” (2011-15 Five-Year Plan for the feed industry, in Gale, 2015).

However, unlike most actual capitalist economies, the Chinese state has played a major role in the concentration and formation of monopolies in the soybean complex, as well as in other industrial sectors. Although this is an historical process with particular characteristics, the state’s role as the main sponsor of capitalist monopolies has had innumerable historical precedents.10

In China, this process has been the result of constant corporate reforms of the state sector. Accordingly, since the 1980s, China’s economic reforms allowed through various phases the opening-up of markets, privatisation of small and medium urban state and collective enterprises, as well as township and village enterprises, along with attracting foreign investments in various areas of the economy (Andreas, 2008; Gallagher, 2005: 131).

Under this scenario, the Chinese leadership announced the policy “hold the large, let go the small” (zhuada fangxiao), which approved the merger and acquisition of public firms, while adapting them to a technologically advanced and competitive constitution (Gallagher, 2005: 140; Naughton, 2010). This effort was formalised at the Fifteenth Party Congress in 1997 when Jiang Zemin announced China would “establish highly competitive large enterprise groups with transregional, inter-trade, cross-ownership, and transnational operations” (Jiang Zemin, 1999: 194, in Gallagher, 2005: 140).

Afterwards, during premier Wen Jiabao’s term in office, the Chinese government continued promoting the formation of bigger and stronger state-owned conglomerates by providing abundant stimulus packages (Shen et al., 2017). As a result, the average asset size of SOEs has grown faster than for non-SOEs, as can be seen in the graphic below.

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Source: CEIC, in Gao, 2010.

The corporate reform of the Chinese state sector also resulted in the creation of a competitive environment that has permeated China’s SOEs (Gallagher, 2005; Naughton, 2010). This was marked by losses of labour rights and a culture of rivalry between workers, as well as increasing competition in all the sectors in which state ownership was prominent. For instance, only within the tiny group of companies under SASAC, besides COFCO, there are three other agricultural companies that dispute the same markets. They are China Grain Reserves Corporation, ChemChina (which in February 2016 purchased the Swiss seeds and pesticides group Syngenta), and China National Agricultural Development Group.

Therefore, the reform of state-owned enterprises has shifted their mission of delivering public services to becoming “corporatised” profit-seeking companies and vehicles for the speedy accumulation of great fortunes (Andreas, 2008; Au, 2012; Morais, 2017; Shen et al., 2017). A considerable number of SOEs are listed on the stock exchange, boosted by the establishment of new investment funds and financial holdings (Wang, 2015, in Morais, 2017: 13).

The transformation of China’s state sector allowed SOEs to lead in the concentration and financialisation of production. Therefore, COFCO became a prominent monopoly in China’s soybean complex. Since the 2000s, COFCO has expanded rapidly through more and more frequent mergers and acquisitions of auxiliary companies. For instance, from 2004 to 2016, it merged and acquired 14 national and international corporations from different segments of the food production and supply chain (see the graphic below), and it spread its scope to 2.3 million terminal sale points all over China’s cities, counties, and villages (“About COFCO,” 2018).

Year

Merges

Acquisitions

2004

China Native Produce & Animal By-Products Import & Export Corporation (TUHSU).

2005

Xinjiang Tunhe Investment Co., Ltd.

2005

Xinjiang Sifang Sugar (Group) Co., Ltd.

2005

37.03% of the equity in China Resources Biochemical (600893)

2005

100% of the equity in China Resources Alcohol

2005

20% of the equity in Jilin Fuel Ethanol

2006

BBCA Biochemical

2006

China Grains & Oils Group

2011

Completed its acquisition of the Australian sugar refinery Tully Sugar

2013

China Grains & Logistics Corporation.

2014

Noble Agri (completed in 2016)

2014

Nidera (completed in 2016)

2015

China Huafu Trade & Development Group Corporation

2016

Chinatex Corporation

Source: Data compiled by the author on bases of COFCO’s official website http://www.cofco.com (“COFCO, Histoy and Honor,” 2018).

8. Overcapacity in China and the Tendency for Exporting Capital

In Marxist terms, the finality of capitalist accumulation is, besides obtaining profits, to provide the necessary conditions for more efficient forms of further accumulation. However, the development of capitalism in advanced economies has faced the common problem of “maturing too much”, consequently finding a less and less “lucrative position” for further capital accumulation. This scenario is attributed to the increasing surplus of capital through gains of productivity with the aid of technological innovations, as well as the decreasing purchasing power of the working class due to unemployment (the saving of ‘labour-time’ at production). As a result, profit rates decrease, and surpluses of capital are unable to be entirely absorbed within a given territorial system (described in Capital, Volume III, chap.14).

This tendency is manifested particularly in the recent phase of China’s economic reforms when the forms of capital accumulation have shown signs of saturation. Accordingly, China’s high economic growth in the first three decades of reform relied on two main factors: (1) the state’s ability to mobilise resources in order to increase the country’s capital stock (the total value of equipment, buildings and other forms of physical capital); and (2) productivity gains, followed by the gradual and increasing transfer of those resources into private hands (Kroeber, 2016: 214, 219). In other words, China’s state policy has committed to boosting the country’s capital stock by adding more capital into the system while increasing its efficiency.11

However, the shrinking of export markets and the over-production in China after the world financial economic crisis imposed obstacles for absorbing greater amounts of capital surplus in production. Consequently, a further mobilisation of resources came with continuously lower returns (Kroeber, 2016: 214). As a recent OECD report shows, between 2007 and 2014, the average return on capital in China fell from 17 percent to 9 percent (OECD, Economic Survey in China 2015, 26, fig. 12, in Kroeber, 2016: 219).

In the agri-food sector, Chinese investments have surpassed the capacity for absorbing surplus capital for expanded reproduction. As a result, the feed and other related industries have faced severe over-capacities. According to the government agency China National Grains and Oil Information Centre (CNGOIC), in 2012, soybean crushing plants were already on average running at half of their capacity, although they were still expanding (in Sharma 2014: 16), which means that investments in processing infrastructure have resulted in less profitable returns.

Returning to Lenin’s theory on imperialism, the decreasing rate of profit in advanced capitalist economies is the main propelling force for the export of capital. The surplus capital from production, in order not to devaluate, must be allocated to find room for its profitable realisation elsewhere (Lenin, 2015). New processes of capital accumulation are set in motion where there are advantages like low wages, cheap raw materials, and relatively low land prices; and it can be accomplished by different means, such as by granting loans to institutions abroad, by setting up industrial, commercial and banking enterprises and concessions abroad, by building infrastructure and by purchasing companies abroad.

From this perspective, COFCO’s inclination to expand internationally follows the same premise of expanding capitalism as in the case of advanced economies as described by Lenin. COFCO has turned its surplus into production in other areas by building processing and trading infrastructures in the Southern Cone, and by integrating into all segments of the global soybean commodity chain. Just like other capitalist agri-food transnationals, COFCO overcomes the tendency for decreasing rates of profits through continuing capital accumulation abroad. It escapes from the over-capacity in the domestic soybean complex by exporting capital to places and segments where further surplus value is obtained from production and trading.

9. Conclusion

Kautsky’s theoretical approach to capitalist development and the international expansion of advanced economies is useful in understanding China’s early tendency of investment overseas. The efforts made by Chinese enterprises to acquire foreign land for agriculture corresponded to the demands of its domestic soybean processing industry. The state has played an active role in guaranteeing the national ownership in the high value-added activities of the global soybean commodity chain, supporting industrial modernisation and a strategy for resource control.

However, COFCO’s internationalisation path has gone beyond Kautsky’s premises. Its increasing transfer of assets overseas and expansion into all segments of the commodity chain can only draw parallels with Lenin’s analyses on imperialism. Accordingly, the concentration and fusion between banking and industrial capital in China’s soybean complex has consolidated huge financial monopolies. With state support, national conglomerates have emerged and dominated large shares of market and production. The excess of capital stock – that derives from productivity gains and huge mobilisation of resources – has propelled Chinese conglomerates like COFCO to invest abroad. Therefore, the surplus capital in China’s soybean complex has found room for profitable realisation elsewhere.

This article has only explored the economic aspects of Lenin’s analysis. Hence, further investigation is required regarding the political determinations of imperialism. We still need to answer what the class fractions behind China’s financial monopolies are, how these fractions have expressed their class interests through state institutions and policies, and whether these policies are responsible for China’s political domination over other countries – the consolidation of spheres of influence.

Nonetheless, the transformations in China’s soybean complex and the international expansion of some of its enterprises give evidence of an imperialist form of capitalist development. This new economic base sheds light on the prominent role of China’s transnationals in global commodity chains and China’s central position within world power relations.

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1 This table took into account the Chinese SOEs COFCO, Jiusan, Sinograin, and Chinatex; the Chinese private enterprises Bohai, Hopefull, and China Sea; and the transnationals Wilmar International, Cargill, Bunge, Louis Dreyfus, and Noble Agri (a Hong Kong-based transnational that now belongs to COFCO).

2 In 2007, the Hong Kong company Pacific Century Group acquired 27.397 hectares in a minor transition led by the Argentinean CalyxAgro. A partnership between the private firm, Fudi Agriculture Co from Zhejiang Province, and the SOE Beidahuang, from Heilongjiang Province, acquired 600 hectares in the Southern Province of Rio Grande do Sul and 16.000 hectares in Tocantins, and in 2011, sold it to Universo Verde, a subsidiary of another Chinese SOE, the Chongqing Grain Group (CGG) (Escher et al., 2018b: 306). In the same year, CGG bought 52.000 hectares on the east of Bahia State for soybean production.

3 The most important companies are Cresud/Brasilagro, Adecoagro, El Tejar, TIAA-CREF, Multigrain/Xingu Agro, and V-Agro (Oliveira, 2015).

4 The two terminals are T12A and Cereal Sul. The former has an annual transit capacity of over 3 million tons. It is not only specialised in exporting agricultural products such as soybeans and sugar to China but also soybean oil and soybean meal intended for Asian and European markets (Escher et al., 2018, and Oliveira, 2017). The latter has an annual transit capacity of 500,000 tons. It is specialised in importing wheat for different purposes (“Zhongliang jituan kaikuo baxi shichang chujian chengxiao [COFCO’s success in opening up Brazil market],” 2015).

5 COFCO also extended its activities to the upstream level, controlling 14 percent of the Brazilian corn seed market (“Zhongliang jituan kaikuo baxi shichang chujian chengxiao [COFCO’s success in opening up Brazil market],” 2015).

6 A more accurate picture has been provided by Zhang and Donaldson (2008). From findings extracted from an empirical study, they notice at least five levels of vertical integration of agribusiness agricultural production: (1) companies purchasing part of the production and providing technical support to independent commercial farmers; (2) establishing formal contracts with farmers also for purchasing and providing services; (3) renting collective land from villages and hiring the local producers, managing the production although preserving the worker’s land-use rights in the village; (4) establishing production bases in leased farmland or ‘wasteland’ and hiring migrant farmers as waged labour, although preserving their land-use rights elsewhere or (5) hiring landless workers as waged labour (Zhang and Donaldson, 2008: 32).

7 Such as Great Wall wines, Mengniu Diary, China Tea.

8 It has also diversified into bioenergy development, real estate and hotel management (Ma, 2017: 9).

9 A financial instrument agreed between parties unknown to each other to buy or sell a product at a predetermined price and at a specified time in the future.

10 One of the most well-known cases is the U.S government right after World War II providing credit and other financial support, as well as enforcing a protective jurisdiction in favour of state monopolies.

11 This includes promoting industrial technology and modern management techniques, developing infrastructure at all levels, such as electricity and telecoms for running “modern business”, building ports and airports for integrating the national industry into global markets, providing transportation for moving workers to their jobs, as well as granting roads, railways, and housing to knit together the domestic market (Kroeber, 2016: 211; Naughton, 2010: 248-252).