Gm Food in China

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An Assessment of China's Market in
Regards to Genetically Modified Food

This paper will provide an overview of the potential market for genetically Modified Food (GMF) in China. The China Genetically Modified food market is rapidly becoming one of the largest in terms of production, consumption, export and import prospects. China has the largest population in the world. It is home to 1.3 billion people or 20% of the world's total population and is likely to exceed 1.4 billion by 2050 (Population Reference Bureau, 2002). China's gross domestic product (GDP) is growing about 8 times as fast as the population. With inflation currently under control (projected to be about 5% in 1997), real income per capita is increasing rapidly. In addition the official policy of the Chinese government has been to promote biotechnology as one of the national priorities in technology development since the1980s (SSTC, 1990; Huang, Rozelle, Pray and Wang, 2002). China is an important destination for US agricultural exports and has an ever-increasing demand for western-style convenience foods. In addition Chinese consumers have a favorable attitude towards GM food and in some cases willing to pay a premium for such foods (In press). Finally, farmers are in favor of the use of biotechnology to grow pest-resistant crops which requires fewer chemicals (Environics International, 1999). Combine that with import restrictions in EU countries, china has the potential to be a great market for GM food products.

In the past decade the advancement of recombinant DNA technology along with genome sequencing for hundreds of different organisms has lead to many new products. These new "genetically engineered," products slowly are becoming intergraded in our daily lives. Genetically modified food (GM) is a special set of technologies that alter the genetic makeup of such living organisms as animals, plants, or bacteria (Wikipedia, 2005). Today genetically engineered food is subject to a wide controversy. There are the unknown environmental and health consequences of GM crops (McFadden, 2005). On the other hand, GMOs (genetically modified organisms) have the potential to be healthier, and more nutritious and productive than organisms derived through conventional means. In the past, two methods were used to boost the food production. First, it was by increasing the amount of land under cultivation; at one point the space available for cultivation will run out. Second, it was to increase the yield of the crop. This was achieved by mixture of seed improvement and technological inputs. But the projected yield improvement has hit a wall. Many scientists believe that the only way to meet the food demand is to genetically engineer crops that are more resistant to nature's ravages (McFadden, 2005). This is potentially a great market size for GM foods.

China has the largest population in the world. It is home to 1.2 billion people or 20% of the world's total population. The total population is expected to peak at about 1.45 billion around 2030 (US, 1997). China's GDP in 1996 grew about 8.1% and its GDP is forecast to grow by about 8% per year through 2005, and 7% annually thereafter through 2015, (See Table 1). Agriculture contributes about 20% of china's GDP. Also the Consumer income is on the rise in China. The result is a growing middle class, composed primarily of singles and two working spouse households. This allows consumers to buy more expensive products, leading to greater demand for variety and quality of produce. In addition, agriculture contributes about 20% of china's GDP (US, 1997). Li, Curtis, McCluskey, and Wahl (in press) concluded that consumers surveyed in Beijing, on average, were willing to pay a 16% premium for GM soybean oil and a 38% premium for GM rice over the non-GM alternatives.

In 2001 only 3 percent of the total global area of GM crops was in China. (Huang, Rozelle, Pray and Wang, 2002). But this number...
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