Number

No.2016-02

Month of Issue

October 2016

Title

Financialization of agriculture in China: the role of private equity firms, agribusiness companies and local governments

Author(s)

Xing Yang
Haja M. Rajaonarison
Shuji Hisano

Affiliation(s)

Graduate School of Economics, Kyoto University, Japan
Center for the Promotion of Interdisciplinary Education and Research, Kyoto University
Graduate School of Economics, Kyoto University, Japan

Keywords

Financialization, China, SCF, Peasant, Agriculture

Abstract

This paper examines the tendency of financialization in the process of bringing “corporate capital to the countryside” in China. The paper focuses on the role of private equity companies, agribusiness companies and local governments in the process of agriculture financialization. We situate this tendency within the context of the transition of the Chinese economy and the evolution of the capitalist system. The uneven development between China’s urban and rural regions has fostered a strong financial sector, especially after the crisis of 2007 to 2008. The capital that is withdrawn from the traditional industrial sector flows into the financial sector, which has viewed Chinese peasants and agriculture as an untapped resource to be exploited. Chinese agribusiness companies are utilizing their new business of supply chain finance to improve their profitability and strengthen their power over other players along the food chain. The local governments are important participants in the process and indeed promote the financialization of agriculture. The paper discusses also few case studies that illustrate this ongoing process.