Sail across the sea

Chapter 493 Can I Hold My Rice Bowl?

Jiang Rongcai didn't understand climate change, but he did know a bit about fertilizers. Recently, the province was preparing to launch a large-scale fertilizer project, and the fertilizer industry company had submitted several plans. As the official in charge of this area, Jiang Rongcai had carefully audited these plans.

In the plan, the fertilizer company listed the costs and benefits of each option, including the situation of large-scale fertilizer plants using anthracite and coal-water slurry as raw materials abroad. Therefore, he knew that Wu Yawei's statement that foreign countries no longer use coal as a raw material was biased.

However, he was somewhat uncertain about whether coal would be phased out, so he continued to ask:

"Mr. Skelly just said that our country's coal-based ammonia synthesis technology will be phased out in the future because it does not meet emission standards. Is there any truth to this statement?"

Wu Yawei paused for a moment, then hesitated before saying, "Well, it's hard to say. According to the requirements of the UN convention, our small nitrogen fertilizer plants certainly don't meet the standards. But to say they'll be completely eliminated is probably quite difficult."

Jiang Rongcai nodded, indicating that he understood Wu Yawei's meaning.

As an official of the Provincial Planning Commission, Jiang Rongcai did have some policy expertise.

Whether or not to phase out a technology depends not only on whether the technology is advanced, but also on the cost of phasing it out.

There used to be more than 1000 small nitrogen fertilizer plants across the country. After the rectification, there are now 5 to 600, employing more than one million people. This is truly a case of "millions of workers whose livelihoods depend on them".

If all small nitrogen fertilizers are eliminated simply because they don't meet the standards, who will take care of the livelihoods of these millions of people?

Jiang Rongcai had every reason to believe that the country would never choose to phase out small-scale nitrogen fertilizer plants. If it had to do so for some reason, the process would be very lengthy, allowing time for the gradual absorption of these employees.

Although he understood this, Skelly's words still offered some inspiration to Jiang Rongcai. The established facts could not be changed, but projects yet to begin should still consider how to adapt to the demands of the times.

The whole country is talking about "rejoining GATT." Jiang Rongcai has read articles by some experts, and they all believe that "rejoining GATT" means fully aligning with international standards. Simply put, China must become like foreign countries.

It is said that foreign countries have all sorts of standards, such as environmental protection, labor protection, and gender equality. If you fail to meet any one of their requirements, they will not recognize you as a market economy and you will not be able to pass customs clearance.

In practical terms, a market representative from Feier Chemical pointed out that using coal as a raw material for synthetic ammonia does not meet emission reduction requirements, which may be the new standard in developed countries. Although the national government has not yet made any requirements on this issue, shouldn't Maolin Province take the lead over other provinces and regions?
Jiang Rongcai kept this thought in mind, planning to discuss it with the director again tomorrow. He turned back to Skelly and said:

"Mr. Skelly, your reminder is very important to us. However, the difficulties we face are also real. Do you have any suggestions?"

Skelly nodded and said, “Your country is a developing country, and the problem of capital shortage is bound to be a long-term issue. Your country began its reform and opening up more than a decade ago, actively attracting foreign investment to help with its modernization.”

"From what I understand, a large number of foreign investors have established businesses in your country, spanning many industries. But what puzzles me is why none of these businesses are fertilizer production companies?" "Well..."

Jiang Rongcai was stumped by the question; he really didn't know how to answer it.

The most direct answer should perhaps be that the fertilizer industry does not meet the national requirements for foreign direct investment.

In 1987, the State issued the "Interim Provisions on Guiding the Direction of Foreign Investment," which listed four areas for encouraging foreign investment: those that cannot be produced domestically; those that can be exported to earn foreign exchange; those that are urgently needed domestically and are technologically advanced; and those that are urgently needed by the energy, transportation, and raw material industries.

If fertilizers do not meet the three conditions mentioned above (first, second, and fourth), then if we have to force them to meet the criteria, they can only be considered to have some connection with the third condition.

The country spends as much as $30 billion in foreign exchange annually on fertilizer imports, so it's reasonable to say that fertilizer is a product urgently needed domestically. However, the claim of advanced technology is unfounded, because the large-scale fertilizer plants imported into China have already reached international advanced levels, and the technology that foreign investors can bring to the fertilizer industry is limited to that level.

To put it bluntly, in the field of fertilizers, foreign technology is indeed more advanced than domestic technology, but since we can build large-scale fertilizer plants by introducing technology, why should we let foreign companies invest directly?

This argument has a flaw: the other party could counter with the question: since it uses advanced foreign technology, why can't foreign businesses invest directly?

This brings us to another document, namely the 1988 "Decision on the Monopoly of Fertilizers, Pesticides, and Agricultural Films." This decision clearly stipulates that agricultural material companies and supply and marketing cooperatives at all levels are the monopoly units for fertilizers, pesticides, and agricultural films, and other departments, units, and individuals are strictly prohibited from selling these commodities.

According to this document, if foreign companies build fertilizer plants in China, the fertilizers produced must be handed over to the agricultural input department for unified allocation. If the agricultural input department does not accept the fertilizers, they can only be exported and cannot be sold domestically.

This regulation is undoubtedly a disaster for foreign businesses. They come to China from afar because they value the Chinese agricultural input market. If agricultural inputs produced in China are then exported again, what's the point?

So, would Chinese agricultural input companies accept fertilizers produced by foreign-funded fertilizer plants?

This question is also difficult to answer.

Logically speaking, China lacks fertilizer and spends a large amount of foreign exchange on imports every year. Now, foreigners are building factories here, and you can buy genuine "imported fertilizer" without even having to pay for shipping. What reason do agricultural input departments have to refuse?
But Jiang Rongcai knew that the agricultural input department might not accept fertilizers produced by these foreign companies, because the government did not support foreign investment in building fertilizer plants in China. Besides considering the needs of the small-scale fertilizer producers, there was another, deeper consideration:

The Chinese people must hold their rice bowl firmly in their own hands.

The state can open up the automobile market, the television market, and the clothing market, but it must keep agricultural supplies firmly in its own hands, because this is a matter of whether 12 billion people can keep their food on the table.

(End of this chapter)