Plan the supply of primary products from a strategic height

—— Correctly understand and grasp the supply guarantee of primary products (Part 1)

  Primary products, including food, energy and minerals, are the basic products for economic and social development.

my country has a vast territory of 9.6 million square kilometers and 1.918 billion mu of arable land. In 2021, the output of grain is 1,365.7 billion catties, the output of raw coal is 4.13 billion tons, and the output of crude oil is 199 million tons.

This constitutes the basic stock of primary products.

  Guaranteeing the supply of primary products is a major strategic issue. We must strengthen strategic planning and make adjustments as soon as possible to ensure supply security.

Primary Product Matters

  For a developing country with a large population like China, it is of great significance to ensure the supply of primary products.

Whether it is to ensure the stability of the industrial chain and supply chain, ease the cost pressure of the real economy, or coordinate development and security, and strengthen the economic foundation for national security, it is required to ensure the supply of primary products.

  ——Strengthening the supply guarantee of primary products is dictated by national conditions.

  my country is a large country with a population of more than 1.4 billion and a super-large economy with a per capita GDP of more than 12,000 US dollars. This means that the domestic demand for primary products is extremely large, and urban and rural residents are indispensable for living.

In 2021, the scale of my country's industrial added value will reach 37 trillion yuan, and the import and export volume of goods trade will be 39 trillion yuan, ranking first in the world. This means that my country needs to have a factory that matches the status of the world's factories to participate in the international economic cycle. Primary product supply.

  In the traditional impression of many people, primary products are too common, too basic, with limited technical content and low added value, and their value is often ignored and even regarded as a "declining industry".

However, with the economic development of various countries, the global demand for resources and energy has continued to rise, and the "balance of power" between primary products and manufactured products has quietly changed.

Although some primary products are not as "glamorous" as high-tech products, they often have stronger influence and voice in the industrial chain due to their limited total amount, non-renewable and irreplaceable products.

  Primary products are related to survival. Although they are usually not visible, their importance can overwhelm everything at critical times.

Although manufactured goods, especially complex manufactured goods with high added value, are also important, primary products are the cornerstone of economic operation, and economic activities and social life are inseparable from primary products.

Whether the supply guarantee capability of primary products is strong or not directly determines the quality, resilience and impact resistance of my country's economic development, and its importance to the country is self-evident.

  ——It is a practical need to strengthen the supply guarantee of primary products.

  Since last year, the supply of some international bulk commodities has been tight and prices have risen, highlighting the scarcity of primary products.

Since the beginning of this year, the conflict between Russia and Ukraine has seriously affected the global food and energy supply, and has also made primary products a focal issue.

  Cheng Guoqiang, a professor at the School of Agriculture and Rural Development of Renmin University of China, said that Russia and Ukraine, as major global grain producers and exporters, have a significant impact on the global grain market and supply pattern due to the conflict between the two sides.

Russia and Ukraine are important food suppliers in the world and play a pivotal role in the international food market.

In 2021, Russia will export 32.9 million tons of wheat, accounting for 18% of the world; Ukraine will export 20 million tons of wheat, accounting for 10% of the world; the two countries will export 19% of corn, 63% of sunflower oil, and 63% of rapeseed oil. 15% globally.

  Liu Gan, executive deputy director of the Russia and Central Asia Research Center of China University of Petroleum (Beijing), analyzed that in the short term, the conflict between Russia and Ukraine is having a serious impact on the global energy market.

In the long run, the existing international energy system will accelerate changes.

Russia exports 10 percent of global oil trade, and exports nearly 20 percent of global trade in natural gas.

The geopolitical tension caused by the conflict between Russia and Ukraine will affect the balance of the market supply and demand system.

Neither Saudi Arabia nor the United States have the possibility of completely replacing Russia in the short term.

The tight global energy supply and demand, Western financial sanctions and Russia's countermeasures to settle energy resource products in rubles are seriously impacting the international energy pricing system and settlement system.

  - Strengthening the supply guarantee of primary products is a long-term strategy.

  "The foundation is not firm, and the ground is shaking." The supply of primary products is the most basic part of the national economy.

Duan Bingde, a researcher at the Development Research Center of the State Council, believes that whether it is to meet the people's needs for a better life or to maintain a certain growth rate for economic development, it means that the demand for primary products is in a period of continuous rise.

Zhong Ying, a researcher at the Institute of Contemporary China, Chinese Academy of Social Sciences, said that to calmly respond to the unprecedented changes in the world and the new crown pneumonia epidemic, my country needs to coordinate development and security, especially focusing on the protection of industrial chain security and primary product security.

This reflects the bottom-line thinking of the central economic policy, emphasizing that under extreme circumstances, it is necessary to ensure that China's primary strategic materials such as oil and grain can be self-sufficient and increase reserves.

  There are indications that the scarcity of key primary products is on the rise.

The Chinese Academy of Social Sciences released the "Top Ten Global Trends Outlook for 2022", proposing that due to the escalating game of major powers competing for key resources and energy, ensuring safe supply and leading the transformation of the energy structure, the supply and demand of global primary products will remain in a serious imbalance. Price volatility risk and availability risk will become more prominent.

On the one hand, the price fluctuation of primary products has an asymmetric impact on exporting and importing countries, especially for importing countries, the increase in the price of primary products will affect the input cost of domestic raw materials, and then its inflation rate, import and export trade, local currency exchange rate. and the balance of payments, etc., and the rise of resource nationalism in exporting countries may further increase the scarcity of key primary products.

On the other hand, the impact of low-carbon development on the supply and demand of primary products cannot be ignored.

With the rapid development of the low-carbon economy, the demand for rare metals such as copper, nickel, cobalt, lithium, and rare earth is rising sharply, and the competition for rare resources by major countries will be further intensified.

The security situation is not optimistic

  Since the 18th National Congress of the Communist Party of China, the Party Central Committee has attached great importance to ensuring the supply of primary products.

Grain production has achieved 18 consecutive harvests, significant progress has been made in the utilization of natural resources, and the energy revolution has been further promoted, laying a solid foundation for high-quality economic and social development.

However, the task of ensuring the supply of primary products is very arduous, and some types of primary products are already highly dependent on imports.

For example, oil, iron ore, soybeans, etc. are highly dependent on foreign countries, and the proportion of imports of some resources and raw materials is still rising.

In recent years, more and more primary products have come to rely on the international market.

  my country is a major producer and demander of primary products.

Since 2002, the proportion of my country's primary product imports to total imports has been on an upward trend. Although it has declined since then, it has risen again since 2016.

As of December 2021, my country's imported primary products accounted for 36.3% of total imports, which has been above 36% for six consecutive months.

At the same time, my country's primary product trade deficit was US$74.64 billion, a record high; in August 2021, it reached a record US$79.43 billion.

If you look at the varieties, the perception will be clearer.

  Take a look at food.

Under the new national food security strategy, the state implements the storage of grain in the land and technology, seizes the two keys of arable land and seeds, and continuously improves the comprehensive agricultural production capacity. The grain output has remained above 1.3 trillion kilograms for seven consecutive years.

In 2021, my country's grain output will reach 1,365.7 billion kilograms, a year-on-year increase of 2%; the unit yield will reach 387 kilograms/mu, an increase of 16.8 kilograms over 2015; the per capita grain possession will exceed 470 kilograms, exceeding the world average.

The self-sufficiency rate of rice and wheat is over 100%, and corn is over 90%.

It can be said that the basic self-sufficiency of grains and the absolute safety of food rations have been achieved.

  However, the structural problems of food have also become prominent, and it is more and more difficult to meet diversified demands.

In 2021, in the face of unfavorable factors such as the new crown pneumonia epidemic, extreme weather, and rising international shipping prices, my country's grain imports will exceed 160 million tons, including 28.35 million tons of corn and 96.52 million tons of soybeans.

In recent years, my country's soybean self-sufficiency rate is about 15%, and edible vegetable oil self-sufficiency rate is about 33%.

It is worth noting that the proportion of grain imports has continued to rise. Among them, the net imports of the three major staple grains, corn, rice and wheat, have become normalized. In particular, the import volume of corn has exceeded the import quota for two consecutive years.

  Second, look at energy.

Since the 18th National Congress of the Communist Party of China, the central government has put forward a new energy security strategy of "four revolutions and one cooperation", promoting energy consumption revolution, energy supply revolution, energy technology revolution, and energy system revolution, and strengthening international cooperation in an all-round way.

During the "13th Five-Year Plan" period, my country's energy independent guarantee capacity has always remained above 80%, and the relationship between supply and demand has continued to improve; as of the end of October 2021, the cumulative installed capacity of renewable energy power generation has exceeded 1 billion kilowatts, including hydropower, wind power, The installed capacity of solar power generation and biomass power generation continues to be the largest in the world; in 2021, the national raw coal output will be 4.13 billion tons, a year-on-year increase of 5.7%; the crude oil output will be 199 million tons, a year-on-year increase of 2.4%.

  Despite the improvement of energy supply capacity and quality, the contradiction of energy security cannot be ignored, which is prominently reflected in oil and gas security.

According to the "Report on the Development of Oil and Gas Industry at Home and Abroad" released by the Institute of Economics and Technology of China National Petroleum Corporation, in 2021, the apparent domestic oil consumption will show a negative growth that is rare in recent years, and the foreign dependence on oil will be 72.2%; in the same period, domestic natural gas consumption will increase by 12%. %, and the external dependence rose to 46%.

Industry insiders predict that with the advancement of my country's industrialization and urbanization, if no effective measures are taken, the dependence on foreign oil and gas will continue to rise.

  Three look at minerals.

Metal minerals are important raw materials for industrial production, including non-ferrous metals, ferrous metals, precious metals, and rare metals.

Judging from the main consumption minerals in recent years, the external dependence of nickel ore, cobalt ore and copper ore has exceeded 90%, and the external dependence of iron ore has exceeded 80%, while the external dependence of rare earth and lead ore is relatively low, about 20%. .

From the analysis, it is mainly related to factors such as low reserves, low quality and low purification technology of my country's mineral products.

  For example, my country's iron ore reserves ranks fourth in the world, but most of them are buried deep underground. Compared with Australia and Brazil, mining is more difficult and costly.

At the same time, the grade of iron ore is relatively low, and the proportion of iron content is lower than the global average.

For another example, my country is the largest producer of silicon and can be self-sufficient in total, but the import dependence of polysilicon exceeds 20%, and the import dependence of metal silicon is less than 0.1%.

The reason is the lack of purification technology, which leads to the import of high-purity silicon products.

  It can be seen that the situation of primary product protection is not easy to sit back and relax.

The reason is that, as the second largest economy in the world, my country has entered the late stage of industrialization. Even if the utilization efficiency of resources and energy reaches the international advanced level, its consumption scale is quite large.

At the same time, the resource endowment of some primary products in my country is not ideal, the per capita possession is lower than the world average, and the difficulty in mining and the low quality coexist.

With the improvement of residents' living standards and the rapid increase in consumption, higher requirements have been placed on the quantity and variety of primary products.

Under multiple factors, it is inevitable to rely on the international market.

  We must be alert to systemic and global risks arising from problems in a single area.

The serious shortage of primary product supply may turn into a "grey rhino" event, especially food security, which is not allowed to miss the slightest.

Since the outbreak of the epidemic, the supply of primary products in many resource-producing countries around the world has experienced varying degrees of problems. Many resource-producing countries have begun to pay attention to environmental protection and the supply of primary products.

If the anti-globalization sentiment is further intensified in the future, these primary products with greater external dependence are likely to become a new "stuck neck" problem.

  This requires us to correctly understand and grasp the supply guarantee of primary products, strengthen strategic planning, and ensure supply security.

The development of security should be integrated into all fields and the whole process of national development, and security issues should be placed in a very prominent position.

It is emphasized that food, energy, and important resources must first ensure supply security.

We attach great importance to the major gaps in the supply of primary products, closely follow, make in-depth judgments, and make full preparations.

Based on domestic guarantee supply

  To correctly understand and grasp the supply guarantee of primary products, it is necessary to strengthen the domestic resource production guarantee capacity.

We must deeply realize that we have to use the "two markets", but there must also be a safety line, and if it exceeds, the "red light" will be turned on.

  - Guarantee ability is "produced".

  The production of primary products has a common law. Whether it is food or energy, it is necessary to play the primary driving force of technological innovation in the production of primary products, improve the utilization rate of resources and output rate, and improve the modernization level of the industrial chain and supply chain.

  Energy is the food for industry, the lifeline of the national economy, and an important basis for improving people's living standards.

General Secretary Xi Jinping emphasized when he inspected Shengli Oilfield: "As a major manufacturing country, if China wants to develop the real economy, the energy rice bowl must be in its own hands." As the world's largest energy consumer, it can only take the energy rice bowl in its own hands. Only by fully guaranteeing the national energy security can we grasp the initiative of future development.

It is the key to secure employment of energy resources and enhance domestic resource production and security capabilities.

This requires clarifying the strategic bottom line of domestic self-sufficiency of important energy resources, deepening the structural reform of the energy supply side, accelerating the development and application of advanced mining technologies, giving priority to the development of non-fossil energy, promoting the clean and efficient development and utilization of fossil energy, and promoting regional multi-energy complementary and coordinated development .

To set the direction of quasi-regional energy development, such as Inner Mongolia to build a national important energy and strategic resource base, Shanxi to become the vanguard of the national energy revolution through comprehensive reform pilots, and Qinghai to build a national clean energy industry highland based on the unique resource endowment of the plateau.

  Food is related to the national movement and people's livelihood.

Only when the problem of eating is solved can the overall situation have a basic guarantee.

General Secretary Xi Jinping pointed out: "For a big country like us with a population of 1.4 billion, the basic position of agriculture cannot be ignored or weakened at any time. It is the truth to have food in hand and not panic at any time." We must deeply realize that, Although my country's grain harvests have been bumper year after year, the foundation of food security is still weak and structural contradictions still exist. It is neither realistic nor reliable to rely on others to solve the food problem of the Chinese people.

To ensure food security, it is necessary to adhere to the strategic bottom line of "basically self-sufficiency in grains and absolutely secure food rations", consolidate the foundation for stable agricultural production and increase production, and put the improvement of comprehensive agricultural production capacity in a more prominent position.

Promote the storage of grain in land and technology, ensure the stability of grain planting area, speed up the construction of high-standard farmland, implement seed industry revitalization actions, improve the level of agricultural machinery and equipment, and ensure reasonable income for grain farmers.

The main production area, the main sales area and the production and sales balance area must share the rice bowl and shoulder the responsibilities together.

  ——The guarantee ability is "stored".

  As a major oil and gas importer, the construction of the oil and gas reserve system should be placed in an equally important position as the investment in oil and gas exploration and development, and the formation of government reserves, corporate social responsibility reserves and production and operation inventories should be organically combined and complementary to each other, physical reserves, production capacity reserves and other The oil reserve system combined with the reserve method.

Establish and improve a multi-level natural gas storage peak regulation and emergency response system in which local governments, gas supply companies, pipeline transportation companies, and urban gas companies are each responsible.

  At the same time, the energy supply guarantee and emergency reserve system should be improved.

Coordinate the green and low-carbon transformation of energy and the security of energy supply, improve the ability to ensure energy supply to adapt to economic and social development and various extreme situations, optimize the layout of energy storage facilities, and improve the coordination mechanism for coal, electricity, oil and gas supply security.

Improve the coal, oil and natural gas production, supply, storage and sales systems, and explore the establishment of a hydrogen energy production, supply, storage and sales system.

Actively promote the construction of leading reservoir power stations in the basin, and improve the reservoir's energy storage, operation adjustment and emergency call capabilities.

  At present, my country has established a grain reserve system with efficient operation and standardized management, with sufficient policy grain stocks and abundant and powerful regulatory resources, mainly including central grain reserves, local grain reserves, and minimum purchase price grain and other policy stocks.

To achieve a basic balance between food supply and demand, it is necessary to make good use of reserves to control resources and adjust market supply and demand. It is necessary to prevent food prices from rising sharply due to shortages of food supply, and to prevent volatile food prices from falling due to loose food supplies.

  While ensuring the absolute safety of rations, it is also necessary to take into account the effective supply of major non-staple foods in the structural arrangement of grain reserves.

At present, corn and soybeans account for a small proportion in the central reserve and even less in the local reserve.

With the upgrading of consumer demand, the demand for feed grains such as soybeans and corn has an increasing trend.

It is necessary to appropriately increase the reserve scale of shortage varieties such as corn and soybeans, and promote the transformation of the reserve grain from a safe total amount to a rational variety structure.

  ——Guarantee capability requires both the government and the market.

  Reforms in energy and agriculture-related fields must be deepened, and the market and the government must work together.

The supply of primary products such as grain, energy, and minerals, on the one hand, requires high policy attention because of its basic nature and importance; on the other hand, the market must also play a decisive role in resource allocation.

  To steadily develop grain production, we must allow farmers to make money by growing grain, and give the main producing areas the motivation to grab grain.

In this regard, it is necessary to give full play to the role of the market mechanism and to give better play to the role of the government.

It is necessary to increase support for grain production, gradually establish and improve the compensation mechanism for the interests of the main production areas, strengthen the financial incentives and subsidies for the large grain-producing counties, and increase the enthusiasm of the main production areas to focus on agriculture and grain.

It is necessary to strengthen subsidies for grain farmers, fully implement the full cost and income insurance of grain, and let farmers have a head start in grain farming.

The efficiency of grain production is low, and it is very difficult to achieve the goal of stabilizing and increasing grain production if it relies entirely on the market to allocate resources.

  "Futures are an effective financial tool to stabilize the supply of primary products, and the futures options market should play a role in stabilizing the supply of primary products." Duan Bingde, a researcher at the Development Research Center of the State Council, said that in 2021, the trading volume of options listed on futures exchanges will rank among the top 10 of corn, natural rubber, iron ore, cotton and copper are all primary products.

The futures market continues to develop and improve, and through hedging and price discovery, the cost expectations of the demand side are stabilized.

It is necessary to strengthen the system improvement of the futures market, improve the legal guidelines, prevent financial risks, prevent excessive capital speculation and amplify the price fluctuations of some primary products.

  - Guarantee capabilities need to optimize the use of foreign markets.

  Under the situation that the gap between supply and demand is increasing, we will further enrich the sources of primary product imports and reduce our dependence on a single import channel.

From the perspective of agricultural products, energy products and mineral products that are highly dependent on foreign countries, the main importing countries are relatively single at present.

For example, soybeans are mainly imported from Brazil and the United States, crude oil is mainly imported from Saudi Arabia and Russia, liquefied natural gas is mainly imported from Australia, iron ore is mainly imported from Australia and Brazil, and copper ore is mainly imported from Chile and Peru.

Single imports are easily affected by natural disasters, geopolitics and other factors, resulting in risks.

  Diversifying the acquisition methods of overseas oil and gas resources is a strategic choice to improve the security of my country's oil and gas supply.

After the two oil crises, major oil consuming countries have recognized the risk of over-reliance on resources in a single region and actively implemented diversified oil acquisition strategies.

Oil and gas resources in Central Asia and Russia are relatively close to my country, and have friendly political relations with my country. They have geographical advantages. In the future, we should focus on strengthening oil and gas development cooperation with countries in the region, and at the same time strengthening the diversification of overseas energy resource transportation channels.

Attention should be paid to the diversification of oil and gas resources import trade methods, and the proportion of long-term supply contracts should be increased.

  Imported grain is an important means to adjust domestic surplus and shortage.

Judging from the procurement situation at the 4th China International Import Expo in 2021, my country's grain enterprises are still in the procurement stage in grain trade, and a whole industry chain development model integrating planting, processing, storage and distribution has not yet been formed in the source of imports.

Compared with multinational grain companies, there is still a big gap between Chinese grain companies.

To further enhance the management capability of the global grain supply chain, enterprises must complement each other in terms of grain, shipping, and logistics, and enhance synergies.

Actively participate in the in-depth cooperation in the agri-food industry in the countries and regions related to the "Belt and Road", and build warehousing, processing and terminals locally.

  (Members of the research team: Gu Yang, Qiao Jinliang, and Feng Qiyu, our reporter)