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China’s pursuit of semiconductor self-sufficiency is widely discussed. But just as urgently, Beijing needs to address its growing reliance on imported food as shortages loom. The approval of seeds from genetically modified organisms (GMOs) is intended to stimulate production and suppliers.

Beijing has provisionally approved the cultivation of 37 varieties of genetically modified corn and 14 soybean seeds. This represents a major change for a country that has long been wary of allowing local companies to grow GMO seeds commercially. Consumers have publicly spoken out against the technology.

But GMO seeds can increase much-needed domestic yields. China is the world’s largest importer of soybeans and corn and is expected to remain so for years to come due to rising per capita consumption. For example, soybean oil consumption has more than quadrupled in the last two decades.

Both corn and soybeans are important ingredients in pig diets, and pork accounts for nearly two-thirds of local meat consumption.

The approved list includes corn varieties developed by China National Seed Group, a unit of Syngenta Group that was acquired by state-owned ChemChina in 2017, as well as soybean varieties from local rival Beijing Damitnong Technology Group.

The latter rose by the daily limit of 10 percent on Wednesday. It now trades at 57 times forward earnings, a significant premium to local peers that reflects its growth potential.

Due to factors such as increasing urbanization, food consumption in China is already greater than domestic supply. Additionally, global warming has affected agricultural production due to extreme weather conditions. Increasing geopolitical tensions with the USA increase the urgency. The two largest U.S. agricultural exports to China in 2022 by value were soybeans at $18 billion and corn at $5.3 billion.

Initially, the market size of these modified seeds will likely start small. Still, the companies that receive early approvals will have a first-mover advantage over the competition. In addition, a strictly regulated domestic market also ensures that winners do not have to worry about global competition.

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Source : www.ft.com

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