*4.2. Matching 2: Production Advantages of Central Asian Countries and China's Agricultural Investments in the Region*

How China can meet the challenge of growing demand for food and ensure the stability of food supply chains? As stated in the National Strategy on Food Security [25], among the solutions are the sharing of resources, support of the enterprises in going global, and encouragement of investment in agricultural products abroad. Foreign direct investment became an increasingly important element in sustainable development of agricultural value chains worldwide [127]. Being the most populous country in the world, China has been increasingly concerned in securing sustainable and sufficient food supply for its people. As the economic growth in China brings more purchasing power to the customers, the country has been emerging as a leading importer of food of all kinds, including high-quality and nutritious products, as well as a major player in outward agricultural investment [128]. According to Zhang and Cheng [129] and Cui and Shoemaker [130], the main task for China's overseas agricultural investment is to establish global value chains that would improve the stability of food supply. The country has been diversifying where it obtains crops that Chinese farmers are not able to grow in sufficient quantities domestically [122].

Many authors, including Bondaz et al. [131], Zhang [132], Shah [133], He et al. [134], and Huang et al. [135] share the vision of the BRI as a driver of China's new approach to its food security strategy and establishment of sustainable agricultural value chains across Eurasia. While the BRI's major focus in Central Asia is on the improvement of connectivity and facilitation of trade, it also involves investment in agriculture. Among the countries of Central Asia, Kazakhstan is most attracting country of foreign direct investment (70% of total investments in the region) [136] and the main recipient of agricultural investments from China (over \$1 billion in 17 projects as of 2018) in processing and sale of rapeseed and sunflower seeds, oil crops, and fresh-frozen fish and fish products, construction of slaughterhouses and poultry farms, and establishment of a cluster in sheep farming and enterprises for deep processing of grain, flax, soybeans, and semi-finished meat products [137] (Table 9). In Uzbekistan, Tian Jean Nana and Exim Bank of China invested about \$29 million to the establishment of a logistics hub in the Bukhara region for the processing of fruit and vegetables and meat and dairy products and exporting them to China. In Kyrgyzstan, Chinese companies invest to crop production, processing of agricultural products, and food industry [138].


**Table 9.** Major Chinese investment projects in agriculture \* and Central Asia's competitive advantages.

**Table 9.** *Cont*.

Note: \* this study does not consider the cotton sector, one of the major attractors of Chinese investment in the region, as that not directly related to food production; green cells—C group; yellow cells—CC group; orange cells—MC group; red cells—NC group. Source: Authors' development based on [104–108,123].

In general, the directions of Chinese agricultural investment in the region intersect with competitive advantages of respective counties. In particular, there is a distinct match between the investment and advantages in horticulture. This finding, however, contradicts with Hofman [139], who argued that the investments in the production of unpreserved fruits in Central Asia were disadvantageous for Chinese agro holdings due to the impoverished storage and transport infrastructure and costly shipment to China. Indeed, there are substantial challenges to both the stability and economic efficiency of value chains due to the backwardness of infrastructure, geography, and landlockedness and remoteness of the region, but Chinese investors still enter joint projects in the production of fresh fruits and vegetables and other perishable products. Perspective sectors for Chinese companies to move to are dairy and sugar production in Kyrgyzstan, both in C group. In most of the sectors, where China currently invests to, Central Asian agricultural producers possess conditionally competitive advantages, according to our classification. Moreover, there are investment projects in the sectors where the advantages are either marginal or absent.
