GrainFinancialization and China-Africa Agricultural Cooperation
SIT Tsui et al.
The globalization led by financial capital has already resulted in “grainfinancialization”（or grain Dollarization），which is the most important factor giving rise to the grave situation in global food security，as well as turmoil in low-income countries that rely heavily on grain imports. This research studies and analyzes food security issues in the 21st century in the context of international financial globalization. In particular，it pays special attention to China-Africa cooperation in the context of grain financialization in order to deal with the dual risks existing in grain and financial markets.
At present，the global supply and demand of wheat，maize，rice and soybeans are essentially in a state of equilibrium，without obvious gap between two sides. It indicates that the supply-demand relationship in international grain market is not the main factor that causes severe fluctuations in grain prices. Rather，there is a close correlation between the severe fluctuations in international grain price and the several rounds of quantitative easing in the United States monetary strategy.
Ever since the financial crisis erupted in the Wall Street in 2007，the US government adopted a “super quantitative easing” strategy to transfer the costs of the crisis and triggered inflation globally. The enormous amount of US dollars thus issued has produced increasing surplus liquidity which then gushed in the grain market，leading to wild fluctuations in grain market prices. The grain market has become the“garbage dump” of excessive financial liquidity. Every major rise and fall functions to digest the surplus liquidity that has been produced by the dominant nations in the West. Both these two aspects show that operation of the grain market has gone beyond the normal realm and the “financial properties of grain” has been artificially created.
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