Chinese Government and Large Chinese Corporations Have Been Systematically Buying Up U.S. Businesses, Homes, Farmland, Real Estate, Infrastructure and Natural Resources

Does China Plan To Establish “China Cities” And “Special Economic Zones” All Over America?

By Michael Snyder, Economic Collapse
January 23, 2013

What in the world is China up to?  Over the past several years, the Chinese government and large Chinese corporations (which are often at least partially owned by the government) have been systematically buying up businesses, homes, farmland, real estate, infrastructure and natural resources all over America.  In some cases, China appears to be attempting to purchase entire communities in one fell swoop.

So why is this happening?  Is this some form of “economic colonization” that is taking place?  Some have speculated that China may be intending to establish “special economic zones” inside the United States modeled after the very successful Chinese city of Shenzhen.

Back in the 1970s, Shenzhen was just a very small fishing village, but now it is a sprawling metropolis of over 14 million people.  Initially, these “special economic zones” were only established within China, but now the Chinese government has been buying huge tracts of land in foreign countries such as Nigeria and establishing special economic zones in those nations.

So could such a thing actually happen in America?  Well, according to Dr. Jerome Corsi, a plan being pushed by the Chinese Central Bank would set up “development zones” in the United States that would allow China to “establish Chinese-owned businesses and bring in its citizens to the U.S. to work.”

Under the plan, some of the $1.17 trillion that the U.S. owes China would be converted from debt to “equity”.  As a result, “China would own U.S. businesses, U.S. infrastructure and U.S. high-value land, all with a U.S. government guarantee against loss.”  Does all of this sound far-fetched?  Well, it isn’t.  In fact, the economic colonization of America is already far more advanced than most Americans would dare to imagine.

So how in the world did we get to this point?  A few decades ago, the United States was the unchallenged economic powerhouse of the world and China was essentially a third world country.

So what happened?

Well, we entered into a whole bunch of extremely unfavorable “free trade” agreements, and countries such as China began to aggressively use “free trade” as an economic weapon against us.

Over the past decade, we have lost tens of thousands of businesses and millions of jobs to China.  When the final numbers for 2012 come out, our trade deficit with China for the year will be well over 300 billion dollars, and that will be the largest trade deficit that one country has had with another country in the history of the world.

Overall, the U.S. has run a trade deficit with China over the past decade that comes to more than 2.3 trillion dollars.  That 2.3 trillion dollars could have gone to U.S. businesses and U.S. workers, and in turn taxes would have been paid on all of that money.  But instead, all of that money went to China.

Rather than just sitting on all of that money, China has been lending much of it back to us – at interest.  We now owe China more than a trillion dollars, and our politicians are constantly pleading with China to lend more money to us so that we can finance our exploding debt.

Today, the U.S. government pays China approximately 100 million dollars a day in interest on the debt that we owe them.  Those that say that the U.S. debt “does not matter” are being incredibly foolish.
So thanks to our massive trade deficit and our exploding national debt, China is systematically getting wealthier and the United States is systematically getting poorer.

And now China is starting to use a lot of that wealth to aggressively expand their power and influence around the globe.

But isn’t it more than a bit far-fetched to suggest that China may be planning to establish Chinese cities and special economic zones in America?

Not really.

Just look at what has already happened up in Canada.  It is well-known that the Chinese population of Vancouver, Canada has absolutely exploded in recent years.  In fact, the Vancouver suburb of Richmond is now approximately half Chinese.  The following is an excerpt from a BBC article…

Richmond is North America’s most Asian city – 50% of residents here identify themselves as Chinese. But it’s not just here that the Chinese community in British Columbia (BC) – some 407,000 strong – has left its mark. All across Vancouver, Chinese-Canadians have helped shape the local landscape.

A similar thing is happening in many communities along the west coast of the United States.  In fact, Chinese citizens purchased one out of every ten homes that were sold in the state of California in 2011.

But in other areas of the United States, the Chinese are approaching things much more systematically.

For example, as I have written about previously, a Chinese group identified as “Sino-Michigan Properties LLC” has purchased 200 acres of land near the town of Milan, Michigan.  Their stated goal is to build a “China City” that has artificial lakes, a Chinese cultural center and hundreds of housing units for Chinese citizens.

In other instances, large chunks of real estate in major U.S. cities that are down on their luck are being snapped up by Chinese investors.  Just check out what a Fortune article from a while back says has been happening over in Toledo, Ohio…

In March 2011, Chinese investors paid $2.15 million cash for a restaurant complex on the Maumee River in Toledo, Ohio. Soon they put down another $3.8 million on 69 acres of newly decontaminated land in the city’s Marina District, promising to invest $200 million in a new residential-commercial development. That September, another Chinese firm spent $3 million for an aging hotel across a nearby bridge with a view of the minor league ballpark.

Toledo is being promoted to Chinese investors as a “5-star logistics region“.  From Toledo it is very easy to get to Chicago, Detroit, Cleveland, Pittsburgh, Columbus and Indianapolis…

With a population of 287,000, Toledo is only the fourth largest city in Ohio, but it lies at the junction of two important highways — I-75 and I-80/90. “My vision is to make Toledo a true international city,” Toledo’s Mayor Mike Bell told the Toledo Blade.

But some of these deals appear to be about far more than just making “investments”.  According to the Idaho Statesman, a Chinese company known as Sinomach (which is actually controlled by the Chinese government) was actually interested in developing a 50 square mile self-sustaining “technology zone” south of the Boise airport…

A Chinese national company is interested in developing a 10,000- to 30,000-acre technology zone for industry, retail centers and homes south of the Boise Airport.

Officials of the China National Machinery Industry Corp. have broached the idea — based on a concept popular in China today — to city and state leaders.

The article suggested that this “technology zone” would be modeled after similar projects that already exist in China, and that Chinese officials were conducting similar negotiations with other U.S. states as well…

Sinomach is not looking only at Idaho.

The company sent delegations to Ohio, Michigan and Pennsylvania this year to talk about setting up research and development bases and industrial parks. It has an interest in electric transmission projects and alternative energy as well.

The technology zone proposal follows a model of science, technology and industrial parks in China — often fully contained cities with all services included.

Thankfully the deal in Idaho appears to be stalled for now, but could we soon see China establish special economic zones in other communities all around America?

The Chinese certainly do seem to be laying the groundwork for something.  They have been voraciously gobbling up important infrastructure all over the country.  The following comes from a recentAmerican Free Press article…

In addition to already owning vital ports in Long Beach, Calif. and Boston, Mass., the China Ocean Shipping Company is eyeing major ports on the East Coast and Gulf of Mexico. China also owns access to ports at the entry and exit points of the Panama Canal.

And due to fiscal woes plaguing many American cities and states, U.S. legislators have been actively seeking out Chinese investors. In one of the worst cases, Baton Rouge, La., Mayor Kip Holden offered the Chinese government ownership and operating rights to a new toll way system if the Chinese would provide the funding to build it.

Does it make sense for the Chinese to own some of our most important ports?

Isn’t there a national security risk?

Sadly, there isn’t much of anything that our politicians won’t sell these days as long as someone is willing to flash a lot of cash.

The Chinese have also been busy buying up important real estate on the east coast as a recent Forbes article explained….

According to a recent report in the New York Times, investors from China are “snapping up luxury apartments” and are planning to spend hundreds of millions of dollars on commercial and residential projects like Atlantic Yards in Brooklyn. Chinese companies also have signed major leases at the Empire State Building and at 1 World Trade Center, the report said.

But it is not only just land and infrastructure that the Chinese have been buying up.

They have also been purchasing rights to vital oil and natural gas deposits all over the United States.

There have been two Chinese companies that have been primarily involved in this effort.

The first is the China National Offshore Oil Corporation (CNOOC).  According to Wikipedia, CNOOC is 100 percent owned by the Chinese government…

CNOOC Group is a state-owned oil company, fully owned by the Government of the People’s Republic of China, and the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) performs the rights and obligations of shareholder on behalf of the government.

The second is Sinopec Corporation.  Sinopec Group is the largest shareholder (approx. 75% ownership) in Sinopec Corporation.  And asthe Sinopec website tells us, Sinopec Group is fully owned by the Chinese government…

Sinopec Group, the largest shareholder of Sinopec Corp., is a super-large petroleum and petrochemical group incorporated by the State in 1998 based on the former China Petrochemical Corporation. Funded by the State, it is a State authorized investment arm and State-owned controlling company.

So whenever you see CNOOC or Sinopec, you can replace those names with the Chinese government.  The Chinese government essentially runs both of those companies.

And as you can see from the following list compiled by the Wall Street Journal, those two companies have been extremely aggressive in buying up rights to oil and natural gas all over the nation…

Colorado: Cnooc gained a one-third stake in 800,000 acres in northeast Colorado and southeast Wyoming in a $1.27 billion pact with Chesapeake Energy Corp.
Louisiana: Sinopec has a one-third interest in 265,000 acres in the Tuscaloosa Marine Shale after a broader $2.5-billion deal with Devon Energy.
Michigan: Sinopec gained a one-third interest in 350,000 acres in a larger $2.5 billion deal with Devon Energy.
Ohio: Sinopec acquired a one-third stake in Devon Energy’s 235,000 Utica Shale acres in a larger $2.5 billion deal.
Oklahoma: Sinopec has a one-third interest in 215,000 acres in a broader $2.5 billion deal with Devon Energy.
Texas: Cnooc acquired a one-third interest in Chesapeake Energy’s 600,000 acres in the Eagle Ford Shale in a $2.16-billion deal.
Wyoming: Cnooc has a one-third stake in 800,000 acres in northeast Colorado and southeast Wyoming after a $1.27 billion pact with Chesapeake Energy. Sinopec gained a one-third interest in Devon Energy’s 320,000 acres as part of a larger $2.5 billion deal.
Gulf of Mexico: Cnooc Ltd. separately acquired minority stakes in some of Statoil ASA’s leases as well as six of Nexen Inc.’s deep-water wells.

So why is the U.S. government allowing this?

That is a very good question.

For a nation that purports to be pursuing “energy independence”, we sure do have a funny way of going about things.

Unfortunately, the sad truth is that China is absolutely mopping the floor with the United States on the global economic stage.  China is rising and America is in an advanced state of decline.  Global economic power has shifted dramatically and most Americans still don’t understand what has happened.

The following are 44 more signs of how dominant the economy of China has become…

1. A Chinese firm recently made a $2.6 billion offer to buy movie theater chain AMC.
2. A different Chinese firm made a $1.8 billion offer to buy aircraft maker Hawker Beechcraft.
3. In December it was announced that a Chinese group would be purchasing AIG’s plane leasing unit for $4.23 billion.
4. It was recently announced that the Federal Reserve will now allow Chinese banks to buy up American banks.
5. A $190 million bridge project up in Alaska was awarded to a Chinese firm.
6. A $400 million contract to renovate the Alexander Hamilton bridge in New York was awarded to a Chinese firm.
7. A $7.2 billion contract to construct a new bridge between San Francisco and Oakland was awarded to a Chinese firm.
8. The uniforms for the U.S. Olympic team were made in China.
9. 85 percent of all artificial Christmas trees are made in China.
10. The new World Trade Center tower is going to include glass that has been imported from China.
11. The new Martin Luther King memorial on the National Mall was made in China.
12. In 2001, American consumers spent 102 billion dollars on products made in China.  In 2011, American consumers spent 399 billion dollarson products made in China.
13. The United States spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.
14. According to the New York Times, a Jeep Grand Cherokee that costs $27,490 in the United States costs about $85,000 in China thanks to all the tariffs.
15. The Chinese economy has grown 7 times faster than the U.S. economy has over the past decade.
16. The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.
17. The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.
18. Overall, the United States has lost a total of more than 56,000manufacturing facilities since 2001.
19. According to the Economic Policy Institute, America is losing half a million jobs to China every single year.
20. Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.
21. In 2010, China produced more than twice as many automobiles as the United States did.
22. Since the auto industry bailout, approximately 70 percent of all GM vehicles have been built outside the United States.
23. After being bailed out by U.S. taxpayers, General Motors is currently involved in 11 joint ventures with companies owned by the Chinese government.  The price for entering into many of these “joint ventures” was a transfer of “state of the art technology” from General Motors to the communist Chinese.
24. Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China’s share had soared to 20 percent.
25. The United States has lost more than a quarter of all of its high-tech manufacturing jobs over the past ten years.
26. China’s number one export to the U.S. is computer equipment.
27. The number one U.S. export to China is “scrap and trash”.
28. The U.S. trade deficit with China is now more than 28 times largerthan it was back in 1990.
29. Back in 1985, the U.S. trade deficit with China was just 6 million dollars for the entire year.  For the month of November 2012 alone, the U.S. trade deficit with China was 28.9 billion dollars.
30. China now consumes more energy than the United States does.
31. China is now the leading manufacturer of goods in the entire world.
32. China uses more cement than the rest of the world combined.
33. China is now the number one producer of wind and solar power on the entire globe.
34. Today, China produces nearly twice as much beer as the United States does.
35. Right now, China is producing more than three times as much coal as the United States does.
36. China now produces 11 times as much steel as the United States does.
37. China produces more than 90 percent of the global supply of rare earth elements.
38. China is now the number one supplier of components that are critical to the operation of U.S. defense systems.
39. A recent investigation by the U.S. Senate Committee on Armed Services found more than one million counterfeit Chinese parts in the Department of Defense supply chain.
40. 15 years ago, China was 14th in the world in published scientific research articles.  But now, China is expected to pass the United States and become number one very shortly.
41. China now awards more doctoral degrees in engineering each year than the United States does.
42. According to one study, the Chinese economy already has roughly the same amount of purchasing power as the U.S. economy does.
43. According to the IMF, China will pass the United States and will become the largest economy in the world in 2016.
44. Nobel economist Robert W. Fogel of the University of Chicago is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040 if current trends continue.

Without the “globalization” of the world economy, none of this would have ever happened.  But instead of admitting our mistakes and fixing them, our politicians continue to press for even more “free trade” and even more integration with communist nations such as China.

In fact, according to Dr. Jerome Corsi, the U.S. government has already set up 257 “foreign trade zones” all over America.  These “foreign trade zones” are apparently given “special U.S. customs treatment” and are used to promote “free trade”…

Corsi noted that the U.S. government has created 257 foreign trade zones, or FTZs, throughout the United States, designed to extend special U.S. customs treatment to U.S. plants engaged in international-trade-related activities.

The FTZs tend to be located near airports, with easy access into the continental NAFTA and WTO multi-modal transportation systems being created to move free-trade goods cheaply, quickly and efficiently throughout the continent of North America.

“There is nothing in the U.S. government’s description of FTZs that would prevent a foreign government, like China, from operating a shell U.S. company that is in reality owned and financed by the Chinese government and operated through a Chinese government-owned corporation,” Corsi wrote.

Sadly, we are probably going to see a whole lot more of this in the years ahead.

According to Corsi, a professor of economics at Tsighua University in Beijing named Yu Qiao has suggested the following plan as a way to transform the debt that the United States owes China into something more “tangible”…

1. China would negotiate with the U.S. government to create a “crisis relief facility,” or CRF. The CRF “would be used alongside U.S. federal efforts to stabilize the banking system and to invest in capital-intensive infrastructure projects such as high-speed railroad from Boston to Washington, D.C.
2. China would pool a portion of its holdings of Treasury bonds under the CFR umbrella to convert sovereign debt into equity. Any CFR funds that were designated for investment in U.S. corporations would still be owned and managed by U.S. equity holders, with the Asians holding minority equity shares “that would, like preferred stock, be convertible.”
3. The U.S. government would act as a guarantor, “providing a sovereign guarantee scheme to assure the investment principal of the CRF against possible default of targeted companies or projects”.
4. The Federal Reserve would set up a special account to supply the liquidity the CRF would require to swap sovereign debt into industrial investment in the United States.

Apparently the Bank of China really likes this plan and would like to see something like this implemented.

In the years ahead, perhaps many of you will end up working in a “special economic zone” for a Chinese company on a project that is being financially guaranteed by the U.S. government.

If that sounds like a form of slavery to you, the truth is that you are probably not too far off the mark.

The borrower is the servant of the lender, and we should have never allowed ourselves to get into so much debt.

Now we will pay the price.

To get an idea of how much the world has changed in recent years, just check out this incredible photo which contrasts the decline of Detroit over the years with the amazing rise of Shanghai, China.

Things did not have to turn out this way.  Unfortunately, we made decades of incredibly foolish decisions and we wrecked the greatest economic machine that the world has ever seen.

Now the future for America looks really bleak.

Or could it be that I am being too pessimistic?  Please feel free to post a comment with your thoughts below…

Related:

40 Ways That China Is Beating America

China Is Massively Boosting Stockpiles of Rice, Iron Ore, Precious Metals, Dry Milk; The U.S. Has No Remaining Grain Reserves

They Are Getting Ready: “No Obvious Reason” For Why China Is Massively Boosting Stockpiles of Rice, Iron Ore, Precious Metals, Dry Milk

By Mac Slavo, SHTFPlan.com
January 10, 2013

If there were ever a sign that something is amiss, this may very well be it.

United Nations agricultural experts are reporting confusion, after figures show that China imported 2.6 million tons of rice in 2012, substantially more than a four-fold increase over the 575,000 tons imported in 2011.

The confusion stems from the fact that there is no obvious reason for vastly increased imports, since there has been no rice shortage in China. The speculation is that Chinese importers are taking advantage of low international prices, but all that means is that China’s own vast supplies of domestically grown rice are being stockpiled.

Why would China suddenly be stockpiling millions of tons of rice for no apparent reason?

Perhaps it’s related to China’s aggressive military buildup and war preparations in the Pacific and in central Asia.

If a 400% year-over-year increase in rice stockpiles isn’t enough to convince you the Chinese are preparing for a significant near-term event, consider that in Australia the country’s two major baby formula distributors have reported they are unable to keep up with demand for their dry milk formula products. Grocery stores throughout the countryhave been left empty of the essential infant staple as a result of bulk exports by the Chinese.

A surge in sales of one of Australia’s most popular brands of infant formula has led to an unusual sight for this wealthy nation: barren shelves in the baby aisle and even rationing of baby food in some leading retail outlets.

We’d be more apt to believe the Chinese were panic-buying baby formula had the Chinese milk scandal occurred recently. The problem is that it happened four years ago. Are we to believe the Chinese are just now realizing their baby food may be tainted?

In addition to the apparent build-up in food stocks, the Chinese are further diversifying their cash assets (denominated in US Dollars) into physical goods. In fact, in just a single month in 2012, the Chinese imported and stockpiled more gold than the entirety of the gold stored in the vaults of the European Central Bank (and did we mention they did this in one month?).

Their precious metals stockpiles have grown so quickly in recent years that Chinese official holdings remain a complete mystery to Western governments and it’s rumored that the People’s Republic may now be the second largest gold hoarding nation in the world, behind the United States.

We won’t know for sure until the official disclosure which will come when China is ready and not a moment earlier, but at the current run-rate of accumulation which is just shy of 1,000 tons per year, it is certainly within the realm of possibilities that China is now the second largest holder of gold in the world, surpassing Germany’s 3,395 tons and second only to the US.

But the Chinese aren’t just buying precious metals. They’re rapidly acquiring industrial metals as well.

Spot iron prices are up to an almost 15-month high at $153.90 per tonne. The rally in prices, which started in December 2012, is mainly due to China’s rebuilding of its stockpiles as the Asian giant gears to boost its economy, which in turn, could improve steel demand.

The official explanation, that China is preparing stockpiles in anticipation of an economic recovery, is quite amusing considering that just 8 months ago Reuters reported that China had an oversupply, so much so that their storage facilities had run out of room to store all the inventory!

When metals warehouses in top consumer China are so full that workers start stockpiling iron ore in granaries and copper in car parks, you know the global economy could be in trouble.

At Qingdao Port, home to one of China’s largest iron ore terminals, hundreds of mounds of iron ore, each as tall as a three-storey building, spill over into an area signposted “grains storage” and almost to the street.

Further south, some bonded warehouses in Shanghai are using carparks to store swollen copper stockpiles – another unusual phenomenon that bodes ill for global metal prices and raises questions about China’s ability to sustain its economic growth as the rest of the world falters.

Now, why would China be stockpiling even more iron (and setting 15 month price highs in the process) if they had massive amounts of excess inventory just last year?

Something tells us this has nothing to do with an economic recovery, or even economic theory in terms of popular mainstream analysis.

Why does China need four times as  much rice year-over-year? Why purchase more iron when you already have a huge surplus? Why buy gold when, as Federal Reserve Chairmen Ben Bernanke suggests, it is not real money? Why build massive cities capable of housing a million or more people, and then keep them empty?

It doesn’t add up. None of it makes any sense.

Unless the Chinese know something we haven’t been made privy to.

Is it possible, in a world where hundreds of trillions of dollars are owed, where the United States indirectly controls most of the globe’s oil reserves, and where super powers have built tens of thousands of nuclear weapons and spent hundreds of billions on weapons of war (real ones, not those pesky semi-automatic assault rifles), that the Chinese expect things to take a turn for the worse in the near future?

The Chinese are buying physical assets – and not just representations of those assets in the form of paper receipts – but the actual physical commodities. And they are storing them in-country. Perhaps they’ve determined that U.S. and European debt are a losing proposition and it’s only a matter of time before the financial, economic and monetary systems of the West undergo a complete collapse.

At best, what these signs indicate is that the People’s Republic of China is expecting the value of currencies ( they have trillions in Western currency reserves) will deteriorate with respect to physical commodities. They are stocking up ahead of the carnage and buying what they can before their savings are hyper-inflated away.

At worst, they may very well be getting ready for what geopolitical analyst Joel Skousen warned of in his documentary Strategic Relocation, where he argued that some time in the next decade the Chinese and Russians may team up against the United States in a thermo-nuclear showdown.

Hard to believe? Maybe.

But consider that China is taking measures now, in addition to their stockpiling, that suggest we are already in the opening salvos of World War III. They have already taken steps to map our entire national grid – that includes water, power, refining, commerce and transportation infrastructure. They’re directly involved in hacking government and commercial networks and are responsible for what has been called the greatest transfer of wealth in the history of the world. Militarily, the PRC has been developing technology like EMP weapons systems, capable of disabling our military fleets and the electrical infrastructure of the country as a whole, and has been caught red-handed manufacturing fake computer chips used in U.S. Navy weapons systems.

If you still doubt China’s intentions and expectations, look to other governments, including our own, for signs that someone, somewhere is planning for horrific worst-case scenarios:

• The Russians have scheduled 5,000 underground bunkers for completion this year.
• Europe rapidly designed, built and stocked the so-called Doomsday Seed Vault in Svalbard, Norway, which contains tens of thousands of varieties of seeds and is supposed to preserve them in the event of Armageddon style events like asteroid impacts or nuclear war.
• The United States government has been stockpiling tens of millions of emergency meals and other supplies and regionalizing their emergency distribution centersacross the country (curiously, those supplies never made it to Hurricane Sandy victims)
• The government has purchased nearly 2 billion rounds of ammunition in the last few years.
• The Pentagon has been Actively War Gaming ‘Large Scale Economic Breakdown’ and ‘Civil Unrest’
• China recently made a call, through their Xinhua news agency, for the complete disarmament of the American population (Behind every blade of grass…)

Perhaps there’s a reason why former Congressman Roscoe Bartlett has warned, “those who can, should move their families out of the city.”

As Kyle Bass noted in a recent speech, “it’s just a question of when will this unravel and how will it unravel.”
Given how similar events have played out in history, we think you know how this ends.

It ends through war.

Governments around the world are stockpiling food, supplies, precious metals and arms, suggesting that there is foreknowledge of an impending event.

Should we be doing the same?

U.S. Government Wheat Stocks Collapse

By Benjamin Gisin, Barter News
July 22, 2008

Quietly, the last of the U.S. government’s wheat reserves, held in the Bill Emerson Humanitarian Trust, were sold in late May onto the domestic market for cash. The cash was put in a trust for food aid. With no other government wheat holdings, U.S. government wheat stocks are now totally exhausted [see CCC inventory].

The following recent statements by Rebecca Bratter, director of policy for U.S. Wheat Associates, provides insights:

“While the U.S. wheat industry strongly supports the administration’s goal of maintaining current food aid programs to prevent rampant hunger worldwide, there is concern regarding the impact of selling reserve wheat on the domestic market and over the lack of commitment from the administration to replenish the Bill Emerson Humanitarian Trust.

“U.S. Wheat Associates has shared these concerns with high officials at USDA and on the President’s staff and has asked about the Administration’s intent regarding replenishment of the Bill Emerson Humanitarian Trust. Staff from the office of the President’s Special Agricultural Assistant noted that while there is no commitment at this time, the administration intends to replenish the Trust once the supply and price scenario stabilizes.”

(Note: U.S. Wheat Associates works in 90 countries promoting U.S. wheat exports.)

The Bill Emerson Humanitarian Trust was established in 1980 by an act of Congress and is authorized to hold up to 4 million metric tons of wheat, corn, sorghum and rice, as a reserve for global food crises. The wheat is purchased and managed by the Commodity Credit Corporation and included in the total amount of wheat owned and held by the U.S. government. Holdings by the BEH Trust for corn, sorghum and rice are also zero.

For the decade of the ‘80s, government wheat holdings (including those in the BEH Trust) averaged 358 million bushels. For the decade of the ‘90s, government wheat holdings averaged 133 million bushels. Since 2000, government wheat holdings dropped steadily until recently when the last of the government-owned wheat was sold.

With no formal plan for wheat stocks by the U.S. government, wheat stocks have defaulted to the arena of the private free-market sector. Unfortunately, the private sector has no plans for any kind of minimum wheat stocks that would protect the American public from a price and/or availability standpoint.

Private wheat stocks are divided into two major categories — on-farm wheat stocks owned by farmers, and off-farm wheat stocks owned by warehouses and grain companies. These two together held 305.6 million bushels of wheat as of June 1 (or roughly 1 bushel per person living in the United States) the lowest level in 60 years.

Of these stocks, on-farm wheat stocks are at 25.6 million bushels, the lowest level of on-farm wheat stocks since the USDA started keeping tabs back in 1934. So as you are driving in rural America before wheat harvest, the farmer’s bins have never been so empty.

The USDA, projects America to have a bumper wheat crop in 2008, producing 2.43 billion bushels and consuming and exporting 2.30 billion bushels. This leaves a meager 133 million bushels (5.5 percent of production) as a margin for error. Globally, the USDA projects wheat production to be 24.36 billion bushels, consumption to be 23.74 billion bushels for a relatively smaller margin of 622 million bushels or 2.6% of production.

The recent wheat crises in America was sparked by the nation exporting more wheat than it produced. This means the true 2008 wheat margin for Americans is really the global margin of 2.6%. Any decline from global projections could precipitate greater wheat exports from America and further draw down already low domestic and global wheat stocks.

Food security is emerging as a global focal point. With the U.S. government and the private sector lacking visions for stocks, food security is poised to grow as a grass-roots issue around the nation.

The U.S. Has No Remaining Grain Reserves; China Stockpiling Grain

The United States has in the past kept a strategic grain reserve, but it was largely eliminated under the 1996 Freedom to Farm Act. Since the beginning of agriculture, farmers have recognized the need to manage stocks of grain to prevent starvation in times of scarcity. Grains are an easy-to-store and nutritious way to provide the basic needs of a population facing a food emergency until alternative food supplies can be arranged. To ensure food security, many countries stockpile strategic grain reserves (SGRs) to help cope with food emergencies, but grain reserves are also used to stabilize grain prices and as a loan commodity. Today, there are no remaining grain reserves in the U.S., and there haven't been since July 2008. Millions of people may die in the next few years because of inadequate world grain reserves. 
The United States has in the past kept a strategic grain reserve, but it was largely eliminated under the 1996 Freedom to Farm Act. Today, there are no remaining grain reserves in the U.S., and there haven't been since July 2008 [this was shortly after the sale of 18.37 million bushels of wheat from USDA’s Commodity Credit Corporation (CCC) to the Bill Emerson Humanitarian Trust, which left only only 2.7 million bushels of wheat in the entire CCC inventory]. In addition to having no grain reserves, the U.S. has nothing else in its emergency food pantry: there is no cheese, no butter, no rice, no corn, or anything else left in reserve except for dry milk.

Grain is the Foundation of the World's Diet

Since the beginning of agriculture, farmers have recognized the need to manage stocks of grain to prevent starvation in times of scarcity. In the Hebrew Bible, the Egyptians were directed to stockpile seven years of harvests in preparation for seven years of famine. The primary purpose of grain reserves is to help cope with food emergencies, but grain reserves are also used to stabilize grain prices and as a loan commodity.

Food security in the fullest sense would mean that all people at all times have access to adequate quantities of safe and nutritious food. To ensure food security, many countries stockpile strategic grain reserves (SGRs). Grains are an easy-to-store and nutritious way to provide the basic needs of a population facing a food emergency until alternative food supplies can be arranged. Food emergencies can result from natural causes, such as pest outbreaks sparked by drought, floods, storms, earthquakes, or crop failures, as well as from war and terrorism.

World Hunger and Grain Reserves

In 1977 the General Assembly of the Unitarian Universalist Association urged and called upon member societies to urge the governments of the United States and Canada to establish national grain reserves and to demonstrate willingness to participate in concert with other large grain-producing countries in a world food bank. The factors leading to this resolution where as follows:

• Millions of people may die in the next few years because of inadequate world grain reserves; and drought and other causes have rendered grain production unstable, which drives prices up and forces poorer countries out of the world grain market;
• It has been demonstrated that when adequate world grain reserves are maintained, price fluctuations are minimized even in times of small harvests;
• The United States, Canada and other large grain producers hold the key to stable world-wide food reserves that have been allowed to dwindle to a fraction of their former levels; and
• The United States, Canada and other large grain producers, through climatic and other circumstances, may themselves experience shortage.

Federal Agriculture Improvement and Reform Act of 1996

In 1996, the Federal Agriculture Improvement and Reform Act of 1996 ("Freedom to Farm Act") called for elimination of government stockpiles of grain, except for a very small amount in the Emerson Humanitarian Trust Reserve intended for foreign aid. The misguided policies of the Bill Clinton administration and the Republican Congresses of the 1990s (as exemplified by the 1996 "Freedom to Farm Act") eliminated historic food-security provisions and handed over control of grain stocks to corporate agribusiness giants and commodities speculators.

The National Family Farm Coalition has for years been warning that a global trading system designed to enrich agribusiness conglomerates, while undermining the interests of working farmers in the U.S. and abroad, would lead to precisely the disaster that is now unfolding. Now, the United States government has no reserves of butter, cheese, barley, corn, oats, sorghum, soybeans, wheat, rice, sugar, honey, peanuts, canola seed, crambe, flaxseed, mustard seed, rapeseed, safflower seed, sunflower seed, peas, lentils and chickpeas. [Source: U.S. Farm Service Agency, Current CCC Inventory (PDF file)]

According to Patrick Woodall, senior policy analyst with Food and Water Watch:

“Consumers see cereal prices go up when input prices rise, but they never see the pass-through when input prices fall... When the crop prices collapsed in 1996 (due to the 1996 "Freedom to Farm Act"), the grocery store prices didn’t come down at all. In many cases, they went up for things like pork chops, ground beef and milk.”

In the developing world, Woodall said, the cereal price index rose 88 percent between March 2007 and March 2008. “Much of the global cereal trading below the cost of production was a deterrent to holding onto any reserves at all.”

Woodall says another factor driving stocks down in the Third World is that “the World Bank has pressured countries to eliminate their own reserve programs, much like the United States... Countries like Kenya and Malawi were forced by the World Bank to sell off their reserves. That was partly because of fiscal austerity reasons, but it was also partly to repay debt to the World Bank.”

As these programs have been eliminated to conform with World Bank directives, “we’re now in a situation where there’s no buffer to protect people from a severe food crisis.”

We are just one drought away from possibly seeing $10/bushel corn or $20/bushel wheat with absolutely no plan in place to deal with such a calamity. The President and U.S. Congress have irresponsibly ignored this issue throughout the entire Farm Bill debate, even as other countries such as China and India build up their strategic stocks. - National Family Farm Coalition

China's Grain Reserves 'Self-Sufficient'

China is aggressively building its grain reserves. Reuters reported that China will raise spending on reserves of grain, edible oils and materials by 61% in 2009, bringing the total to CNY 178.045 billion or 4.1% of its budget spending. According to the report, the spending includes CNY 78.341 billion to stimulate domestic demand by expanding reserves of important materials such as grain, edible oils, crude oil, non-ferrous metals and specialty steel, as well as developing storage facilities. Direct subsidies to grain producers will also rise 25.8% to CNY 19 billion.

New Wheat Crisis Plagues World Food Supply
China Adds 292 Million Tons to Grain Reserve in 2008
China, South Korea, Japan, Saudi Arabia, Kuwait Grabbing Land for Food
South Asian Nations Agree to Build Grain Reserves
China Says to Spend $26 Billion on Commodity Reserves; Veg Oil, Grain
China Boosts Rural Economy Spending, Power Reform
China Adds $10 Billion to Commodity Stockpiling Budget
Food Grain Export Ban by India, China Harming Third World

In the wake of global food issues in early 2008, a number of groups in the U.S. are lobbying to create a strategic grain reserve:

Family Farmers Respond to the Food Crisis
An Open Letter to Congress on the Need for Strategic Grain Reserves
Growers and Economists Push for Strategic Grain Reserves
U.S. Farm Group Backs World Grain Reserve Proposal
Final Declaration of Farmers at High Level Meeting on Food Security, January 27, 2009

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The U.S. Has No Remaining Grain Reserves; the 2008 Food Crisis Is Not Over