Why does China go abroad?:A study case of the methods and dynamics of COFCO’s expansion towards Brazil

Since 2012, Chinese investments in the Brazilian agricultural sector have been accomplished through methods other than exclusive land purchase. Among all methods, mergers and acquisitions of traditional agri-food transnationals have been the main choice of some of the Chinese investors, like the giant state-owned enterprise, COFCO. After purchasing two big transnationals, the company became the third largest soybean exporter in Brazil. COFCO's exports have met a growing consumer market in China, providing abundant raw material to the Chinese feed and livestock industry. Notwithstanding, besides controlling and seeking profits from sectors directly linked to China, COFCO has also reproduced and promoted multiple forms of capital accumulation abroad by mimicking methods of recently acquired corporations, and by engaging in diversified industrial and commercial operations across the world. This paper explores the basis of this phenomenon by raising the hypothesis that COFCO “goes outwards” in order to evade from latent problems of over-accumulation of capital in the sectors it operates in China. Accordingly, the Chinese agriculture has experienced different methods of accumulation, followed by the vertical integration within all segments of the production. Consequently, an increasing concentration of industrial capital in agriculture, as well as its connections to banking capital, has been responsible for the consolidation of huge financialised conglomerates. At the same time, a restructuration of the state sector has constituted dominant and monopolistic forms of capital which has shaped and has been shaped by the process related previously. Finally, these factors combined have been responsible for an increasing overaccumulation of different segments of China’s economy. From the perspective of the feed and processing industry, this paper argues that over-accumulation has been solved by exporting capital across global commodity chains. It identifies COFCO as a result of this process, which is one way to explain the main dynamics of COFCO’s investments in Brazil.