FINANCING DIGITALIZATION AND INNOVATION IN CHINA'S AGRICULTURAL SECTOR TO ACHIEVE SUSTAINABLE DEVELOPMENT

Abstract

The article highlights that food security is one of the key Sustainable Development Goals (SDGs) of the United Nations, and agricultural systems account for more than one-third of global greenhouse gas emissions, underscoring the critical importance of innovation and digitalization in this sector. Agriculture is a capital-intensive sector with specific financial needs, requiring tailored approaches and funding strategies. Global demand for food is projected to grow by 70% by 2050, necessitating at least $80 billion in annual investments across all value chains. Therefore, researching the financing of innovations for the sustainable development of the agricultural sector is an extremely relevant topic. China is a leader in innovation and digitalization within the agricultural sector. The article identifies key features of financing innovative activities in China's agriculture and highlights the specific characteristics of the country's agricultural sector. It examines the dynamics of global investments in agri-food technologies and emphasizes that China is one of the leaders in developing and investing in AgriTech and FoodTech technologies. The Chinese government places significant emphasis on fostering the innovative capacities of platform companies and ensuring the sustainable growth of the platform economy. China's digital economy has ranked second globally for many years and developing rapidly. However, despite the fast pace of digitalization, the digital divide between rural and urban areas remains a challenge, hindering innovative development and requiring increased investment. The article identifies the main obstacles to the development of digital innovations in China's agricultural sector, including fragmented land ownership and the dominance of small-scale farmers, who constitute 98% of agricultural entities. Addressing these issues depends on ensuring the accessibility of technical solutions, which requires government subsidies and the development of public-private partnerships. The article reviews major government initiatives for financial support of digitalization and innovation in the agricultural sector, considering their specific features in China. The government subsidizes insurance programs, implements intelligent agricultural technologies, and makes these technologies available to farmers. In this context, farmers are the end-users, while the government acts as the primary client. The role of the Agricultural Bank of China in financing innovation and sustainable development in the agricultural sector is also explored. Additionally, the article examines initiatives to promote inclusive digital finance in rural areas, including cloud platforms for agricultural technologies and education. Key market-leading companies driving digitalization in the agricultural sector are highlighted, along with their main products and services. The interaction of these companies with banks and insurance providers is also discussed. It is shown that the development of the digital economy in rural areas is accelerating rapidly, with the level of informatization in agricultural production steadily increasing. Precision farming technologies optimize resource usage, enhance productivity, and reduce environmental impact. Data analytics and machine learning improve crop planning, yield forecasting, and the detection of plant diseases. Information and communication technologies (ICT) provide farmers with access to critical public information, financial services, insurance, credit, new agricultural technologies, research, and e-commerce opportunities. These technologies are transforming market structures and economies, contributing to more accessible food prices, profitability in agricultural production, sustainable development, and increased incomes for farmers.