The Year of the Pig signifies abundance, prosperity and wealth in China. Not so this year. African Swine Flu has decimated the Chinese pig industry. The China-U.S. Trade dispute made matters worse because China decided to replace its U.S. pork purchases with sick pigs from Russia.
The U.S. is the world’s second-largest pork producer, largest exporter and the pork is free of ASF. Russia is the country worst affected by ASF in the world. The virus was first discovered at a farm not far from China’s border with Russia and has spread to all 31 mainland provinces. It is estimated up to 200 million pigs, almost half the country’s pig population have either died from the disease or been culled.
With a population of 1.4 billion who have a strong affinity for pork, China has the world’s biggest pig farms. It accounts for half the global pig population and the highest per capita consumption of pork. In 2018, 694 million pigs were readied for slaughter; the Chinese consumed nearly 56 million tons of pork, as much as the rest of the world combined. Each citizen consumes about 55kg of pork every year.
“Pork politics,” “pork economics,” “pork diplomacy,” dominate China’s domestic and foreign agenda. In other words, China is porked!
The pork industry in China contributes an estimated US$128 billion to the national economy. Rising pork prices are having a major impact on the cost of living — a rising worry for China’s leaders at a time when the U.S.-China trade war, Hong Kong protests, South China Sea tensions and depreciation of the yuan are already pushing up inflation.
Pork is the biggest single consumer item in China’s consumer price index basket. It accounts for 10 percentage points of food prices and more than three percentage points overall in China’s CPI.
China’s economy showed more signs of weakness last Monday when the country published weak data for industrial output, investment and retail sales. Industrial output fell to its lowest level in 17 years. Earlier today, German financial services company Allianz, reported that assets held by Chinese households fell 3.4 percent last year, the first decline since 2000.
The Ministry of Agriculture has warned that pork prices could rise 70 percent by the end of the year. They have already doubled since July.
To address the crisis, the government is releasing millions of tons of frozen pork from its strategic pork reserves.
A video of shoppers fighting over a large piece of fresh pork during the opening of Costco’s first store in Shanghai a couple of weeks ago went viral.
Chinese pig farms have also been hit by China’s tariffs on American soybeans as they have made a key ingredient of hog food more expensive.
There is a Chinese saying about “eating a big bowl of pork’ that symbolizes lives that are well-fed and clothed — financial well-being. Unfortunately, the Chinese are unable to fill their bowls with pork this year of the pig.
With pork prices rising, the specter of stagflation and rising inflation facing China’s leadership as it readies to celebrate the 70th anniversary of the founding of the People’s Republic of China on October 1st, China is porked in more ways than one.