There is a reason why an increasingly desperate Beijing is willing to suspend tariffs on US pork exports, and it has nothing to do with trade war de-escalation or concessions, and everything to do with preventing an angry and hungry mob from running rampant across China's streets.
As Caixin reports, the widespread outbreak of African swine fever that has prompted China to slaughter millions of pigs has caused 1 trillion yuan ($140 billion) of direct losses, an industry expert estimates; if correct, the direct damage from the "pig ebola" is far greater than the monetary damages incurred from two years of escalating trade tariffs with the US.
The shocking number was unveiled at a pig industry forum last Tuesday by Li Defa, who heads the College of Animal Science and Technology at China Agricultural University, and who notes that the upstream and downstream of the pork industry chain, such as pig feed and catering industry, were not included in the calculation, suggesting the full indirect losses from the crippling pork virus could be orders of magnitude greater.
For over a year, China’s pork industry has been crippled by an outbreak of the deadly pig virus since at least August 2018, when the first case was reported in Northeast China’s Liaoning province. It has since spread to all provincial level regions in the country, wiping out between one-third and half of all Chinese hog stocks and sending pork prices to record highs.
That’s contributed to broader food inflation. In August, China’s consumer price index, which measures the prices of a select basket of consumer goods and services, rose 2.8% year-on-year, according to data from the National Bureau of Statistics (NBS). The average pork price increased 46.7% year-on-year — the fastest pace in more than eight years — adding 1.08 percentage points to CPI growth.
China pork price inflation jumped from +38% in August to +84% in September - WOW. All meat prices now record high. Shortages reported. Imports rumored. Hang on! pic.twitter.com/ZOUkIoZ9Es— Global AgriTrends (@AgriTrends) September 29, 2019
The price of live pigs has surpassed 40 yuan per kilogram in late -September, more than doubling from when the epidemic first became publicly known in August last year.
Even the WaPo recently noted that "the most pressing political problem facing China’s leaders this week may not be the ongoing protests in Hong Kong. Nor the protracted trade war with the United States. No, it is probably a shortage of pork — during the Chinese zodiac year of the pig, no less — that has become so severe that the rulers of the Communist Party declared stabilizing pork supply and prices to be an 'important political task'."
Pork, as is widely known, is the main meat consumed in China, accounting for more than 60% of the country’s meat demand. The country is expected to consume 55 million tons of pork in 2020 with an estimated population of 1.4 billion, said Li: the Chinese love to eat pork. Red fried pork. Sweet-and-sour pork ribs. Glazed pork belly. Twice-cooked pork. Pork dumplings. Trotters. Chinese eat an average of 120 pounds of pork a year. Half the world’s pork is consumed here.
But with a slew of holidays on deck, officials are increasingly worried that public discontent will overshadow the celebrations. They are particularly concerned that pork shortages will ruin the “happy and peaceful atmosphere” required during the upcoming commemoration of the 70th anniversary of the founding of the People’s Republic of China, the biggest event on the Communist Party’s calendar this year.
“We should ensure pork supply by all means,” Vice Premier Hu Chunhua said at the end of last month, adding that China’s pork shortages would be “extremely severe” in the last quarter of this year and the first half of 2020.
“We must strengthen the guidance and management of public opinion,” he continued, according to a state media account of his remarks.
“If China loses more than half of its domestic pork production, it will not be easy to meet the demand gap by relying on foreign supplies,” Li said, failing to mention that if China is truly unable to restore its pork herds and prices continue to soar, the country's massive lower and middle classes will soon become very angry.
To try to stabilize prices and feed domestic supply, the central government pledged to raise purchases of pork from overseas markets, including the U.S., a move which was seen as an olive branch in the trade war, but which in reality was just Beijing desperate to give the angry population what it wants.
China also released 10,000 tons of pork from state reserves last week to cope with a supply shortfall ahead of the weeklong National Day holiday, although not only did the move fail to put a dent on the soaring price of pork, it was instantly absorbed as it represented less than 2 hours of pork need across China.
Should China fail to stabilize the country's collapsing pork population, the following scene from the SCMP, which shows women in China fighting over the last piece of discounted pork at a market, will become increasingly more frequent, and violent.
"Pulled" pork? These women in China were filmed fighting over the last piece of discounted pork at a market pic.twitter.com/WSEq4r9fG6— SCMP News (@SCMPNews) September 20, 2019
In the meantime, the authorities are trying to turn consumers away from China’s favorite meat: the Life Times, a newspaper affiliated with the Communist Party, even suggested in a front-page special that eating too much pork was not healthy. “Eat less pork: Both your wallet and your body will thank you,” the publication wrote on Weibo, the Chinese version of Twitter.
China’s Internet users were not impressed. “This is a modern version of ‘Let them eat cake,’ ” responded Jiang Debin, quoting the line often attributed to Marie Antoinette when French peasants ran out of bread shortly before the revolution. “They are using so-called expert advice to deceive people, but dare not say don’t eat meat unless you have money.”