Saturday, December 9, 2023

How China could be causing global inflation to skyrocket

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Despite having less than 20% of the world’s population, China plans to store more than half of grain and other commodities, according to the financial daily Nikkei Asia. This approach might force global prices to rise, putting more nations at risk of food shortages.

China’s reaffirmation of its long-term objective of being almost totally self-sufficient in pork production implies that the world’s largest swine herd will continue to rely on global grain supplies.

According to Bloomberg, the country that consumes half of the world’s pork will continue to produce 95% of the commodity domestically until 2025. China’s Ministry of Agriculture has said that the country aspires to be self-sufficient in food. Demand for poultry and eggs is 100%, 85% for beef and lamb, and 70% for milk. That is one of the world’s second-largest economy’s food security goals.

To meet the abovementioned objectives, local governments would most likely need to expand their imports of soybeans, grain, and animal feed from other countries in order to fatten domestic cattle and poultry. Soybeans and corn are two of China’s most important imports. In the last two years, the government has imported unprecedented numbers to feed a herd of pigs recuperating from African swine disease. As investors expressed concerns about supplies, the enormous purchasing sparked a global rise.

“There is a potential that grain imports for animal feed would be imported,” said Ong Darin Friedrichs, co-founder and head of market research at Sitonia Consulting, a Chinese agricultural information service provider. As China continues to prioritize local meat and dairy production, capacity will stay high for the foreseeable future. “After an outbreak of African swine flu wiped almost half of China’s pig herd three years ago, demand for meat imports skyrocketed, driving up costs. Pork consumption is at an all-time high. It encourages hog production modernization while lowering costs.

Observers expected the trade deal between China and the United States, which was struck in January 2020, would help alleviate bilateral tensions and restore some trade balance. Meanwhile, China has bought record amounts of US goods since the phase one agreement was signed. Beijing, on the other hand, was behind on pledges as of the end of last month, having purchased less than 59% of the entire $ 200 billion in commodities, agricultural products, and energy for which it had set a deadline of the end of 2021.

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