In this file:
· China Media: How much economic pain can China tolerate in the trade war? Donald Trump is about to find out
· China Media: Xinhua Headlines: U.S. farmers harvest disappointment as trade war escalates
How much economic pain can China tolerate in the trade war? Donald Trump is about to find out
· A buying frenzy over pork in Shanghai might be a sign of economic trouble or an after-effect of the swine flu epidemic. Either way, it raises questions about the Chinese people’s capacity for withstanding the fallout from the US trade war
Chiu-Ti Jansen, Opinion, South China Morning Post (China)
4 Sep, 2019
On August 27, American hypermarket chain Costco opened its first China store in Shanghai, but had to shut early due to “safety considerations”, after eager shoppers crowded aisles and worked themselves into a frenzy over heavily discounted Mao-tai, nuts, croissants – and cuts of pork.
Pork is a staple food in China and a key indicator of food price inflation. Worryingly, pork prices have risen to new highs in recent weeks.
On August 20, the government of Putian city in Fujian province announced a subsidy of 4 yuan (US$0.56) per kg of pork; under the programme, locals with valid identity cards would be able to buy up to 2kg of pork. Yet, instead of assuring the public, the announcement fed anxiety among Chinese about returning to the days of meat coupons (which were introduced in the 1950s and only phased out in the 1990s).
While such fears are overblown, if there is such a thing as a national psyche, I am sure pork is embedded in China’s. This is a country where a full-page feature on President Xi Jinping’s recent visit to Gansu province and his love for the Chinese populace mentions his understanding of ordinary people’s deep longing to “eat meat”.
The Costco phenomenon and runaway pork prices have renewed debate about China’s consumption. Xinhua has rhapsodised about the opening of the hypermarket in Shanghai, saying it “reflects the vitality of the Chinese consumer market”.
Global Times , in an op-ed article headlined “Costco’s opening in China defies US attempts at decoupling”, praises the US retailer for defying President Donald Trump’s order to leave China.
However, Canadian newspaper The Star argues that the Costco frenzy shows the limits of Chinese nationalism amid the raging trade war
with the US: “In China, like in many places, the appeal of a good deal often overrides patriotic allegiances.”
Li Guangdou, a Beijing-based brand consultant, sees troubling signs in the news story of “uncles and aunties fighting over a piece of pork” in Shanghai. “In a big city that is rich in commodities and tops GDP per capita rankings, this phenomenon of bargain hunting illustrates how people’s wallets are shrinking and their spending habits are changing.”
At the outset of the US-China trade war, economists sparred over which country could better withstand the economic pressure by presenting scenarios and data. Lately, analysts have been talking about the psychological breaking point on each side.
Daniel Chen, a China-born violinist turned YouTube commentator, argues that the Chinese are better positioned than the Americans to withstand the pressure of the trade war. Whereas the Americans would vote out a president if they had to “go from eating beef to eating pork ... the Chinese people have no problem going from eating meat to eating grass”.
Seen in this light, the trade war looks like a test of endurance.
The Chinese consume 700 million pigs annually, half the world’s total. Pork is their favourite meat, accounting for 60 per cent of their meat consumption.
According to the National Bureau of Statistics, livestock prices rose 18.2 per cent year on year in July, of which pork prices rose by 27 per cent and lifted the consumer price index by 0.59 per cent.
Many blame the government’s handling of the trade war. In August last year, the confirmation of the first case of African swine flu in China coincided with the lifting of a ban on pork imports from Russia. This has fanned speculation that the epidemic originated in Russia and is spreading in China as a consequence of substituting Russian pork for US meat; Chinese officials have disputed this, however.
The State Council has announced that it is increasing financial support for the recovery of the pig industry and enhancing epidemic prevention efforts. However, disease control measures are hampered by the millions of small pig farms and the practice of transporting the animals over large distances, sometimes more than 2,000km.
It certainly does not help that soybeans are a staple feed for hogs. According to the Ministry of Commerce, in the first four months of the year, China’s soybean imports fell 7.9 per cent year on year, with imports of US soybeans plummeting more than 70 per cent. Meanwhile, Brazilian soybean prices have shot up 70 per cent in the past two months.
Before African swine flu became a nationwide epidemic, China had imposed retaliatory tariffs on 62 per cent of US pork imports. Last month, China announced it would stop buying US agricultural products in response to Trump’s tariffs on a further US$300 billion in Chinese goods; the farm belt states are understood to be Trump’s Achilles’ heel in his re-election bid.
However, before Trump’s new tariffs came into effect on September 1, China stepped up its purchases of US pork: it imported 1,861 tons of pork in the week beginning August 16, up from 220 tons the previous week. It also purchased 10,200 tons of US pork in the week starting August 2, plus 9,589 tons of US soybeans in the week beginning August 9.
With the Mid-Autumn Festival approaching, pork prices are expected to soar, the result of seasonal demand outpacing replenishment of breeding stock in China. In fact, analysts believe the trend will continue into next year.
Liang Ming, a Ministry of Commerce researcher, recently caused an uproar when he said China was “probably in the most comfortable position” economically and would come out of the trade dispute stronger.
While the hullabaloo over the comment suggests a disconnect between official rhetoric and public perceptions of the trade war, we mustn’t forget that pain, like happiness, is relative. If Chen – who came of age during the Cultural Revolution – is right, Trump should not underestimate either the extent of the American farmers’ economic pain or the Chinese people’s capacity for “eating bitterness”.
Chiu-Ti Jansen, with advanced degrees from Yale and Columbia, is the founder of multimedia platform China Happenings and a former corporate partner of international law firm Sidley Austin
document, plus links
Xinhua Headlines: U.S. farmers harvest disappointment as trade war escalates
via China.org.cn (China) - September 4, 2019
DES MOINES, the United States, Sept. 3 (Xinhua) -- For many U.S. farmers, they had hoped for better businesses and better lives, inspired by catchy slogans such as "Make America Great Again," and grand titles such as "great patriots" bestowed on them.
However, with no end in sight for the U.S.-initiated trade war against its major trade partners, even those who tend to believe in Washington's wisdom in making policies have started to suspect that the promised "greatest harvest" will ever arrive for their struggling farms and ranches.
The gap between hopeful tweets and disappointing grain future prices and multi-layered anxiety is straining the patience of U.S. farmers, some of whom are reconsidering their support as the election season comes.
JUMPING OFF CLIFF
"It's been a roller coaster," Jacob Handsacker told Xinhua on his farm in Radcliffe, Iowa, describing how he felt the rumbling U.S.-China trade tensions.
Standing among rows of soybean plants, which will be ready for harvest in weeks, the young farmer said it had not been an enjoyable ride, as futures prices for his harvest dipped more than a dollar per bushel below production cost.
The slumping price is the direct result of Chinese retaliation tariffs on U.S. goods, including soybeans. For a state that agriculture plays a crucial role, the effect has been crippling.
"88 percent of Iowa landscape is covered by a farm, about 20 percent of our employment and a third of our economy is agriculture related," said Craig Hill, president of the Iowa Farm Bureau Federation and also a local farmer.
As the country's leading producer of soybean, corn and pork, Iowa had relied heavily on exports to China, which bought the equivalent to the entire production soybeans of Iowa and Illinois each year, said Hill.
"Price dropped precipitously when the trade war was announced," Hill said, referring to the spring of 2018, when soybean futures prices dropped from 10.36 dollars per bushel to 8.3 in less than two months.
As Washington flip-flopped on trade issues, soybean futures prices dipped to a low of 8 dollars in May, a level unseen in a decade.
Hill said farmers, who sell their crops at a price lower than the futures prices, are losing as much as two dollars per bushel on their soybeans compared with costs.
"We produced about 550 million bushels of soybeans annually, and if we're losing nearly 2 dollars, that's 1 billion a year," Hill said, adding this loss does not count for other farm products, such as corn and pork.
"Once we started on this path, it's like jumping off a cliff," he said.
U.S. farmers, who traditionally side with Republicans in U.S. politics, was a crucial group that sent Trump into the White House in 2016.
Many once believed that U.S. agriculture sector will come out a winner in Washington's trade tensions with China, being awarded with larger access to a market with burgeoning middle class and insatiable demand for meat products.
The optimism may have helped solidify Trump support in the farm belt, but according to experts, the prospect now looks increasingly unclear...
ACCUMULATING DISAPPOINTMENT ...