A porcine crisis in China

Posted On: Wednesday - October 30th 2019 7:34PM MST
In Topics: 
  China  Economics  Inflation

Round 'em up, move 'em out ...

China's female, rural, answer to the American urban cowboy, I guess.

There's some type of swine flu going on in China, and well, this one is actually affecting the swine. It's a bigger deal than it would be here, as the Chinese LUV LUV LUV that pork. My guess is that the population density just doesn't allow as much land for cows, and it's been dense for a long, long time. Just as with black Americans always having a big hankering for chicken, it being cheaper than red meat in the past when they were poor for real, pork seems to be "what's for dinner" in the Chinese culture. (It helps a whole lot that they left the economic portion of Communism far behind, as meat of any kind used to be more like a flavoring for meals, if any at all, rather than big hunks of satisfying protein.)

Per Zerohedge, a couple of weeks back, there is a porcine crisis now, and imports of pork from the US have hit all-time highs - from near nothing fairly recently, about 20,000 tonnes in September to 142,000 tonnes in October. Don't even bother with ZH's graphs - it's one of the site's worst features. There's not even any units of the vertical axis (price)* on their 1st graph! Zerohedge is OK with the large number, say, FED money created in a year, but terrible with detail numbers - I'd call Tyler Durden an "innumerate savant" or something. Come for the headlines, stay for the comments (bound to be some comments on the big pig above - picture taken directly off ZH).

I'm lucky to have source of information about China. I am told that the price for pork on the street is ~ 50 Yuan/lb. (I think they use 1/2 kilo for units, called - by my inaccurate ear a "bon" - note, that's not even the PinYin, just my ears.). That is about 7 bucks a pound. You've got to understand, this is a LOT of money for a middle class Chinaman. Even though there is a big middle class there now, this middle class makes the income that would make them lower-middle class here in America. Yeah, it's great they're not poor, no doubt, but my experience from people I know is that lots of families are making something like $1000 to $1500 a month (they always think of salary on a monthly basis in China) with both Mom and Dad working. There's not a lot extra with housing prices going up like crazy.

It's tough for the average Zhou in China, but kind of a delicious irony for the average Joe here, watching the Chinese government piss and moan about tariffs designed to simple even things out, after 25 years or so of China being given every break in the book ... with NO reciprocation whatsoever.

This inflation in pork is obviously mostly due to this calamity with the Chinese pigs, but also, as Peak Stupidity noted near the bottom of the post Inflation and Chinese Imports and Exports, "Inflation is our biggest export to China". This is the case due to China's government's peg of their RMB ("The People's Money", denominated in Yuan) to the US $. Hey, not my idea. They do this to keep cheap exports flowing. We devalue the dollar with the FED's printing of money, and the Chinese government follows suit to keep the exchange rate steady.

Serendipitously, I noticed that our post on inflation and imports/exports was written just over a year ago, and at the bottom, I happened to have related my knowledge that the price of retail pork at that time was on par with the price in the US. So there you go - I can dispense with the low-quality ZeroHedge price graph completely.

This is something to note, as we have admired the great improvements in China in infrastructure (here and here), industriousness, and entrepreneurship (here and here). The vaunted middle class is not that high up. Most of these people will be struggling to put a few ounces of meat onto each family member's plate in the form of sliced-up strips, while Americans with no jobs go into Safeway and buy 16 oz. steaks with their EBT cards. That's quite the disparity.

* From my information on retail, I'm gonna guess that the numbers are in Yuan/kilo, making them just under 1/2 of the retail price I gave.

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