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- 2008-11-7
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小 发表于 2007-10-2 15:50 只看该作者
Raid on a piggy bank
In any other country, ashortage of pigs might be brushed off as a temporary phenomenon, curedby another turn in the perennial “hog cycle” as rising prices prompthigher meat production.
But in China, where pork is the staplemeat and food counts for a large part of the household budget, theshortage – and its feared spillover to other parts of the economy – isbeing treated as something approaching a national emergency.
Thespectre of inflation fomenting broader discontent – as it did twodecades ago, culminating in the Tiananmen Square protests of 1989 –taps into the deepest existential fears of Chinese rulers about massdisorder and regime survival. In recent weeks, protests by studentsangry at higher prices and smaller food servings in their canteens havebeen reported in Anhui and Guangdong provinces. Even in affluent urbancentres, including Beijing and Shanghai, the food price rises arecausing resentment.
Inflation hit 6.5 per cent in August, the highest rate in 11 years,largely because of a 49 per cent year-on-year surge in meat and poultryprices (see chart). The fact that non-food price gains have remainedlow, at less than 1 per cent, has not calmed the nerves of seniorpolicymakers.
“We have entered a very delicate stage of ourdevelopment,” says a senior economist and government adviser, askingnot to be named. “For a long time, I was very optimistic about China'sgrowth, but now I am quite worried. Real inflation is much higher. Noone believes the government's figures.”
Inflation has lowered theattractiveness of bank savings, which pay only 3.87 per cent intereston a one-year deposit account. If negative real interest rates persist,policymakers fear depositors could flee the banks and pour more oftheir money into the already frothy stock and property markets.“Inflation and the asset bubbles are now supporting each other. This isvery dangerous,” says the economist.
Two high-profile events onBeijing's calendar have added to the pressure on the government. Thefive-yearly Communist party congress in mid-October will pick thecountry's leadership team until 2012 and perhaps anoint a newgeneration of leaders to take over after that. August 2008, meanwhile,brings the Beijing Olympics, an event on which the government isbetting China's reputation.
In the short term, the government hasalso been rushing out a series of measures, in recent days freezingstate-controlled prices and releasing meat from a “strategic porkreserve” as well as offering farmers incentives to raise more pigs andget them to market. Officials are anticipating a surge in demand duringweek-long National Day holidays that start on October 1 and are a timeof family celebrations and banquets.
Albert Keidel of theCarnegie Endowment for International Peace in Washington, a formerWorld Bank economist in China, paints a gloomy scenario about theunfolding crisis, saying “draconian steps to suppress inflation couldcause hardship and social unrest”. If there were protests during theOlympics, “vicious reprisals could fill the global media” and severelydamage China's standing. “The consequences would hurt just not growthbut also China's commercial and political relationship with the US,” headds.
The shortage of pork is a result of a convergence offactors. Porcine blue-ear disease swept through many farms late lastyear, killing millions of pigs. Feed costs rose as global corn priceswere driven higher by a boom in demand for the crop for use inproducing ethanol. Low pig prices in 2006 prompted farmers to raisefewer animals.
Some see this year's resultant shortfall asindeed temporary and say the market is working the problem through. “Asprices rose and blue-ear remained under control, farmers earlier thisyear began rebuilding their hog stocks,” says Andy Rothman, of CLSA,the brokerage, in Shanghai. “Since it takes about four months to raisea hog to slaughter weight, this means supply should begin to catch upwith demand in September.” Wholesale pork prices have now declined forsix consecutive weeks and are down 11 per cent from their peak.
Ifthis trend is maintained, inflation too will abate, relieving much ofthe immediate pressure on the government. But if not, broader globalconcerns about Chinese inflation will grow, with the attendant risk ofsubstantially higher wages and export prices. That, in turn, would meanhigher prices for toys, clothing and a host of everyday goods in theWal-Marts and Carrefours of the US and Europe. It would affect much ofthe developed world, which has enjoyed low inflation for the lastdecade partly because of a flood of cheap Chinese goods.
But manyare sceptical that the hog cycle can be turned around so quickly. “Thisis not a blip or a temporary thing. It is a shift,” says James Rice,the China country head for Tyson Foods, in Shanghai. “When you want toincrease your capacity [in this industry], it takes a long time.”
Farmers,concerned about their fully-grown pigs catching blue-ear disease, andeager to capture the high market prices, are also slaughtering themyounger, meaning that the meat generated per animal is declining. Pigsusually slaughtered at 120kg are now being killed at a weight of about75kg, says Mr Rice.
Central and provincial governments haveresponded with a range of measures, offering incentives to farmers toraise more pigs and even cutting road tolls for trucks transporting theanimals to market. To great fanfare, the government last week releasedthe equivalent of 30,000 tonnes of live pigs from what it calls its“central meats reserves”, also known as the strategic pork reserve.
This“piggy bank” consists of both live animals and frozen meat, accordingto the two ministries that manage it, but its size is a state secret.Mr Rice doubts it will have any real impact other than burnishing thegovernment's credentials in tackling the crisis. “They describe it asthough they have pigs buried underground, like oil in wells,” he says.“It is not really a true reserve.”
With China consuming about130,000 tonnes of pork a day, 30,000 tonnes will have little impact inany case. Anecdotal evidence from farmers also suggests that restockingwill not be fast.
Li Yongqiang, who has raised pigs on theoutskirts of Beijing for 19 years, says the wild price fluctuations forpork are making small farm operators cautious. Mr Li lost nearly halfof his 4,000 pigs to blue-ear but says the high prices for the sows heneeds to replace them make for a very risky investment. “It will takeme about a year to get the new pigs to market, but most farmers have noidea what the price will be then,” he says. “Raising pigs is just likethe stock market. If the prices are high, you will sell, but if theyare low, you are stuck with them.”
The government's rapidreaction, perhaps even overreaction, to combating price rises isalready infecting broader economic policy. The central bank has liftedinterest rates five times this year to try to keep prices in check. Inrecent days, the government has frozen all state-controlled prices,including those for fuel and electricity, in an effort to quarantinethe impact of the food increases.
Both moves have potentiallydamaging consequences for key areas of economic policy. The rate riseswill provide an extra incentive for capital inflows, according toeconomists, at a time when the central bank is already managing themonetary impact of trade surpluses of about $25bn (
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