Falling pork prices: another red flag for China’s economy – Shaun Rein

 

Shaun Rein

Deflation is on the edge of slowing down China’s economy, and falling pork prices are yet another indication not all is well, says Shanghai-based business analyst Shaun Rein at CNBC. As for the less affluent, China Market Research Group’s Rein observed that they are saving money by ordering less pork, according to CNBC.

CNBC:

Deflation — associated with the decline in prices of goods and services and a sign of a weakening economy — is concerning because consumers may postpone investments or purchases in hopes of prices falling further.

“Aside from falling real estate prices and price cutting across consumer goods, the biggest reason for China being on the verge of deflation is falling pork prices,” China Market Research Group’s Managing Director Shaun Rein said.

China’s consumer price index fell 0.5% year-on-year in November, marking the sharpest slide in three years. …

Affluent Chinese are increasingly considering beef to be a healthier alternative to pork, with 28% of consumers surveyed saying they plan on reducing pork consumption, a study published in February by managing consulting firm McKinsey showed.

As for the less affluent, China Market Research Group’s Rein observed that they are saving money by ordering less pork.

More at CNBC.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.

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Coronavirus disrupts food deliveries in China - Sara Hsu

Sara Hsu

Logistical chains are disrupted the coronavirus crisis, and limited export of pork by corona-hit processing plants in the US hit China additionally, says financial analyst Sara Hsu to CGTN.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

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China's consumers pick pork over iPhones - Victor Shih

Victor Shih

China's consumers are changing because of the trade war and food-driven inflation, says China expert Victor Shih at the Investor Place. They will pick pork over iPhones, he says, with a drastic impact on the stock markets.

The Investor Place:

In an email correspondence, Victor Shih, Ph.D., associate professor of political economy at the University of California, San Diego, wrote: 

"Both the trade war and food-driven inflation likely will crimp Chinese consumers’ discretionary spending.  While the trade war has slowed employment growth and wage growth, the African swine flu has driven up food prices substantially. For the average households, they are trapped between much higher food prices and uncertainties about future income. This will limit their spending on discretionary items." 

Put another way, AAPL stock may be on a winning path right now. But that’s not guaranteed to sustain. As known pressures tighten their stranglehold, the impact will invariably filter down... 

But at the present juncture, China is a major risk factor. As Professor Shih noted, the average Chinese consumer is feeling the heat. Given the choice of buying food to live or buying an iPhone 11, I don’t have to spell out the correct answer. Therefore, anybody who is not a day trader should probably avoid or cash out of AAPL stock.

More at the Investor Place.

Victor Shih is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

More stories by Victor Shih are here.

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Pigs are the real problem for China's leadership - Victor Shih

Victor Shih

It is not Hong Kong protests or the trade war, China's leaders fear most, but hogs hit by African swine fever and the rising pork prices, says political analyst Victor Shih at Phys.org. An estimated 40 percent of its pigs have been killed already and massive reserves of frozen pork released on the stretched markets.

Phys.org:

And as it wears on, it is not just a problem for farmers, but also for the country's leaders—afraid of social repercussions and spiralling economic costs. 

"Historically, high food inflation has triggered bouts of urban protests," says Victor Shih, the Hi Ho Miu Lam chair professor at University of California San Diego. 

Beijing has implemented several measures to boost the pig population, including subsidies of up to five million yuan ($700,000) for breeders. 

They also announced in September that new large-scale breeding bases were being built in southwest Sichuan province with the capacity to produce two million pigs a year. 

But farmers contacted by AFP—reluctant to be identified—were afraid to raise new herds despite government subsidies, fearing that any trade deal between Beijing and Washington would undercut Chinese producers or that their hogs would be taken away again... 

In a bid to keep a grip on escalating prices, the government auctioned 30,000 tonnes of pork from its strategic meat reserves ahead of the National Day holiday. 

Officials insisted in September that there was sufficient supply and prices would now be stable. 

But given the slowing economy and the trade war, "pork-driven inflation has further limited the government's options", says Shih.

More at Phys.org. Victor Shih is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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