China, Taiwan, Pigs and Sanctions

Following on "China Cites U.S. Agriculture for Why It's Chosen Not to Invade Taiwan".

From Nikkei Asia, August 22:

$2.6tn could evaporate from global economy in Taiwan emergency

Sanctions against China would be a double-edged sword

A report on how Western sanctions might impact China sent shock waves through the State Council, China's cabinet, in April.

The report, prepared by China's Ministry of Public Security and Ministry of State Security, analyzed what would happen if the U.S., Europe and Japan were to react to a Taiwan emergency by imposing economic sanctions on China, as they did to Russia over that country's invasion of Ukraine.

"If the U.S. and allies move to slap sanctions," the report says, "our country will return to a planned economy closed off to the world."

What worried State Council members was a national weak point highlighted by the report. "There is a high risk of [China] facing a food crisis," the report warns.

If Chinese exports and imports are disrupted due to Western sanctions, China's earnings abroad would disappear, and essential items would stop being imported.

A halt to imports of soybeans, among other essential items, would affect the Achilles' heel of China, as the country relies on the U.S. for 30% of its soybean imports. China is an agricultural powerhouse. But the truth is that its soybean self-sufficiency rate is less than 20%.

*****

Soybeans are used not only in the production of edible oil, which is essential for Chinese cuisine, but also as feed in pig farming. Pork accounts for 60% of the meat consumed in China.

If the supply of soybeans to China is halted, the country's 1.4 billion people would be beset by food problems immediately.

China boasts the world's biggest population, and the Chinese Communist Party keeps it together by using an iron fist. But the party's support is pragmatic and more fragile than widely thought.

"I become sensitive to pork price rises, as they also affect prices of beef and chicken," said a 54-year-old trading company employee in Beijing who declined to be named, recalling what happened in 1989.

In June 1989, the Chinese military suppressed pro-democracy student protests in Beijing's Tiananmen Square. While the protesters were shouting pro-democracy slogans, inflation was accelerating.

The consumer price index surged at a pace of between 20% and 30% on a year-on-year basis. Some say that spikes in the prices of pork and other items amplified social unrest, becoming an indirect cause of the protests.

*****

On July 4, the National Development and Reform Commission, which steers Chinese economic policies, secretly summoned officials of domestic pig farming companies to a meeting room near its building in central Beijing.

The move came after farm-gate pig prices soared by just over 40% in one month and doubled from March. The commission instructed pig farming companies to stop being unwilling to sell. It has also begun to consider releasing frozen pork under its jurisdiction to stabilize the market.....

.....MUCH MORE