China’s crash diet warning raises fears of a looming food crisis

China faces a ‘food shortfall’ unless major agricultural reforms are undertaken, a Beijing report warns. Chinese farmers are hoarding stocks as food prices rise. (AFP)
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Updated 27 August 2020

China’s crash diet warning raises fears of a looming food crisis

  • Xi Jinping launches Operation Empty Plate to curb ‘shocking’ waste as consumption and prices skyrocket

SHANGHAI: A national campaign to curb mounting food waste in China is feeding speculation that the supply outlook is worse than the government admits and fueling warnings food could become another front in the worsening US-China rivalry.

President Xi Jinping started the “Operation Empty Plate” drive in mid-August to address what he called “shocking and distressing” waste, prompting a nationwide push to comply reminiscent of the Mao era.

The aggressive campaign has spooked many on social media, who are asking whether it indicates deeper problems.

China is among the world’s biggest food producers and consumers, with nearly 1.4 billion mouths to feed.

But heavy flooding this year in the Yangtze River basin — the source of most of China’s rice — has destroyed huge swathes of farmland, while coronavirus lockdowns earlier this year upset supply chains.

These add to longer-term problems such as dwindling arable land and an exodus of people from rural farming regions to cities.

China has increasingly filled the food gap with imports, but trade and political disputes have dramatically soured relations with three
of its most important food suppliers — the US, Canada and Australia.

Repeated “all-is-well” official pronouncements and promises of a bumper 2020 grain crop have only fueled suspicion.

“Some people are beginning to speculate whether there is a shortage of domestic food this year ... in fact, there is no need to worry,” said a report from the Chinese Academy of Social Sciences, a top state-run think-tank. But the report added that China’s “food shortfall” will increase in coming years unless major agricultural reforms are undertaken, and state media have reported that grain farmers — banking on rising future prices — are hoarding stocks, which is crimping market supplies.

China’s resources “are not enough to support the upgrading of our entire food consumption structure,” Li Guoxiang, a researcher with the academy’s Rural Development Institute, told AFP. “Improving living standards have indeed raised requirements and the challenges facing our entire food and agricultural production picture.” Big meals are ingrained in Chinese culture — typically involving multiple dishes to impress guests or woo business partners.

But consumption is soaring along with living standards.

And prices are rising rapidly, with food inflation jumping more than 13 percent on-year in July, having surged more than 11 percent in June and 15.5 percent in May.

The prevalence of obesity  increased more than three-fold in 2004-2014, according to government figures.

China is estimated to waste enough food annually to feed a country the size of South Korea, and conspicuous consumption has fueled the popularity of bizarre livestream phenomena in which viewers watch people binge-eat.

The food-waste drive has underscored the striking ability of Xi to motivate millions with a word.

Diners nationwide are being urged to order less, the binge eaters are going to ground, and some buffet restaurants are making customers pay deposits that are forfeited if they leave food.

People are also being encouraged to inform on each other.

An AFP journalist in Shanghai watched as a confrontation developed in a coffee shop this week after a woman called out another customer for leaving behind a nearly intact sandwich.

China’s policy options are limited, experts say, as subsidising domestic farmers could violate World Trade Organization rules and anger trading partners such as the US. Likewise, the reduced-waste drive will probably have “less impact than everyone thinks,” said Rosa Wang, a Shanghai-based analyst with agro-consulting company JCI China.

She said the pandemic had already dramatically cut consumption as households opted for more economical home cooking because of lockdowns or for safety reasons.

That leaves mainly imports, but China is already the world’s biggest food importer, leaving it vulnerable to trade pressure, and has ramped up imports of grain and other items this year, partly to comply with a tentative US-China trade deal.

Increased Chinese imports, however, could potentially crimp world supplies and drive up prices.

In the long term, China needs aggressive steps to protect arable land from development and improve farmers’ lives to keep them on the land, said Guoxiang.

Otherwise, it will become increasingly vulnerable to outside forces that “will have an adverse impact on the stability of our imports,” he added.


‘The stock market, stupid’ — Trump’s claim is looking hollow 

Updated 29 October 2020

‘The stock market, stupid’ — Trump’s claim is looking hollow 

  • The timing of the Wall Street downturn is the worst possible for the incumbent, who has declared every new peak in the S&P as a personal victory throughout his presidency
  • The likes of Apple, Amazon, Alphabet and Facebook are due to declare their earnings for the third quarter, and how those numbers are received could give the indices a boost

Before the US election of 1992, candidate Bill Clinton summed up what he saw as the reason he would become president: “It’s the economy, stupid.” He was proved right as voters disowned the economic policies of President George H.W. Bush in their droves to elect Clinton. 

Until the COVID-19 pandemic began to ravage the US economy in March, President Donald Trump would have been able to make the same claim. For the four years of his presidency, the US economy had continued the progress initiated by his predecessor to recover from the 2009 global financial crisis.

By most measures — growth, employment, inflation — the Trump years had been good, and those on the top of the pile had even more reason to be grateful thanks to the big tax cuts he had made a flagship policy.

The pandemic changed all that in the space of a few weeks as lockdown measures shocked the economy. Jobless claims soared to all-time records, bankruptcies and closures affected large swathes of American business, and gross domestic product collapsed. The International Monetary Fund forecasts that the American economy will shrink by 4.3 percent this year.

But Trump could still claim instead that “it’s the stock market, stupid” as a reason he could be re-elected. Mainly because of the trillions of dollars injected into the economy in the form of fiscal stimulus, US share indices had swum against the economic tide.

The S&P 500 index hit an all-time high in September, allowing Trump to boast that under his administration, investors and the millions of people whose livelihoods depended on the financial industry had never had it so good.

Now, it looks as though even that final claim is looking more fragile. For the past couple of days, US and European stock markets have gone into reverse as investors took fright at the rising number of COVID-19 cases and the re-imposition of economic lockdowns in many countries.

Trump might argue, with a little justification, that Wall Street is worried about the prospect of Joe Biden being elected president by the end of next week. Certainly the contender, by definition, is something of an unknown quantity in terms of economic policy.

He is also known to favor some policies — such as tighter regulation on environmental sectors, more spending on health care, and higher taxes for federal services and projects — that have traditionally been regarded as contrary to the philosophy of “free market” America.

In particular, the energy industry is worried about possible restrictions on shale oil and gas production that Biden and his “green” team are believed to favor. However, it should be pointed out that the Democratic candidate has specifically said he will not ban shale fracking, as some environmentalists want.

In any interesting side-story, the state of Texas — one of the biggest in terms of electoral college votes — would seem to have more to lose than any other if the energy scare stories about Biden were true. Yet the contest there between Democrats and Republicans is the closest it has been for decades, according to opinion polls.

The timing of the Wall Street downturn is the worst possible for the incumbent, who has declared every new peak in the S&P as a personal victory throughout his presidency and a sign of his deal-doing prowess. If even this claim is denied to him in the final week of campaigning, it would make the uphill battle against the polls even more difficult.

There is a chance that Big Tech might offer some relief. The likes of Apple, Amazon, Alphabet and Facebook are due to declare their earnings for the third quarter, and how those numbers are received could give the indices a boost, given that they were the ones largely responsible for the big market gains earlier in the year.

But for Trump, any such respite might be too little, too late. It looks as though Wall Street and Main Street are finally catching up in their gloom, and there is nothing the president can do about it.