artist supply warehouse China Economic Information Network
Abstract: Inflation is returned to China, while the sharp rise in pork prices is the most outstanding performance. Faced with this situation, the Chinese government is emergency response. In many low-cost labor-intensive products, China is the world's lowest cost producer, played the role of control global prices. However, with wages, prices of natural resources, this role has reached its limit. The face of upward pressure on domestic prices, Chinese companies began to raise export prices, the West has long brake inflation is invalid, the United States and Europe economy will be affected.
(The essence of Beijing outside the brain) for the Chinese people, very few things as important as the pork. Therefore, in the year of the Pig, with pork prices up nearly the past few days, the government emergency response, pork has become a nationwide shortage of concern.
For thousands of years, pork has always been one of China's main food. Recently, Xi'an 2100 years ago discovered the production of ceramic pig figurines. At present, China's annual pork consumption of more than 92 billion pounds, the average consumption of one-fifth of pounds per person per day.
For any income level of Chinese, the pork is vital source of protein. But for low-income groups of workers, the meat is even more important. It is precisely the population of the United States and Europe to ensure families have access to 49 U.S. dollars a DVD machine adequate supply of daily consumer goods.
Why soaring pork prices
China's pork price crisis and soaring gasoline prices caused shock among Americans, there are similarities, both of which show how commodity prices can occur suddenly skyrocketed.
The reason for the soaring price of pork in China for many interpretations. First of all, the price of animal feed last year, a quarter. The reason why high feed prices, partly because more corn to produce ethanol, partly because of increased per capita income levels increase in meat demand driven and therefore require more feed to keep pigs. Second, from the veterinary costs are increasing rapidly. Again, as last year's prices low, some farms have closed, their lack of preparation this spring's prices. In addition, the outbreak of blue ear disease led many from the dead, but the specific data is unclear.
Ministry of Agriculture, the latest data show that in April this year, live pigs and pork prices rose 71.3% and 29.3%. May, pork prices continue to rise sharply, so that consumers uneasy. Recently, in Guangzhou, a busy market in commodities, the current number of consumers expressed dissatisfaction with the price of pork. On the other hand, some businesses are difficult to sell the meat because of deterioration and distress occurred.
Not just pork prices rose. This spring, as feed costs rise, chicken, cattle, fish and eggs also appeared in the prices soared, despite the gains as the price of pork.
Government emergency response
In the U.S., gasoline prices will trigger a political reaction. In China, due to soaring pork prices will affect the residents of the budget expenditure and may lead to income inequality, the Chinese government are extremely worried.
The Government is emergency response. Premier Wen Jiabao inspected the pork in Xi'an, the supply of, and proposed instructions. In order to stabilize the dissatisfaction of students, the Ministry of Education has asked the universities to provide subsidies for pork, rather than raising the price the school; Ministry of Civil Affairs asked local governments to provide pork to subsidize low-income families; Ministry of Railway Transport of pork was provided preferential treatment.
Ministry of Commerce is considering allocation from the national strategic reserve in the possibility of pork. Ministry of Commerce in charge of the national-level strategic reserve of frozen pork and live pigs, and local governments also have their own reserves. Reserve items constantly added fresh pork meat, and sell the old pork. Pigs received special subsidies from the farm feeding, its use is that response to the current shortage of such pork.
Supply may be the end of cheap products
In the past ten years there have been no substantial rise in prices, the inflation was quietly returned to China, while the sharp rise in pork prices is the most outstanding performance. The face of upward pressure on domestic prices, Chinese companies began to raise export prices, the West has long brake inflation is invalid.
The consumer price index to measure China's April inflation rate was only 3%. But Goldman Sachs expects the rising price of meat will soon exceed China's inflation rate of 4%.
At present, the global economy have been strong, India, Mexico and other rapidly developing countries, price levels tend to rise, this situation, central banks and investors increasingly worried. In the United States and Europe, as lenders require the borrower pays more interest to compensate for a gradual decline in purchasing power of money, interest rates between the two areas are increasing.
In toys, shoes and many other labor-intensive production of cheap products, China is the world's lowest cost producer. But business executives generally agreed that, in many Chinese cities, the wage increase in more than 10% of cases, this situation has been late in the day.
So far, China's factories, roads, railways and ports of large-scale investment inhibit prices of finished goods, while productivity gains were largely offset by the increase in wages and food, oil and metals prices on the prices. But economists and business executives have said that Chinese manufacturers are under increasing pressure for fare increase, especially in large-scale inflow of money in China's economic situation.
HSBC officials in Michael RP Smith believes that people always underestimate the past decade, the price of Chinese exports, the role of inhibition. As wages rise, prices of natural resources, this role has reached its limit.
English original: Rise in China's Pork Prices Signals End to Cheap Output
GAOYAO, China, June 1 – Few things are as essential to the Chinese as their pigs.
From pork spare ribs and mu shu pork to char siu bao – barbecued pork buns – pork is a staple of the Chinese diet. So in this Year of the Pig, an acute shortage of pork has been national news, as butchers raise prices almost daily and politicians scramble to respond.
Steep increases for pork loins and bacon are the most tangible sign that after a decade in which prices have fluctuated but not moved significantly upward, inflation is creeping back into China. In response to this pressure at home, Chinese companies are starting to raise prices for exports, removing what has been a brake on inflation in the West.
With the global economy expanding at a robust pace, and prices rising in fast-developing countries like India and Mexico, central bankers and investors are becoming concerned. Interest rates are inching up in the United States and Europe as lenders demand that borrowers pay more to offset the erosion of buying power over time.
Business executives say that with wages rising 10 percent or more a year in many Chinese cities, the country's days are numbered as the world's lowest-cost producer of many cheap labor-intensive products, like toys and shoes.
“People tend to underestimate the deflationary impact over the last 10 years” from Chinese exports, said Michael RP Smith, the chief executive of HSBC's Asian operations. “It has got to the limit: you've had wage inflation, you've got rising natural resource prices. There's just no more give. “
The crisis over pork prices in China, like the jolt many Americans feel when gasoline prices jump, offers one example of how prices can suddenly soar. The Chinese government is struggling to cope – including deliberating whether to sell a snuffling, smelly strategic reserve of hundreds of thousands of live pigs kept at special subsidized farms for precisely the shortage the country is now facing.
Chinese officials offer several reasons for the high pig prices. The cost of animal feed has risen by one-quarter in the last year, partly because more corn is being made into ethanol and partly because more prosperous workers are eating more meat, which requires more animal feed.
The cost of pig veterinary medicine has soared. Some pig farms, shut down because of low prices last year, were unprepared for strong demand this spring. And outbreaks of disease have killed many pigs, though no reliable estimates of how many are available.
The most recent statistics from the agriculture ministry show that prices for live pigs rose 71.3 percent in April from March, while pork prices climbed 29.3 percent. The price of pork followed pig prices higher in May as well, to the dismay of shoppers.
Some consumers showed irritation with pork prices on two recent afternoons at a busy street market in metropolitan Guangzhou, an area of perhaps 12 million in southeast China. A woman walked up to Zhang Hanbiao, a butcher standing behind an unrefrigerated counter of raw pork under the glare of two large light bulbs, and asked him the price of the dark red slab of pig liver.
Told the answer – 7.5 yuan a catty, or 89 US cents a pound, up from 6 yuan a catty – she stalked off in silence without buying.
Her response angered Mr. Zhang, a butcher with a faint mustache who has followed a Chinese tradition of letting his nails grow long on the little finger of each hand.
“No business!” He exclaimed. “I've lost 1,000 yuan in three days because the meat goes bad before I can sell it.”
Another woman came to the counter, sniffed some pork suspiciously, then kept walking. “After it turns color, people won't buy it,” Mr. Zhang said, adding that roadside snack vendors buy unsold meat at a discount each evening.
Wu Lijuan, a Guangzhou resident who bought a small plastic bag of lean pork from Mr. Zhang, said that she was eating less pork and more fish as pork prices rose. But prices for chicken, beef, fish and eggs are also increasing sharply this spring, along with the higher cost of animal and fish feed, although rising not quite as fast as pork prices.
In a move to head off any protests among sometimes volatile student populations, the education ministry has ordered colleges and universities to subsidize pork instead of raising prices on campus. The civil affairs ministry has instructed municipal governments to subsidize pork purchases by low-income families, while the railway ministry has given priority to pig shipments.
Prime Minister Wen Jiabao visited the pork counter at a supermarket in Xian in central China on May 26 and called for local governments to pay pig farmers to increase production. The commerce ministry has raised the possibility of distributing pork from China's strategic pork reserves.
State-controlled television in Shandong Province in northeastern China carried a detailed report late last month on the reserves. The commerce ministry keeps a national reserve of frozen pork and live pigs, and local governments keep their own reserves as well, constantly selling older supplies and procuring fresh stock. Government agencies pay a pig subsidy to farmers to keep their animals in the program.
“The sties are very roomy, there is heat in the winter and fans in the summer,” the television program said, describing conditions very different from those endured by many other pigs in China, including those here in Gaoyao, 50 miles west of Guangzhou .
Yang Yuanji stood in sweltering heat next to his fetid, crudely built pigpens on a recent afternoon and contended that he needed high prices to pay for costly animal feed and medicine.
“Everyone says pork prices are high – I don't think so,” he said.
One of his neighbors, Yang Ming, said he did not believe that farmers were withholding pigs from the market – as the state media occasionally hint – in hope that prices will keep rising. “I don't wait, I sell a pig as soon as it reaches 180 catties, “or 200 pounds, he said.
Pork has been a cornerstone of the Chinese diet for centuries. Rows of 2,100-year-old terra cotta pigs were recently discovered near Xian, a city better known for terra cotta warriors. China's 1.3 billion people eat more than 92 billion pounds of pork a year – a fifth of a pound a day for every man, woman and child.
And just as higher gasoline prices can lead to a political reaction in the United States, the Chinese government is particularly worried about soaring pork prices because of their impact on household budgets and the way they can exacerbate income inequality.
Pork is a critical source of protein for Chinese of all incomes, but particularly for low-income workers like those who keep American and European families well supplied with $ 49 DVD players and other popular consumer products.
Broader measures of consumer prices showed just 3 percent inflation in April, but Goldman Sachs now predicts that higher meat prices will help push this above 4 percent “very soon.”
Heavy investments in new factories, roads, rail lines and ports have helped limit inflation until now in manufactured goods, as productivity improvements mostly offset rising wages and higher prices for food, oil and metals. Economists and business executives say that manufacturers face growing pressure to raise prices as well, particularly with the torrent of money pouring into China, which has helped push up the prices of Chinese stocks and real estate.
But the price that many Chinese care about most these days is the price of pork. Not far from Mr. Zhang's butcher counter is a small shop selling unrefrigerated barbecue. Cherry Zhou, a shop worker, said it had raised prices 25 percent in the last few days.
Blaming pork distributors, she added, “It's more expensive by the week.”
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