Swine And Stablility

Swine And Stablility

Kevin Schoelzel

There is perhaps no greater success story in developmental economics over the last half century than that of China. In 1976, China was in disarray after being ravaged by the collective failures of the Great Leap Forward and Cultural Revolution. However, starting in the 1980’s and accelerated under the leadership of Deng Xiaoping, reforms spurred explosive economic growth. Over the last thirty years, China has experienced an average growth rate of 9.8% and this year the economy is growing at roughly 7.5%. As a result, today China has the second largest economy in the world with a Gross Domestic Product of $8.2 trillion; and an increasing number of its citizens have made the leap out of poverty and into the middle class. In China, politics and economics are inextricably linked.  The Chinese Communist Party controls almost all facets of life in the country and has been largely responsible for the polices that have fostered growth. However, as an authoritarian government, the party’s primary concern is maintaining its control. Therefore, in order to remain in power, the Chinese government knows that it must perpetuate domestic stability.

The cornerstone of this stability is economic growth and securing resources needed to fuel this development. China’s demand for resources is similar to those of other large economies, but in China the scale and diversity of resource procurement is unparallelled. China has strategic reserves in many basic commodities; however, in addition to these reserves, China also has hoarded away some more unorthodox resources, specifically hogs.  The Chinese people consume over half of the world’s pork, and the meat is a central part of the nation’s cuisine and culture. Since 2007, China has been building a large pork reserve.  The exact size of the reserve is unknown, but the annual consumption of pork in China is roughly 70 million tons.  The pork reserves illustrate both the sensitivity of the Chinese government to any fluctuations in popular resources and the size of the Chinese consumption base.

China’s efforts to stabilize swine may not seem like it has many implications for the international community. After all, since China is currently the largest consumer of pork, their behavior already dictates the movements in international markets.  Some may worry that China’s ability to flood the market with pork in times of price fluctuations may hinder free-market economics, and (depending on one’s susceptibility to corporate conspiracy theories) at worst may prevent the return of the McRib, but this strategic decision by China is very telling. The Chinese government’s active policy of livestock security is a microcosm of Beijing’s larger objective of resource policy. Shifting away from the frivolity of pork reserves, China’s demand for energy has broader implications on global markets and geopolitics. In short, China needs energy sources to sustain its current economic growth. Prior to 1993, China was able to domestically produce enough oil to meet its demand.  Over the past two decades, China’s consumption has rapidly increased and is expected to keep rising. Between 1995 and 2020, Chinese oil importation is expected to increase from 2.5 to 9.5 million barrels a day. To put that figure into perspective, the United States, which at its peak imported 10.1 million barrels a day, is expected to decrease imports to 6.8 million barrels a day during that same period. While China is right behind the United States in terms of gross oil importation, it ranks 20th on the list of per capita oil consumption. Subsequently, as China’s middle class continues to grow and standards of living improve, the consumption of oil and other energy sources also has the potential to grow exponentially. As such, China’s energy demand will be one of the main objectives in Chinese foreign investment and foreign policy.

China’s rise is the natural consequence of demographic and economic expansion. Justifiably, the Chinese government should continue to pursue policies that reflect its self-interest and the general well-being of its people. However, as demand for resources grow there will be significant political and economic ramifications. There are many theories on the trajectory of global population trends and the capacity of our planet to supply the raw materials necessary for growth. Today, as China stockpiles lean pork backs, it may appear to be a paranoid policy of a government fixated with maintaining domestic tranquility, but it is perhaps a harbinger of a world where scarcity and competition compels governments to hoard anything and everything.

[Photo Credit: http://www.britishfoodinamerica.com/images/editorial/Our-Inaugural-Holiday-Number/pig-left101.jpg]