Why China is worried about pigs

If the US economy is hooked on oil, then for China the addiction is pork. China consumes some 550 million pigs a year – about 70% of local meat consumption and a large part of the average household budget.

If the US economy is hooked on oil, then for China the addiction is pork. The Chinese consume some 550 million pigs a year about 70% of local meat consumption and a sizeable proportion of the average household budget. The government even maintains a central reserve of pigs, live and frozen, to support consumption in the case of emergency. But after an 87% run up in the price of pigs over the last year, China's inflation rate has jumped to 6.5%, the highest rate in 11 years. With the government facing the prospect of an upset economy before its big Olympic showpiece, it is doing everything in its power to facilitate an already booming pig sector.

The trouble is that an outbreak of blue ear disease a reproductive and respiratory illness that is fatal to pigs is devastating China's pig population and putting a serious squeeze on the price of pork. The disease has killed more than 70,000 animals and infected 280,000 already this year. This is a problem that borders on a national emergency in China. The spectre of inflation fuelling broader discontent as it did when protesters marched on Tiananmen Square in 1989 taps into the government's "deepest existential fears about mass disorder", notes Richard McGregor in the FT. Beijing has already tightened controls on corn exports, vowing to increase the supply of poultry, and decreed that pigs be given privileged access on all transport services. The government was even moved to reach into its central reserve, releasing 30,000 tons of live pigs into 22 cities nationwide.

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Eoin came to MoneyWeek in 2006 having graduated with a MLitt in economics from Trinity College, Dublin. He taught economic history for two years at Trinity, while researching a thesis on how herd behaviour destroys financial markets.