Inflation hits Chinese food supply
By Mark Godfrey, SeafoodSource contributing editor reporting from Beijing, China
24 August, 2012
Data released this week by China’s Department of Agriculture show that retail prices for aquatic products in China dropped 1.3 percent in July compared to June but rose 8.09 percent compared to July of last year.
In July, China’s official consumer price index (CPI), a measurement of inflation, rose 1.8 percent, the lowest increase since January 2010. However, the official CPI data seem to conflict with data presented by the China Cuisine Association (CCA), which claims restaurants are failing at the rate of 15 percent a month in China due to rising labor and food costs. The CCA claims inputs are up 8 percent to 10 percent this summer compared to the same period last year.
At Beijing supermarkets this week, shoppers chose between carp at RMB 30 per kilogram and yellow croaker at RMB 15.80 per 500 grams, both prices up 10 percent since January.
Best-selling species at the upmarket BHG Marketplace supermarket chain include river bass at RMB 38 per 500 grams and tilapia selling at RMB 18.80 per 500 grams. Based in high-end shopping malls and office blocks, BHG serves a white-collar clientele and has been accused, along with other upmarket chains, of helping drive inflation by charging high prices. Notably, BHG charges RMB 276 per kilo of salmon fillet, compared to Jinkelong’s RMB 176 price tag.
China’s government has vowed to keep inflation within 4 percent and has resorted to measures such as restricting lending at the state-owned institutions that dominate China’s banking scene. The government has also resisted a repeat of the 2009 stimulus that saw a flood of liquidity from the state banks, largely due to worries over inflation.
There are recent, obvious signs of an economic slowdown in China. GDP growth in the first half of 2012, for instance, slid to 7.8 percent, compared to 9.6 percent in the same period last year. Likewise, companies listed on the Shanghai Stock Exchange reported a 6.75 percent rise in revenues for the first half, compared to a 36.1 percent jump in the same period in 2011.
Commentators have different views of how China should proceed. Patrick Chovanec, an economics professor at Beijing’s elite Tsinghua University, said China has caused its economic slowdown partly by failing to lift domestic consumption, as promised, and instead pumping money into industrial capacity in the manufacturing-for-export sector.
Tang Min, an economics adviser to China’s cabinet, said the priority now is to hit 8 percent GDP growth in the second half of 2012 while avoiding any radical loosening of monetary policy. Both experts may be ignored. Tianjin and Chongqing, two major Chinese cities, ruled directly by the central government, this month announced local stimulus plans worth CNY 1.5 trillion to be spent over the coming three years on improving infrastructure and manufacturing capacity.
24 August, 2012