China's moves to tackle swine fever are 'ineffective' — it may cause inflation to spike above target
Evans-Pritchard predicted that, by early 2020, prices could increase over 80% as compared to the same period last year.
That will weigh on China's consumer price index. Inflation could average 3.5% and peak over 4% next year, he estimated. That's over the 3.0% annual average inflation target set by China's central bank.In 2018, full-year inflationChina said last week it would issue subsidies of up to five million yuan — in the latest measure to boost pork production.
Those subsidies would go towards the construction of large-scale pig farms. Authorities also said they would support large farms that needed to be relocated for environmental reasons, and improve and expand waste treatment facilities. "We should ensure pork supply by all means ... and strictly rein in market speculation, actively boost production of alternative meat products and increase frozen pork reserves," China's vice-premierA butcher chops pork at a market in Shanghai, China on May 30, 2013.But, in the short run, China's efforts to control the swine fever outbreak won't help much, noted Capital Economics, though they will boost production capacity in the medium term.
"The recent step up in subsidies to consumers and farmers remains too small to alter the big picture. The strategic pork reserve could be deployed more aggressively but would quickly be depleted as it contains just three to four days' worth of supply," Evans-Pritchard wrote. "And since China produces and consumes over half the world's pork, it can't rely on overseas supply, at least not without pushing up prices everywhere.
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