China has found a new weapon in the battle against rising inflation: pork.
China is the world's highest producer and consumer of pork Image: Daehyun Park |
By June 2011, inflation in China had already well surpassed Wen Jiabao's December target of 4% with a year-on-year figure of 6.4%. With pork prices up a massive 38% since the start of the year, the government will release its 200,000 metric-ton stash of frozen pork onto the Chinese market to curtail further inflation.
China is the world's largest pork producer and consumer with over half the world's swine, or more pigs than the following 43 pork producing nations put together. The effect of rising pork prices on the nations Consumer Price Index (or in some circles, the China Pig Index) are therefore profound.
After an epidemic of pig disease in 2007 caused radical fluctuations in the nations CPI, the government resolved to set up giant freezers across 11 of China's provinces to ensure the stability of pork prices.
Experts at Shandong University's School of Economics calculate an increase of 20% in pork prices will drive up the CPI by around 0.6 percentage points – a worthwhile reason to keep the price down. Others are unconvinced that the negligible 200,000 ton pork mountain will do much to influence overall inflation, as last year China consumed just over 50 million tons of pig products.