In early 1990, I was asked by a cabinet secretary through a mutual friend to show a foreign visitor the sights of Manila.
The visitor was an executive of the then-largest bank in the world by number of customers, the Farmers Bank of China. Understand that the GDP per capita in purchasing power for the Philippines was about $4,000 (which collapsed because of the 1989 coup attempt) and $1,600 in China. Unlike what is currently expected by visitors, our guest did not get a seat at the head table or a more impressive tour guide.
During our conversations, the gentleman told me that every Chinese government unit and agency had only one objective, and that all policies had to be geared in a single direction—rice self-sufficiency. No one realized that this policy planted some of the seeds of China’s current trade and economic problems. It can be found in the popular Sichuan dish Mapo doufu with ground pork.
In 1959–1961, the Great Chinese Famine killed millions through starvation, an event so catastrophic that it reinforced the importance of rice cultivation self-sufficiency. Commentators with the “China good; Trump bad” narrative like to point out how China raised 500 million people out of extreme poverty, which is true. However, it was due in large part to rice self-sufficiency.
After this great leap in food production, came China taking advantage of its ability to manufacture goods at lower cost for export to the world as Japan had done previously. As the peoples’ wealth increases so does the consumption of high-quality food like Mapo doufo made with tofu and pork.
As recently as 1995, China was producing 14 million tons of soybeans and consuming 14 million tons. By 2011 the demand for soybeans increased to 70 million tons per year.
Note that half of all the pigs in the world are in China. Consumption of pork grew on the same path as economic prosperity, to the extent that China’s per capita consumption of pork (and other meat) is greater than at any time in 5,000 years.
In the past year, pork prices in China have increased by 50 percent, and by 18 percent in the past month. Even in the face of import tariffs imposed by China in retaliation to that of the US, American exports of pork to China were the largest in three years, up 123 percent year-on-year in June, and 25 percent ahead of 2018.
Certainly, the African swine flu has decimated China’s pig population. But there is more to the story than that.
China cannot produce soybeans as cheaply as importing the product. But the reason that China needs so much soybean is that one-third of all their soybeans goes to feed their pigs on a ratio of one part soybean meal to four parts grain. In 2017-2018, China had to import more than 100 million tons of soybeans because of strong animal feed demand. Now comes the hard part.
Many like to think of China as the “Magical Kingdom” rather than the “Middle Kingdom.” Why doesn’t China just grow all their soybean requirements? While China is big and has the highest agricultural output in the world, only 13 percent of its total land area can be cultivated.
So, if China were to produce all soybeans they consume, it would mean that they would need to convert one-third of the grain land to soybeans, forcing China to import about 160 million tons of grain including rice. No man—or nation—is an island entire of itself—even China or the US.