The perfect storm confronting Xi Jinping

Unfortunately, Xi is now confronted with a double-barreled threat. First, fall armyworm has arrived in China. Since it was first detected in January, the pest has spread across some 8,500 hectares of Chinese grain production areas, affecting six provinces mostly in southern China. The U.S. Department of Agriculture worries that this voracious creature may affect staple crop production such as corn, rice, wheat, and sorghum, as well as others to include soybeans and cotton. “Experts report that there is a high probability that the pest will spread across all of China’s grain production area within the next 12 months.” There is no natural predator in China that feeds on the fall armyworm, nor are there any registered pesticides in China to counter it.

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At the same time, African Swine Fever is now threatening China’s pigs, spreading across the country since the first confirmed case in northeast China last year. Cases of this disease have now been reported in every province. As the world’s largest producer and consumer of pork, African Swine Fever is a direct threat to the livelihood and diet of a substantial portion of China. Unfortunately, there is no cure; the only solution is to cull herds, impose quarantines on affected farms, and hopefully halt the disease from spreading.

This combination of agricultural threats means Xi will likely have to substantially increase his imports of foreign foodstuffs in order to keep food prices stable in China — and even then, pork prices are likely to rise. Indeed, domestic meat prices are likely to increase substantially as feed supplies are affected by fall armyworm. Yet a key Chinese tool in its trade war with the United States are the tariffs it has placed on agricultural products, including soybeans. It is not at all clear whether this is sustainable, especially since the United States is one of the world’s most efficient agricultural producers. At a minimum, raising tariffs on American agricultural products will mean a rise in the price of those products when they are imported to counter domestic shortfalls.

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