China’s Imminent Food Crisis – OpEd

By White Mountain

For over a decade, I have delved into the issues of inflation and food crises in China. Throughout this long period, at times I have questioned whether my analyses might have been flawed.

Yet, after repeated re-evaluation of the fundamental logic underlying these issues, I believe that the conclusions drawn years ago remain valid and plausible. In other words, the crisis has not left China; it persists and could materialize at any moment.

For comparison, one can look at the socialist regimes of South America, particularly Chile under the leadership of Salvador Allende. While numerous factors may have contributed to Allende’s ultimate failure, one pivotal reason stands out: inflation and severe food shortages.

In China both today and in the future, very few people in rural areas are still engaged in food production. The sons of Chinese farmers, influenced by factors such as declining birth rates and the impact of China’s lowbrow culture, aspire to lives and ideals that have little to do with farming. Continuing to toil in the fields is not their ambition. They grow up with the dream of becoming successful individuals when they return to their hometowns. Such privileged figures in the rural culture are those who can decide the fate of others. While they may harbor other dreams, one thing is certain: amidst the desolation of China’s countryside today, they certainly have no desire to remain as farmers tilling the land.

As aging continues and farmland diminishes, with no one willing to continue farming, where will China’s food come from? The past hope rested on imported food. With the world’s population increasing and arable land decreasing, the total global supply of food has never been sufficient to sustain an ideal consumption level. The balance between supply and demand has often been precarious. However, for a long time, China was able to freely purchase sufficient grain, primarily due to the strength of the yuan exchange rate.

The imminent issue lies in the fact that the key support factors that have historically bolstered the strength of the Chinese currency exchange rate are waning. Factors like robust demand in the global market, China’s export of goods, foreign confidence, and China’s private economy, among others, are declining. Present-day China is facing challenges related to decoupling, both from other countries worldwide and from various industries. Simultaneously, it is evident that public opinion in Chinese society is demonstrating an unparalleled level of distrust towards the global market. Therefore, decoupling is almost certain, and this will significantly impact the yuan exchange rate, inevitably manifesting in its exchange rate performance.

On another front, China is also facing issues with the world’s major grain-producing countries. I am uncertain about the thought process of the relevant authorities; I merely observe that today, more than a decade later, the relationship between the world’s major grain-producing countries and China is increasingly tense. Ukraine’s grain production and exports pose significant supply risks to China due to the latter’s support for Russia. Argentina, as a major exporter of grain, is undoubtedly discontented with China, particularly after China unilaterally terminated the bilateral currency agreement. The United States and Australia are also major grain-exporting countries, but the tension in China’s relations with them is close to a state of war. Of course, there are also Southeast Asian countries, whose grain exports are not substantial, but their proximity to China raises concerns. However, the shadow of the South Sea dispute looms large, and China’s strength always seems to be at odds with its needs in these disputes.

Therefore, China’s food crisis is like a time bomb. It will inevitably explode, where the problem of feeding a population of 1.4 billion will definitely erupt one day. It is only a matter of time when that happens.