BEIJING —
Business is normally bustling at the sprawling Xinfandi produce market in
southern Beijing, where stores, restaurants and thrifty shoppers buy their
fruits and vegetables in bulk.
But
more apple sellers were napping than hustling one recent afternoon. The price
of apples had nearly doubled, to roughly $1 per pound, and people were spending
their money elsewhere.
“Whoever
eats apples these days must be loaded,” said Li Tao, who has been selling
apples for more than 20 years.
Migrant
workers used to be able to afford apples, he said. “Now it’s too expensive,”
Mr. Li said.
Already grappling with a
slowing economy and President Trump’s trade war, Beijing now has to worry about
the rising price of food. It is not just apples. Other fruits and vegetables
are more expensive. The price of pork has jumped as the country deals with a
devastating swine fever epidemic. Chicken, beef and lamb prices have been
creeping up, too.
Apart
from food, China does not appear to have a broader inflation problem. But
rising food costs have become the talk of China. Government officials are reassuring the country that food supplies are
plentiful, even as they take steps to stabilize prices.
“People
and economists talk like ships in the night,” said George Magnus, an associate
at the China Center at Oxford University. While overall inflation may not be
high, he added, rising prices for visible goods like pork, fruit and vegetables
can affect consumer spending — a potential problem for China’s economy.
Even a normally sanguine
Li Keqiang, China’s premier, looked surprised on May 25 when he visited a fruit
vendor in the eastern province of Shandong. “It has gone up so high?” Mr. Li said after
the vendor told him that the price of his apples had more than doubled since
last year.
now has to worry about the
rising price of food. It isn’t just apples. Other fruits and vegetables are more
expensive.CreditLam Yik Fei for The New York Times
Various forces are
driving up food prices. Chinese officials are still trying to contain the outbreak of swine fever, which doesn’t make people
sick but can be fatal in pigs. More than a million pigs have been culled to
stop the spread of the disease, though it appears to be continuing.
For fruits and vegetables, Chinese authorities blame severe weather and say the
price increases will be temporary.
“The
prices of fruit and vegetables have caught everyone’s attention. Pork as well,”
said Chenjun Pan, executive director of food and agriculture at RaboResearch.
Experts
are also watching the spread of a pest called the fall armyworm, a sort of
caterpillar that likes to eat rice, sorghum and corn crops. More than 350
square miles of crops have been ravaged, according to official media, though
the full impact on crop prices may not be felt until later in the year.
Food
prices are rising at a sensitive time. President Xi Jinping has signaled tough times ahead as tensions rise with
the United States. Data released on Friday suggest that a nascent economic uptick is beginning to wane and
that China could slip back into a slowdown. In March, Mr. Li, the
premier, acknowledged that the economy faced pressures as
Beijing lowered its expectations for growth this year.
The
government has long worried about inflation. It played a role in huge public
protests in Tiananmen Square 30 years ago; the anniversary of the government’s
violent suppression of the protests is this week. Steep inflation in the
1990s threatened to derail efforts to open the Chinese economy.
For
now, the price increases appear limited to food, thanks in part to China’s
uncertain economic situation. Rising rents have cooled to single-digit
percentage growth this year. Wage increases have slowed, and
unemployment is rising. At China’s factories, prices for raw materials and
other goods appear tame. China still suffers from excess factory capacity in
cars, steel and other industries, meaning production could quickly ramp up if
prices rise.
“I
don’t think inflation is a big issue for China so far,” said Yu Yongding, a
prominent economist at the Chinese Academy of Social Sciences, an elite
government institution in Beijing.
Chinese workers also have
little leverage for seeking higher wages, another possible contributor to
inflation. Job losses are already a problem among young white-collar workers as
the country’s tech sector has slowed over the winter and spring.
The
price of pork jumped 14 percent in April compared with a year earlier, while
broader food prices for consumers rose 6.1 percent, according to government
statistics. Agriculture officials have warned that pork prices this year could
go up by 70 percent. Just over a week ago, the average price of a group of
seven types of fruit hit a nearly five-year high of 50 cents per pound,
according to official statistics.
Gao
Feng, a spokesman for the Ministry of Commerce, said recently that officials
would “effectively guarantee the market supply of daily necessities such as
fruits and vegetables, meat and eggs products.”
In
early May, Beijing city economic officials said they were putting in place a
contingency plan to deal with rising costs of grains and cooking oil in
Beijing. They issued similar notices in 2016 for rising pork prices and in 2017
for vegetables.
The
higher prices are beginning to spread to other foods. Higher pork prices have
driven some restaurants and families to serve chicken, beef or lamb instead,
pushing the price of these meats up. Traders and slaughterhouses buying up
extra stocks to sell at a higher price later have also disrupted the country’s
“cold chain,” or the network of freezers and temperature-controlled trucks that
bring meat from farms to plates.
It
isn’t clear whether higher prices could ripple into other parts of the economy.
Perceptions of inflation could drive workers at state-owned companies to demand
higher wages, said Harry Broadman, a former chief of staff at the White House
Council of Economic Advisers who is now the chairman of the emerging markets
practice at the Berkeley Research Group, a global consulting firm.
“It’s
not a strictly economic issue,” Mr. Broadman said. “It’s a political
economy issue.”
Online, discontent is
rising. A survey on China’s biggest social media platform by Phoenix Finance
asked people to pick an explanation for the sudden surge in fruit prices. The
choices did not include a rise in overall inflation, so people added that in
their comments.
“These
four options are just trying to smooth things over,” one person wrote. “It’s
obviously inflation.”
Other
online wags focused on new guidelines from China’s nutrition association, which
said individuals should eat at least 500 grams of vegetables and 250 grams of
fruit each day.
“I
can’t afford eating now,” said one commenter. “Fruit is as expensive as gold.”
Elsie Chen contributed
research.
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