Inflation in China, which likely peaked at 6.5% in July, was driven by food prices, particularly pork, which is a staple Chinese diet. There are about 610 million pigs in China, and the country is the world's largest producer and largest consumer of pork. Given that tight monetary policy is aimed at containing inflation, and since fears of a sharp slowdown of the Chinese economy is one of the main concerns holding back the world economy, every measure aimed at containing "swine inflation", and therefore loosening the monetary restriction, is welcome.
At the root of this inflation, in addition to epidemics that have affected supply, there is also a question of demand, since a richer population consumes more protein. In both cases, any policy aimed at increasing supply is the right answer to the problem, and something is changing in the productive structure of pig farming. The small companies disappear and the big ones expand, but there is a 'third way': the big companies enter into agreements with the small ones, entrusting them with a part of the production cycle. And the state helps this process with targeted subsidies.
Source: China Daily
