How China Keeps 1.4 Billion People Fed as Virus Clogs Roads

(Bloomberg) --

Among the logjammed traffic trying to enter Beijing last week on a highway from the south were dozens of trucks carrying food to the capital, stuck in line as health officials stopped each vehicle to screen the occupants for signs of coronavirus.

In the city, supermarkets were emptying fast as panicked shoppers rushed to stock up on provisions. Days earlier, the government had closed Hubei province, the epicenter of the new virus and a nexus of transportation in the center of China.

How China Keeps 1.4 Billion People Fed as Virus Clogs Roads

Keeping the nation’s 1.4 billion people fed is one of the ruling Communist Party’s vital challenges, a task that was tough enough even before the virus, due to an outbreak of swine fever and the effects of decades of pollution and urban expansion. Within days of the panic buying, authorities had opened special thoroughfares for essential food and medical items called “Green Passages.”

“Any food price spike could lead to social unrest, and that’s why the government gives this top priority,” said Ma Wenfeng, senior analyst with Beijing Orient Agri-business Consultant Ltd. “Food is more important, even than masks.”

The measures are working in the capital. A visit to a supermarket in Beijing this week showed that fresh vegetables and fruit, which had been the first to go, are now piled high on shelves.

“We have no worries anymore and we can get anything we need,” said Liu Ying, a woman in her 50s who was shopping at a supermarket in southern Beijing.

How China Keeps 1.4 Billion People Fed as Virus Clogs Roads
How China Keeps 1.4 Billion People Fed as Virus Clogs Roads

The Green Passages helped ease prices that had spiked in some areas, Lian Weiliang, deputy head of the National Development and Reform Commission, said in a state broadcast on Monday.

Preventing Prices

Average vegetable prices were still 11% higher on Thursday compared with before the holidays, while pork prices had risen 4.1%, according to the commerce ministry.

Lian said China will transport state pork reserves to Wuhan. The government said it has released another 10,000 tons of pork from the reserves today.

Because the outbreak spread around the time of the lunar new year festival, many citizens had already stocked enough food for the holidays, so the panic buying at some supermarkets was more “psychological,” said Ma at Beijing Orient.

Moreover, the country has huge reserves of basic grains such as rice and wheat, stored around the country in government silos.

How China Keeps 1.4 Billion People Fed as Virus Clogs Roads

China’s National Administration for Food and Strategic Reserves asked local governments to ensure supplies of grains and edible oil to prevent shortages, panic buying or price spikes, and said it will release items from reserves if necessary. There’s enough rice and wheat in government stockpiles to feed the public for a year, Lian said.

Other products present a bigger challenge. China relies on imports for some foods, especially soybeans and edible oils. It has also boosted imports of pork, one of the nation’s favorite meats, after African swine fever forced the country to cull millions of domestic hogs.

China’s commerce ministry said the country will boost imports of meat and other products to meet any deficit, while state-owned food companies Cofco and Sinograin have been ordered to resume production to boost supplies, state media Xinhua reported.

The Asian nation agreed to buy $40 billion to $50 billion a year of U.S. farm products for the next two years, mostly soybeans and meat, as part of the phase-one trade deal signed last month.

How China Keeps 1.4 Billion People Fed as Virus Clogs Roads

Still, the coronavirus may temper the nation’s demand for some products. People are eating out less, shunning restaurants along with other public places. Dining venues and food stalls are among the biggest users of pork and other meats as well as products like palm oil.

About 5 kilometers from the supermarket is a street of eateries with a small noodle restaurant. The lights are off and a sign on the door says “closed.” Owner Ji Jingping is waiting for the government to tell her when she can open again, though that might not make much difference.

How China Keeps 1.4 Billion People Fed as Virus Clogs Roads

‘Nobody Dares’

“Even if you open, nobody dares to eat outside,” Ji said. “There are many restaurants like us. All the restaurants along the street are closed.” Ji is still paying her 20 employees and 50,000 yuan in monthly rent and says it may be even harder for big restaurants with many workers and expensive rents.

The Lunar New Year holiday has ended, but the streets in Beijing remain mostly deserted. Restaurants, public parks and cinemas are closed. Visitors to supermarkets and citizens going home to their communities now typically need to get their temperatures tested before entering.

How China Keeps 1.4 Billion People Fed as Virus Clogs Roads

To prevent the spread of the virus, most Chinese provinces banned festival celebrations, parties and dining at restaurants during the biggest holiday of the year. More than a dozen cities and provinces extended the Lunar New Year break by a week as part of these efforts.

“Restaurants are among the businesses that have been hardest hit during the holidays,” said Li Qiang, chief analyst with Shanghai JC Intelligence Co., a private agriculture consulting firm in Shanghai.

Restaurants and retail businesses may have suffered losses of about 500 billion yuan ($71.7 billion) in just seven days during the holidays, according to a report by Ren Zeping, chief economist of China Evergrande Group, a Shenzhen-based developer. That’s about 10% of last year’s total catering revenue of 4.7 trillion yuan.

Ren expects the country’s economic growth to slow to 5% this year due to the drop in demand and production, the impact on investment, higher short-term unemployment and rising prices.

©2020 Bloomberg L.P.

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