Should China Try to Feed Itself?

By Bruce Einhorn

Bloomberg Business Week - May 10, 2013

For China’s leaders, there was one problem in an otherwise benign inflation report for April. First, the good news: The consumer price index rose 2.4 percent, about in line with economists’ expectations. While inflation accelerated from 2.1 percent in March, the April figure is still well below the government’s target of 3.5 percent for the year.

So what’s the catch? Food prices. With vegetables getting more expensive, the cost of eating jumped 4 percent last month, compared with an increase of 2.7 percent in March. The rising cost of food could create more difficulties in the coming months, the People’s Bank of China warned yesterday.
The Chinese government is well aware of the political sensitivity of food, which is one reason the country is sticking to a policy that promotes self-sufficiency. The country’s farmers met about 98 percent of China’s demand for grain last year, Vice Minister of Agriculture Chen Xiaohua said at a news conference in March.

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