Date
20 September 2019
Costco's first store in China, which opened in Shanghai last Wednesday, had to close early on its first day because there were simply too many shoppers. Photo: Reuters
Costco's first store in China, which opened in Shanghai last Wednesday, had to close early on its first day because there were simply too many shoppers. Photo: Reuters

Glaring wealth disparity in China

There are a number of interesting economic stories about food in China.

The nation’s largest producer of pickled mustard products, Chongqing Fuling Zhacai Group Co. Ltd. (002507.CN), saw its annual sales revenue increase by only 1.9 percent to 1.09 billion yuan (US$152.3 million) in the first half of this year from a year ago. That marks a sharp slowdown from 20 or 30 percent annual growth in the past.

A Taiwanese financial commentator concluded that China is grappling with a serious economic slowdown given that preserved vegetable is a staple dish for lower-income Chinese. But is this really an affordability issue? Or could it be due to a shift in consumer taste for healthier food?

The price of pork is another hot topic in China. The nation’s food prices rose 9.1 percent in July from a year ago, while the surge in the price of pork was much higher, 27 percent, due to the African swine flu, trade war and other factors.

Twenty-nine Chinese provinces and regions have handed out pork subsidies for local residents.

But the rise in the price of pork has continued, spiking 52 percent in the first half of August, according to latest data released by the National Bureau of Statistics, indicating the pork shortage has yet to abate.

There are reports about citizens literally fighting for pork in the market. Reading such news, one may conclude that life must be getting really harsh for Chinese at the moment.

Meanwhile, the first store of US retail giant Costco, which opened in Shanghai last Wednesday, had to close early on its first day because there were too many shoppers.

Frenzied shoppers swamped the outlet and snapped up expensive products like Maotai white liquor, Chanel handbags, Toshiba ovens, and 75-inch Philip TVs.

The fact is, China is a big country with great disparities of income. Some coastal cities are as rich as those in the western world while some inland villages could be poorer than those in underdeveloped African countries.

It might be true that tens of millions of people in China can’t afford pork, but it’s also true that lots of white-collar workers go to fancy restaurants for steak every week.

From a positive point of view, such a huge wealth gap suggests there remains a huge room for China to improve its economy by boosting the development of economically backward regions and promoting consumption upgrade.

The full article appeared in the Hong Kong Economic Journal on Aug 30

Translation by Julie Zhu

[Chinese version 中文版]

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RT/CG

Hong Kong Economic Journal columnist