"Le Devoir" had a small but significant article in its April 17th, 2008 issue in the Economy section, about how the increase in food prices worldwide affects China.
At the end of the first trimester, food prices in China increased by 21% from the same period last year, reported the Chinese National Statistics Bureau (NSB).
The (NSB) representative, Li Xiaochao said that "since last year, food has been the main factor of inflation, and it remains this year as well". Between January and March 2008, the CPI has increased by 8% over the same period last year, however if the food items are removed, then the increase is only 1.2%. This problem has been worsened by the increase in demand for biofuels, which leads to a transition from traditional crops like wheat towards corn because of higher sales prices.
This is a serious issue in developing countries like China, where 1/3 to 1/2 of the family revenue goes towards the purchase of food (the proportion is largest in the poor rural regions). The Chinese government is dreading social unrest caused by a food shortage, but until now nothing but the typical party rhetoric calling for increased productivity and production in the agriculture sector seems to have been accomplished.
A hungry China would be a terrible thing, with the potential to ignite a world war. The World Bank and the IMF are well aware and on Sunday they called for an urgent intervention. It remains to be seen what this intervention will be...
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