China’s Retaliatory Move
China’s recent anti-dumping investigation into pork imports from the EU marks a significant escalation in trade tensions. This move is seen as a response to the EU’s tariffs on Chinese electric vehicles. While the EU denies accusations of unfair subsidies, the probe is expected to particularly affect major pork suppliers like Denmark, the Netherlands, and Spain.
Limited Impact on China’s Meat Market
Despite being the world’s largest pork producer, consumer, and importer, EU pork imports account for just 5% of China’s total consumption. However, China is already grappling with oversupply issues in its domestic pork market, leading to deflationary pressures. The oversupply is a result of a recovery in pig numbers following the devastation caused by African swine fever between 2018 and 2021.
Oversupply and Weak Consumption
China’s pig population rebounded to 434 million last year, up from a low of 310 million in 2019, despite labor shortages during the pandemic. This recovery has led to falling pork prices, exacerbating deflationary concerns. Weak domestic consumption, influenced by factors such as disposable income growth and changing dietary habits, has contributed to the oversupply issue.
EU’s Response and Potential Impact
The EU is compelled to participate in the investigation, which could lead to a loss of market share in China. Any restrictions on EU exports could benefit suppliers from the Americas, and Russia, a close trading partner of China, could increase its meat shipments. A full suspension of EU pork exports to China would have significant implications for the pork supply chain across the EU.
Conclusion
China’s anti-dumping investigation into EU pork imports comes at a critical juncture for both parties. While the immediate impact on China’s meat market may be limited, the investigation could have far-reaching consequences for EU pork exports. The outcome of this probe will not only affect the pork industry but also highlight the broader implications of escalating trade tensions between the EU and China.
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