World

Chinese authorities could dip into strategic pork reserves in a bid to rein in prices of the staple meat, Beijing’s top economic planner said Tuesday.

Pork prices in the world’s second-biggest economy spiked late last month, with the meat selling for 32 percent more than in June 2021 as market supplies dropped, state media Xinhua News Agency reported.

The spike came on the back of “irrational behaviours such as blindly holding supplies and reluctance to sell in the live pig market,” the National Development and Reform Commission (NDRC) said in a notice on social media.

The NDRC said that reluctance was aimed at boosting profits and ordered major suppliers to slaughter pigs at a “regular pace”, warning them against hoarding, Xinhua said.

On Tuesday, the commission added that it was “looking into a release of central pork reserves”.

It has also instructed local governments to release supplies “in a timely manner” to guard against sharp price hikes.

China has largely been spared the impact of a global surge in food prices caused by Russia’s war in Ukraine.

But pork prices were hit hard after the country’s herds were devastated by African swine fever in recent years, causing consumer inflation to spike.

In 2019, authorities said they would free up land to restore pork production to pre-swine fever levels, and officials have since released supplies from reserves to rein in rising costs.

“As the prices of hogs continue to rise, pig farmers are turning losses into profits… farmers are now profiting about 60 yuan (about $9) per head,” Ministry of Agriculture and Rural Affairs hog expert Wang Zuli told state broadcaster CCTV in an interview in June.

“We can say the darkest days for pig farmers are over,” Wang said, adding that pork supplies were expected to grow.

Top officials from the United States and China held a “candid” video call on Tuesday to discuss global economic challenges, especially regarding supply chains.

The exchange between Chinese Vice Premier Liu He and US Treasury Secretary Janet Yellen came as President Joe Biden considers lifting some tariffs on imports from China to try and ease soaring inflation.

The world’s two biggest economies are also grappling with Covid-snarled supply chains and rising global energy prices.

“The two sides agree that as the world economy is facing severe challenges, it is of great significance to strengthen macro-policy communication and coordination between China and the United States,” China’s official Xinhua news agency reported.

“And jointly maintaining the stability of the global industrial and supply chains is in the interests of both countries and the whole world.”

The Xinhua report said the video call took place at the request of the United States, and described the conversation as “constructive”.

Yellen and Liu “discussed macroeconomic and financial developments in the United States and China, the global economic outlook amid rising commodity prices and food security challenges”, the US Treasury Department said in a readout.

“Secretary Yellen frankly raised issues of concern including the impact of the Russia’s war against Ukraine on the global economy and unfair, non-market (Chinese) economic practices.”

China has repeatedly refused to condemn the Russian invasion, and has been accused of providing diplomatic cover for Moscow by blasting Western sanctions and arms sales to Ukraine.

With inflation in the United States at 40-year highs, authorities there are rushing to try and find ways to ease price pressures.

Among the options is lifting some of the trade tariffs imposed on China by Biden’s predecessor Donald Trump.

Any decision is likely to come soon as some of the Trump duties are set to expire from July 6 unless renewed.

The penalties were aimed at punishing what the United States says are China’s unfair trade practices.

In the call with Yellen Tuesday, China “expressed its concern about issues including the lifting of additional tariffs on China and sanctions by the US side”, according to Xinhua.

Contact is expected in the coming weeks between Biden and Chinese President Xi Jinping.

Asian markets rose Tuesday on growing speculation US President Joe Biden is about to roll back some of the Trump-era tariffs on Chinese goods as he looks for ways to rein in inflation, though sentiment remains at a premium owing to fears of a recession.

The mood on trading floors has become increasingly gloomy in recent months as observers warn that sharp interest rate hikes aimed at curbing price rises could cause a contraction, compounding uncertainty caused by Russia’s war in Ukraine.

Still, equities were on the up Tuesday on talk that the White House is about to remove duties on some of the hundreds of billions of dollars worth of imports from China, with reports saying an announcement could come this week.

With some of the tariffs due to expire soon, officials in Washington have been discussing the measures with an eye on inflation, which is sitting at four-decade highs.

And in a sign that something could be on the cards, China’s state-run Xinhua news agency said Treasury Secretary Janet Yellen and Vice Premier Lui He had held discussions.

“The two sides agree that as the world economy is facing severe challenges, it is of great significance to strengthen macro-policy communication and coordination between China and the United States,” it said. 

“And jointly maintaining the stability of the global industrial and supply chains is in the interests of both countries and the whole world.”

Reports also said that Biden was considering launching new probes into industrial subsidies — allowing for more targeted measures in strategic areas — to appease China hawks.

Hong Kong, Shanghai, Tokyo, Sydney, Seoul, Taipei, Wellington, Manila and Jakarta were all in positive territory.

“Given that inflation remains the White House public enemy number one, (investors are) leaning toward a gradual rollback of some China tariffs as it would reduce end costs to US consumers,” said SPI Asset Management’s Stephen Innes.

However, some commentators said that while the removal of some tariffs would be widely welcomed by traders, they were unlikely to have a long-lasting effect on inflation.

“Markets are likely to react positively on a knee-jerk because at this point we are hungry for any signs of positive news,” Charu Chanana, of Saxo Capital Markets, said.

“But we don’t see the move impacting the global growth and inflation dynamics in a significant way.”

Oil prices rose on expectations that demand will continue to outstrip supplies as the Ukraine war rages with no sign of an end, while investors are keeping tabs on China as it sees fresh Covid outbreaks that have led to some cities being put into lockdown.

Months-long flare-ups in Shanghai and Beijing earlier in the year saw millions of people ordered to stay home, sending shockwaves through the domestic economy and battering supply chains.

“China is the real wildcard here: it’s going to be two steps forward, one step back,” said Australia & New Zealand Banking Group’s Daniel Hynes.

“A demand recovery in China could potentially offset weakness in developed economies as central banks tighten monetary policy.”

– Key figures at around 0230 GMT –

Tokyo – Nikkei 225: UP 0.8 percent at 26,369.24 (break)

Hong Kong – Hang Seng Index: UP 1.0 percent at 22,037.88

Shanghai – Composite: UP 0.2 percent at 3,412.73

Dollar/yen: UP at 136.20 yen from 135.69 yen Monday

Euro/dollar: DOWN at $1.0430 from $1.0431 

Pound/dollar: DOWN at $1.2106 from $1.2116

Euro/pound: UP at 86.16 pence from 86.09 pence

West Texas Intermediate: UP 2.3 percent at $110.87 per barrel

Brent North Sea crude: UP 0.6 percent at $114.16 per barrel

London – FTSE 100: UP 0.9 percent at 7,232.65 points (close)

New York – Dow: Closed for public holiday

It’s still dark when the line starts forming outside an electronics store in Tokyo, as desperate gamers try to snag the latest PlayStation or Xbox despite chronic shortages in Japan.

The consoles made by Sony and Microsoft have been hard to buy since their November 2020 release, as has Nintendo’s Switch, with supply chain issues exacerbated by lockdowns in China.

Shortages have struck worldwide but are particularly acute in Japan because Sony and Microsoft have prioritised other markets.

That has left consumers and stores in a game of cat-and-mouse as customers hunt coveted consoles and sellers battle chaos that has sometimes required police intervention.

Tetsuya, 50, has been trying to get a console since February and lined up before 6:30 am with dozens of other people outside a store in the electronics district of Akihabara.

But around 8 am, an employee emerged to announce the store had not received either PS5s or Xboxes and the crowd quickly dispersed.

“It’s a shame, but I’ll keep trying my chances if I can,” said Tetsuya, who declined to give his second name.

Hoping to discourage crowding, many stores have moved sales online, using lottery systems, while others have shifted to low-profile sales that take place without prior warning, with consoles arriving on a random schedule.

The phenomenon is known as “guerrilla sales” in Japan, a term that first emerged with the Nintendo DS console, which was a victim of its own success during the 2000s

Some gamers are fighting back with their own tactics, including one who has set up a website gathering crowdsourced information.

“Last summer, I spent three months trying to buy a PlayStation 5, but every time I went to a store, they were sold out,” said the 40-year-old Japanese man, a researcher in artificial intelligence who asked to remain anonymous.

“The only option was to phone each store or find information on Twitter,” he told AFP.

“I thought to myself that everyone must have the same problem, and that creating a site to share information would help the community.”

– ‘There’s no line’ –

The site’s creator says he spends hours on weekends sorting and verifying up to 500 daily messages posted on its forum.

“For PS5s in Yokohama, they are now selling both the disc edition and the digital edition. It’s unclear how many units they have. There’s no line,” reads one post.

The information gives gamers real-time leads but is also fed into a calendar to highlight trends and analysed by an algorithm designed to predict when stores will have supplies.

Japan’s console drought is the result of various factors, says analyst Hideki Yasuda of Toyo Securities.

Microsoft’s Xbox has never been as popular in Japan as elsewhere, so in times of short supply, the country isn’t a priority market.

And Sony has targeted PS5 sales in Europe and North America, according to Yasuda, who estimates just five to eight percent of the 20 million PS5s sold worldwide were in Japan.

When the PS4 launched in 2013, “the smartphone game market in Japan was exploding while the console market was stalling”, he told AFP.

“Sony must have thought it was going to disappear in the 2020s, especially with the shrinking Japanese population.”

As a result, a PS5 bought for 55,000 yen ($400) can now easily fetch 80,000-100,000 yen when resold, and there have even been fistfights involving alleged resellers at stores.

Despite promises from PlayStation boss Jim Ryan in May of a “significant ramp up” in production, Yasuda doesn’t expect a major boost to deliveries before the second half of 2023.

The crowdsourcing site founder says he will keep going, determined to help those “who really love video games” against “scalpers”.

“I have no life on the weekend, but if I stop, people who want to buy a console will be stuck.”

“Business is back”, exclaims Abdullah Mekhlafi at the shop where he sells prayer mats in Islam’s holiest city, which is preparing for the biggest influx of hajj pilgrims since the coronavirus pandemic began.

Two years of drastic restrictions on the number of pilgrims who could perform the hajj emptied shops and hotels across the Saudi Arabian city of Mecca. But business owners are hoping for a quick recovery as hundreds of thousands of worshippers flock to the region this week.

“We had few customers (during the last two hajj seasons), but today business is back, thanks to God. It’s the same as before, and even better,” 30-year-old Mekhlafi told AFP.

One million people, including 850,000 from abroad, will be allowed at this year’s hajj, one of five pillars of Islam which all able-bodied Muslims with the means are required to perform at least once in their lives.

In 2019, about 2.5 million people took part in the rituals, which include circling the Kaaba at the Grand Mosque in Mecca, gathering at Mount Arafat and “stoning the devil” in Mina.

The following year, after the pandemic took hold, foreigners were barred and the total number of worshippers was capped at 10,000 to stop the hajj from turning into a global super-spreader.

That figure rose to 60,000 fully vaccinated Saudi citizens and residents in 2021.

– Restoring old glory –

The hajj, which costs at least $5,000 per person, and umrah pilgrimages that occur at other times of year are usually a significant revenue earner for Saudi Arabia, especially its tourism sector.

In normal times, they generate about $12 billion (11.5 billion euros) annually, keeping the economy humming in Mecca.

The city has seen a construction boom in recent years that has brought new shopping malls, apartment buildings and luxury hotels — some offering spectacular views of the sacred Kaaba, the large black cubic structure at the centre of the Grand Mosque towards which all Muslims pray.

But these projects were starved for clients during the pandemic, meaning their owners were cheered by scenes already unfolding in Mecca on Monday, two days before the hajj officially begins. 

White-robed worshippers were flocking to souvenir and barber shops across the city of two million.

And the main shopping centre near the Grand Mosque, where many hotels are located, was buzzing with pilgrims again, a far cry from a year ago when the area looked nearly abandoned. 

Amin, a perfume shop owner, was bullish about his prospects, telling AFP his losses could be recovered this year.

“There is a huge difference between this year and past ones. This year we can see a lot of pilgrims who are bringing back the glory to the Grand Mosque,” he said. 

“The losses were big, but now things are better.”

– Boom times –

The changes in Mecca track the recent economic fortunes of Saudi Arabia.

During the pandemic, the kingdom faced a sharp downturn in oil prices due to a collapse in global demand, which triggered austerity measures including the tripling of a value added tax and cuts to civil servants’ allowances.

Particularly after Russia’s invasion of Ukraine in February, things seem to have changed.

In early May, Saudi Arabia reported its fastest economic growth rate in a decade, as a surging oil sector fuelled a 9.6 percent rise in the first quarter over the same period of 2021.

“The impact of the losses during the last two years was significant, but we are starting to see a recovery on the business level, and this year’s (hajj) is good news,” said Salem Ali Shahran, operations manager at the biggest hotel chain in Mecca.

“The current numbers have reached 40 percent of their 2019 levels. We hope for bigger numbers in the coming years.”

Saudi Arabia’s GDP is expected to grow by 7.6 percent in 2022, the International Monetary Fund said in April.

The world’s biggest oil exporter is trying to diversify its economy, a main pillar of the Vision 2030 reform agenda pushed by Crown Prince Mohammed bin Salman, the de facto ruler. 

Tourism is a crucial component of that plan, making a booming hajj all the more important.

The current goal is for Saudi Arabia to triple foreign tourism this year as pandemic restrictions ease, Ahmed Al Khateeb, the tourism minister, told AFP in an interview last month.

Of the 100 million foreign and domestic tourists targeted for 2030, 30 million are expected to be making religious trips, largely to Mecca and Medina, Islam’s two holiest sites.