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Comment: The China syndrome

China’s new role as a global economic leader makes it important the country shoulders its transparency responsibilities

When SARS hit back in 2003, China was nowhere near the economic powerhouse it is today. Now, if something happens to China, the entire world is affected.

Even though the coronavirus outbreak is starting to slow, the economic damage will easily surpass that of SARS.

China accounts for a much larger share of commodities demand now, relative to 2003. Most futures like cattle, hogs, and soybeans have dropped anywhere between 10 per cent to 30 per cent.

China is essentially buying less of everything, making its population more vulnerable. Reports suggest the food inflation rate has exceeded 100 per cent in some areas.

On our end, some retail-level food prices could drop. It’s possible that we may see lowered prices for some products like beef, pork, and coffee.

Observers still caution that the full economic fallout depends on how well China can ultimately contain the outbreak. And when it does, China will be back, buying everything it can. Considering the new trade truce with the United States, China could be buying American goods at a historical pace.

Once this happens, we could see commodity prices soar across the board. Such a swing could impact prices here in Canada too. Futures are telling us that markets are expecting such a recovery to happen as soon as April or May.

If that occurs, food inflation in Canada could become an issue. The big question most analysts are asking is how long until the outbreak will be contained.

We are seeing encouraging signs; even if the number of deaths in China surpass the toll from SARS, the number of cases reported every day seems to indicate that the situation may be under control.

As with SARS, scientists now believe that contact with live animals or slaughtered animals’ flesh may be the cause of the disease. This could become yet another blow to the livestock industry.

But the reality is this: biosecurity measures in the country, especially in central China, are questionable at best. China is not known to be forthcoming with reliable, verified data.

In 2008, thousands of infants were exposed for months to contaminated milk formula, but Beijing opted to turn a blind eye simply because it was hosting the Olympic Games and did not want the distraction. As a result, 54,000 babies were hospitalized, and six died.

What is happening with the coronavirus could indicate how the African swine fever (ASF) is being dealt with, in China. Skepticism about what is happening in China with ASF may grow.

Many believe it could come to Canada soon. There are no associated risks for humans who contract ASF, but Canadian officials could find it difficult to communicate risks when data coming out of China is anything but reliable.

Humanity goes through a global outbreak like this every 15 years or so, and given China’s topography and demographic reality, there is a chance the country will be the epicentre of many other outbreaks in the future.

China has its ways, whether we agree with them or not, but its responsibilities go far beyond its borders.

This recent setback in transparency is yet another indication that China has not fully accepted its place as a major socio-economic player around the globe.

Before ASF gets to Canada, let’s hope China opts not to suppress any information.

About the author


Sylvain Charlebois is senior director, Agri-Food Analytics Lab, and professor in food distribution policy, Dalhousie University.



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