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China wakes up to the need for a greener diet



For Jian Yi, founder of campaigning organisation the Good Food Fund, China’s understanding of food systems is where its awareness of the environment was a decade ago. Initially mundane discussions on how to clean up litter or avoid the harmful impact of smog rapidly grew into a broader debate about building sustainable ecosystems. 

The award-winning documentary film-maker sees a similar turning point approaching for food in China — with a pivot away from narrow concerns about food safety, sparked by scandals involving tainted milk powder, “gutter oil” and rotting meat, to how to transform food systems. “We are currently trying to connect the dots for people to convey that this is a global problem that requires a solution in China,” he says. 

The pandemic has spurred scrutiny of China’s wildlife trade and urban markets, where the novel coronavirus virus first appeared, and prompted Chinese environmentalists to call for a wider reflection about humans’ relationship with nature.

China’s leadership has also prioritised food and the environment. In August, President Xi Jinping stressed the need to strengthen food security as he relaunched “Operation Empty Plate”, a campaign to tackle waste. In September, he surprised the UN by pledging that China would be “carbon neutral” by 2060.

Campaigner Jian Yi thinks China is nearing a turning point in its attitude to food

A key task for advocates of food sustainability like Mr Jian is to make policymakers appreciate the relationship between these currently siloed issues. Last week, his three-year-old organisation held its fourth annual summit, where 30,000 online attendees could hear lectures on the relationship between food systems and climate change, and watch livestream footage from organic farms in southwest China.

The event also included the launch of the Good Food Pledge, where partners including local governments, restaurants and companies set sustainability goals in line with the UN’s by 2030. Participants’ efforts are recognised through a certification scheme. “We want to help partners find an incentive,” Mr Jian says.

The Good Food Fund operates under the China Biodiversity Conservation and Green Development Foundation, a government-backed non-profit. That gives it a degree of influence within the country’s political system.

Diners in a Beijing restaurant. President Xi Jinping has urged consumers to avoid food waste © Kevin Frayer/Getty Images

Meat or veg?

Pushing for change at the institutional level, rather than making grassroots efforts to change consumer behaviour, is a relatively new approach for China’s food sustainability movement. Mr Jian previously worked more with China’s vegan communities and released a documentary called What’s for Dinner?, an uncomfortable exploration of livestock farming.

While a vegan himself, Mr Jian has attempted to build a bigger audience for his organisation. One idea he has had is to tap into China’s national obsession with food, working with top chefs to design plant-based menus. He is also following in the footsteps of US universities such as Yale to bring food sustainability into China’s elite educational institutions.

China’s traditions and social norms are not always helpful. Vegetarianism and veganism are still relatively uncommon compared with more developed countries. Although many regions have traditionally used meat sparingly in their cooking, animal protein is still frequently seen as essential to a healthy diet, while ready access to expensive meats confers social status. 

A worker in Sichuan pushes butchered pigs into a cooler. About one-third of the world’s meat is eaten in China © China Photos/Getty Images

The country accounts for nearly a third of global meat consumption, and the per-capita amount is growing — an ominous development, given the meat industry’s contribution to carbon emissions and other environmental harms.

The government has been encouraging the population to cut down on daily meat intake, with dietary recommendations last updated in 2016 recommending a total of 120-200g of animal protein per day. What may help is that consumers appear to be receptive to alternatives, with one survey finding that 62 per cent are open to buying more plant-based meat.

This openness may come in part from the influence of a sizable Buddhist community that, in striving not to harm animals, has popularised the use of fungus- and soya-based meat alternatives. Tofu is also a common part of Chinese cuisine, often appreciated in its own right rather than merely as a meat substitute. Meanwhile, plant-based milk alternatives — derived from soya, walnuts, almonds, coconuts and peanuts — have found a vast market, owing to a high incidence of lactose intolerance.

Data provider Euromonitor estimates that China’s plant-based meat market had sales of about $10bn in 2019, a figure projected to reach nearly $13bn by 2023. As a result, US-based Beyond Meat has entered the Chinese market to take on local rivals like Shenzhen-based Qishan Foods (or Whole Perfect Foods in English) and start-up Zhenmeat (Treasure Meat).

Matilda Ho, managing director of Shanghai-based agriculture and food tech venture capital fund Bits x Bites, says the real opportunity lies in bringing novel alternative protein sources such as chickpeas to Chinese consumers, as interest in moving beyond traditional soy-based products has blossomed in the past year.

“A lot of existing [plant-based protein] brands under-deliver on nutrition,” she says. “A lot of them are really rich in sugar and fat, which does not appeal to the younger generation that is looking for healthier alternatives.” She expects compound annual growth for the sector to continue at about 10-15 per cent over the next decade, a rate maintained since 2014.

For Mr Jian, the excitement around plant-based meat helps raise awareness but can only be a part of the solution. “People in China have long accepted the centrality of plants in their diet,” he says. “We just need to give them the tools to act upon that belief.”

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Emerging Markets

Tech-heavy Taiwan stock index plunges on Covid outbreak




Taiwan’s stock market, home to some of the world’s biggest tech companies, suffered one of the largest drops in its history as investors were rocked by a worsening Covid-19 outbreak.

The Taiex fell as much as 8.55 per cent on Wednesday, the index’s worst intraday fall since 1969, according to Bloomberg. It finished down 4.1 per cent.

Construction, rubber, automotive and financials — sectors retail investors had been shifting into from technology in recent months — were the worst hit in the sell-off.

The world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Company, which has a 30 per cent weighting in the index, fell as much as 9.3 before recovering ground to be down 1.9, while Apple supplier Hon Hai Precision Industry, also known as Foxconn, dropped 9.8 per cent before paring losses to be down 4.7 per cent.

While Taiwan’s sell-off was related to domestic Covid-19 problems, it followed recent declines in global markets as investors worried about possible inflationary pressures.

The falls came as Taiwan’s government was expected to partially close down public life to contain a worsening coronavirus outbreak — something the country had managed to avoid for more than a year.

“The reason that triggered the escalated sell-off during the trading session is the new [Covid-19] cases to be reported this afternoon, and probably the raising of the pandemic alert level,” said Patrick Chen, head of Taiwan research at CLSA. “On top of that, the market before today was already at a point where the index was at an inflection point.”

Taiwan’s strict border controls and quarantine system and meticulous contact tracing measures had helped it avoid community spread of Covid-19 until recently.

That success, which allowed Taipei to forego lockdowns, helped boost the local economy, which grew about 3 per cent last year and 8.2 per cent in the first quarter of 2021.

But health authorities announced 16 locally transmitted confirmed cases on Wednesday, for three of which the infection source was unclear — a sign of widening spread in the community. Authorities had confirmed seven untraced cases on Tuesday, and domestic media reported that the government might introduce partial lockdown measures.

President Tsai Ing-wen called on the public to be vigilant but avoid panicking.

Taiwan’s stock market rose almost 80 per cent over the past year, peaking at a historical high late last month. It is now down 8.5 per cent from that mark.

Retail investors have increasingly moved out of technology stocks in recent weeks, reducing the sector’s weight in trading volume from almost 80 per cent at its height to just over 50 per cent.

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China factory gate prices climb on global commodities boom




The price of goods leaving factories in China rose at the fastest pace in more than three years, on the back of a rally in commodities supported by the country’s economic recovery.

The producer price index rose 6.8 per cent in April year-on-year, beating economists’ expectations and surpassing March’s increase of 4.4 per cent.

The rate was driven in part by comparison with a low base last year in the early stages of the pandemic. But it also reflects a global surge in the prices of raw materials that was first stoked by China and now incorporates expectations of recovering global demand.

While PPI prices in China have leapt, economists suggested there was limited spillover into consumer prices and that the central bank was unlikely to react. China’s consumer price index added just 0.9 per cent in April, the National Bureau of Statistics said on Tuesday, although it touched a seven-month high.

“It tells us that demand at this moment is super strong,” said Larry Hu, head of greater China economics at Macquarie, of the PPI data, although he suggested policymakers would see the increase as “transitory” and “look through it”.

“We’re going to see some reflation trends,” he added.

Signs of tightening in China’s credit conditions have drawn scrutiny from global investors eyeing the prospect of higher inflation as the global economy recovers from the pandemic, especially in the US, which releases consumer price data on Wednesday.

China’s PPI index remained mired in negative territory for most of 2020 following the outbreak of coronavirus, but has started to gather momentum this year. Gross domestic product growth in China returned to pre-pandemic levels in the final quarter of 2020.

An industrial frenzy in China has stoked demand for commodities such as oil, copper and iron ore that make up a significant portion of the index and have helped to push it higher. 

Policymakers in China have moved to tighten credit conditions, as well as attempted to rein in the steel sector. Ting Lu, chief China economist at Nomura, said the relevant question now was “whether the rapid rise of raw materials prices will dent real demand, given pre-determined credit growth”.

Retail sales in China have lagged behind the growth rate of industrial production, putting downward pressure on CPI, which has also been weakened by lower pork prices that rose sharply on the back of African swine fever. Core CPI, which strips out food and energy, rose 0.7 per cent in April 

Julian Pritchard-Evans, senior China economist at Capital Economics, said that producer prices were feeding through into the rebound in consumer prices, but also suggested that pressures on the former were “likely to be mostly transient”.

He added that output prices for durable consumer goods were rising at their fastest level on record.

China’s rapid recovery has been driven by its industrial sector, which has churned out record quantities of steel and fed into a construction boom that policymakers are now trying to constrain. On Monday, iron ore prices hit their highest level on record, while copper prices also surged.

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Iron ore hits record high as commodities continue to boom




The price of iron ore hit a record high on Monday in the latest sign of booming commodity markets, which have gone into overdrive in recent weeks as large economies recover from the pandemic.

The steelmaking ingredient, an important source of income for the mining industry, rose 8.5 per cent to a record high of almost $230 a tonne fuelled by strong demand from China where mills have cranked up production.

Other commodities also rose sharply, including copper, which hit a record high of $10,747 a tonne before paring gains. The increases are part of a broad surge in the cost of raw materials that has lasted more than a year and which is fanning talk of another supercycle — a prolonged period where prices remain significantly above their long term trend.

The price of timber has also hit a record high as US sawmills struggle to keep pace with demand in the run-up to peak homebuilding season in the summer.

“Commodity demand signals are firing on all cylinders amid a synchronised recovery across the world’s economic powerhouses,” said Bart Melek, head of commodity strategy at TD Securities.

Strong demand from China, the world’s biggest consumer of commodities, international spending on post-pandemic recovery programmes, supply disruptions and big bets on the green energy transition explain the surge in commodity prices.

Commodities have also been boosted by a weaker US dollar and moves by investors to stock up on assets that can act as a hedge against inflation.

The S&P GSCI spot index, which tracks price movements for 24 raw materials, is up 26 per cent this year.

Strong investor demand pushed commodity assets held by fund managers to a new record of $648bn in April, according to Citigroup. All sectors saw monthly gains with agriculture and precious metals leading the way, the bank said.

Agricultural commodities have had an especially strong run owing to rising Chinese demand and concerns of a drought in Brazil. Dryness in the US, where planting for this year is under way, is also adding to the upward rise in prices. Corn, which is trading at $7.60 a bushel and soyabeans at $16.22, are at levels not seen since 2013.

“From a macro economic environment to strong demand and production concerns, the ingredients are all there for the supercycle,” said Dave Whitcomb of commodity specialist Peak Trading Research.

Rising copper and iron ore prices are a boon for big miners, which are on course to record earnings that will surpass records set during the China-driven commodity boom of the early 2000s.

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JPMorgan reckons Rio Tinto and BHP will be the largest corporate dividend payers in Europe this year, paying out almost $40bn to shareholders. Shares in Rio, the world’s biggest iron ore producer, hit a record high above £67 on Monday.

Brent crude, the international oil benchmark, has crept back up
towards $70 a barrel, which it surpassed in March for the first time in
more than a year, recovering ground lost as the pandemic
slashed demand for crude and roiled markets.

Supply cuts by leading oil producers have helped to bolster the market
as consumption has begun to recover around the world.

While some Wall Street banks have hailed the start of a new supercycle, with some traders talking of a return to $100 a barrel oil, others are less convinced. The International Energy Agency said oil supplies still remain plentiful meaning any talk of a supercycle is premature.

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