Local governments in China are urging cities, especially those in the north, to preserve and stockpile food to avoid shortages during the winter when supplies are difficult.
However, The Economist has noted a significant development in Beijing’s increased construction of additional warehouses and storage facilities to store vital goods in secret locations across the country.
According to a recent report by The Economist, these vital commodities include various types of grains, oil, natural gas, and some types of minerals essential to many industries.
Data from China’s customs authority indicates that its imports of basic commodities increased by 16% during the past year, amid the challenges facing the country, and the newspaper indicated that this increase in imports is not merely meeting demand.
Although known as the “world’s factory” and the largest exporter of goods, China is also a major importer of many goods, especially raw materials for manufacturing and equipment.
The Economist reports, based on data from China’s customs authority, that Beijing is currently able to provide about 60% of the population’s food needs, with the rest imported.
A previous report by JPMorgan indicated that China is building dozens of tanks to store liquefied gas along its coast, with total storage capacity expected to reach 85 billion cubic meters by 2030.
China’s wheat stocks will account for 51% of the world’s total, and67% of Corn stocks.
Meanwhile, the USDA expects China’s wheat stocks to account for 51% of the world’s total by the end of the current planting season, and 67% of corn stocks, an increase of 5 to 10% since 2018.
Between 2018 and 2023, China’s imports of soybeans, a vital import from America, rose by 90% to 38.5 million tonnes, with expectations of reaching 42 million tonnes by the end of this year.
Many challenges
China faces many challenges, most of them external, that are pushing it to be more cautious in storing goods domestically to avoid any escalation, especially with the West. The trade war is the main challenge, with signs of a further escalation in the trade war with the United States and the West through increased tariffs on Chinese goods.
Last May, US President Joe Biden signed a decision to raise tariffs to an average of 60% on goods coming from China, reaching 100% on goods such as cars.
The European Union has followed suit, imposing a provisional tariff of up to 38% on imported Chinese electric cars, with a final decision expected in November. That will be on top of a previous 10% tariff on Chinese cars, bringing the total to 48% for some vehicles.
Western sanctions on Russia may also serve as a cautionary tale for China, which could face similar sanctions due to East-West tensions.
China currently maintains complete control over its currency market and the movement of its local currency (the yuan), a system in place for decades to prevent the West from controlling the yuan’s exchange rate. In addition, Beijing controls 100% of its Internet, restricting access to Western websites except through bypass technology.
In response to these challenges, Beijing is seeking to achieve self-sufficiency in various vital goods and services to avoid potential Western sanctions on trade, currencies, internet services and financial payments.
