• <div class="header-image" style="background-image: url(/live/image/gid/4/2611_Header_V6N2_web_4.rev.1518551584.jpg);">​</div><div class="header-background-color"/>

China’s Astounding Appetite for Pork: Recent Trends and Implications for International Trade

April 02, 2015

China is the world’s largest producer and consumer of pork. Historically, China has maintained self-sufficiency in pork production. However, since 2007 China has begun to import significant quantities of pork for the first time to make up for the domestic supply shortage. From 2007 to 2014, China’s pork imports have increased substantially, with an annual average growth rate of 150%. Given China’s astounding appetite for pork, even a small share of domestic consumption coming from imports can turn into a significant amount of the world’s exports. International pork trade will be a win-win game for both China and pork exporting countries.

China’s Pork Consumption

Pork has long been important in the Chinese diet. It makes up 60% of China’s total meat consumption (Figure 1). With population growth, rapid economic development, continuous urbanization and an expanding middle class, China’s total pork consumption has increased fivefold since 1980.[1] China’s lust for pork makes the pork industry central to Chinese people’s daily life.

China's Meat Consumption 

Source: China Statistical Yearbook 2014

China is the leading pork consumer in the world. Its pork consumption totaled 57 million metric tons in 2014, which accounts for more than half of the global pork consumption (109.9 million metric tons).[2] Figure 2 shows that Mainland China’s per capita pork consumption was 35.6 kg in 2011, more than double the world’s average. Per capita pork consumption in Hong Kong is much higher than Mainland China due to the higher income level. According to the projection of the OECD and the Food and Agriculture Organization of the United Nations, Chinese consumers will make up of half of the global pork consumption increase in the next decade. [3]

China's Per Capita Pork Consumption 

Source: FAOSTAT

China’s Pork Production

China is the world’s largest pork producer, with nearly 50% of the world’s total. Pork production in China increased from 39.58 million metric tons in 2000 to 57.01 million metric tons in 2014 (Figure 3). Although much attention is focused on the upward trend in China’s pork production, the pork industry has been quite volatile. For example, China’s pork production decreased 7.8% during 2006-2007 due to an outbreak of blue ear pig disease.According to The New York Times, this pig disease was found in 25 of China’s 33 provinces, prompting a pork shortage and the strong inflation caused largely by the surge in pork prices.[4]After the dramatic fall of production in 2007, pork production rebounded quickly. However, domestic production has been unable to meet the demand since then, leaving a supply gap around 0.5 million metric tons.

China's Pork Consumption and Production

Source: USDA Foreign Agricultural Service

The occurrence of the 2007 pig disease has caused fundamental structural change in China’s pork industry. Traditionally, China’s pork was produced in small backyard farms. But in recent years, China’s pork industry has been industrializing to large-scale commercial farms. Figure 4 indicates that only about 36.2% of live hogs came from backyard farms in 2010, compared with 71.3% in 2003. Backyard farms are dropping out of the market at a fast pace. However, the industrialization of the pork industry has not occurred at a fast enough pace to compensate for lost backyard production, contributing to a supply shortage. Furthermore, China’s pork industry is still facing various kinds of pressures including pig diseases, rising feed costs, labor costs, environment pollution and food safety concerns.

Hog Farms in China

Note: Backyard farms raising less than 50 hogs.

Source: China Animal Industry Yearbook 2004-2011

China’s pork trade

International trade of pork in this article is defined as the imports and exports of fresh, chilled and frozen pork, which excludes the live pig trade. China refers to Mainland China, excluding Hong Kong, Macau and Taiwan since these areas are separate customs territories from Mainland China. Although China has long been the world’s largest pork producer and consumer, this well-known fact did not have a large impact on the rest of the world as China mostly maintained self-sufficiency in pork in the past. However, China has been taking a larger role in global pork market in the recent years.

China’s pork exports have been low and relatively steady. In 2014, Mainland China exported 275 million tons of pork, accounting for only 0.05% of domestic pork production (Figure 5). After the sharp fall of production in 2007, China’s exports decreased consequently and have remained at a low level. Due to price advantages and geographic proximity, Hong Kong has long been Mainland China’s primary pork export destination, accounting for around 80% of its total pork exports in the last 5 years.[5]

China’s pork imports have changed dramatically over the last decade. Historically, pork imports were low in China as most demand for pork was met by domestic production. Since 2007, China began to import significant quantities of pork for the first time to make up for the domestic supply shortage. As indicated in Figure 5, China’s pork imports increased from 53 metric tons in 2006 to 182 metric tons in 2007, with a growth rate of 243%. During 2007-2014, China’s pork imports have maintained an annual average growth rate of 150%. In 2014, Mainland China was the third largest importer of pork, accounting for 13% of the world’s pork imports, following Japan (21.1%) and Mexico (13.1%).[6] Mainland China and Hong Kong’s pork imports combined totaled 18.6% of the world’s total meat imports. Major pork import sources into China were the United States (20.4%), Germany (19.7%), Canada (12.7%) and Denmark (11.0%) in 2014.[7]

China's Pork Imports and Exports

Source: USDA Foreign Agricultural Service

China’s rising pork imports are driven mostly by high domestic pork prices as well as food safety concerns.China’s pork prices have been increasing since 2007. The average pork price during 2007-2010 ($0.79 per pound) was more than double the average during 1991-2006 ($0.37 per pound), higher than the U.S. pork price.[8] Another issue contributing to China’s pork imports is food safety. A series of pork scandals in China have deeply undermined consumer confidence in domestic pork. Some Chinese consumers have a growing preference for safe, high quality and affordable pork from international markets. For example, China’s pork imports from Germany have been increasing steadily since 2012 partly because Germany can produce ractopamine-free pork. [9]

Government Policies

Government policies take a key role in shaping China’s pork industry. Given the importance of pork in Chinese economy and diet, pork is at the center of the Chinese government’s food security strategy.[10] Chinese leaders have strengthened the nation’s emphasis on food security, which has long been equated with self-sufficiency. They remain wary of reliance on any other countries to provide pork for China’s large population. 

The Chinese government’s interventions in the pork market have been increasing in response to the sharp production decrease and rising pork prices that characterized 2007. Government policies have  focused on encouraging production and stabilizing pork prices. In 2007, the Chinese central government established a national pork reserve to deal with pork shortages and volatile pork prices in the same year.[11] China is the first and only country in the world to implement a pork reserve. Additionally, the Chinese government has issued a series of comprehensive regulations to support the pork industry, including subsidies for pig feeding and standardized scale farming, disease control and market price support to direct the industry development. Figure 6 shows that since 2008, the Chinese government has been increasing subsidies for the pork industry. These subsidies mainly favor large-scale farms to modernize the industry and promote pork production.

China's Pork Industry Subsidies 

Source: China Animal Industry Yearbook 2009-2013

Environmental and food safety pressures have also driven the Chinese government’s interventions. China’s hog farming has imposed severe risks on the environment. According to the Wilson Center, the average pig in China produces 5.3 kg of waste each day, which contains heavy metals and pharmaceutical residues.[12] Food safety is also a major concern for the Chinese government. The scandal of China’s largest processed pork manufacturer using illegal feed additives in March 2011 raised Chinese consumers’ concerns for pork security. The government has been blamed for its inability to ensure a safe food system.

Implications for International Trade

China’s self-sufficiency in pork is not sustainable in the long run. Due to limited land and water resources, it’s hard to provide enough resources to meet the fast growing domestic demand for pork. Rapid growth of pork consumption has consequentially spurred demand for grains and soybeans as animal feed. As the world’s leading soybean importer, China imported 6.3 million tons of soybeans in 2013, accounting for 60% of the world’s total production.[13] High import dependency on the global feed market cannot truly ensure self-sufficiency in pork. In addition, although the Chinese government has subsidized large commercial farms to promote production, it is still doubtful whether domestic production capability growth can keep at the same pace with rising demand.

The international pork trade is a solution to China’s pork problems, including high domestic prices, supply shortages, poor quality and environmental pollution. Take the China-U.S. pork trade as an example. U.S. pork has competitive advantage in pork prices and quality compared with China.[14] Furthermore, American and Chinese consumers have complementary tastes. American consumers prefer muscle meats, while Chinese consumers prefer pig offal such as liver, kidney, feet and other body parts. Chinese consumers can purchase high-quality U.S. pork at a lower cost than the domestic product, without sacrificing the environment.

China’s growing appetite for pork has big implications for countries such as the United States and other pork exporting countries. Although there has been a recent surge in China’s pork imports, the amount still remains a small proportion of the domestic pork consumption. However, even a small share of pork imports in China’s pork market can turn into a significant amount of exports. Chinese rapid pork imports could quickly lead to China becoming the largest importer of pork worldwide. Rising import demand will provide great opportunities for major pork exporters such as the United States, the European Union and Canada.

However, China’s export market does not come without challenges. The Chinese government is trying to protect the domestic pork industry from international market through various non-tariff barriers on pork imports. On the one hand, the Chinese government has been significantly increasing subsidies and price support measures to its pork industry. On the other hand, the Chinese authorities apply a multitude of regulations on pork exporters to limit pork imports.[15] For example, U.S. pork products were affected by sanitary and phytosanitary  measures implemented by China’s regulatory authorities in 2013.[16]China bans imports of pork containing any residue of ractopamine, an animal drug approved for use in feed that promotes feed efficiency in pigs. China maintains this ban to despite the fact that U.S. government approves that ractopamine can be used safely.

Conclusion

Pork is central in the Chinese diet. Rapid economic growth has raised disposable income and led to greater demand for pork. China has begun to import a significant amount of pork since 2007 and is expected to continue to drive pork and feed import growth in the future. International pork trade with China is facing both opportunities and barriers. China can not only make up the domestic pork supply gap at a low cost, but also help address environmental pollution and food safety concerns. Growing demand for pork in China can be a massive potential market for pork exporting countries especially if the Chinese government becomes more open to the international pork market and removes trade barriers.

  [1] USDA Foreign Agricultural Service. “Production, Supply and Distribution Online,” Accessed  March 20, 2015, http://apps.fas.usda.gov/psdonline/psdQuery.aspx.

  [2]USDA Foreign Agricultural Service. “Production, Supply and Distribution Online,” Accessed  March 20, 2015, http://apps.fas.usda.gov/psdonline/psdQuery.aspx.

  [3]OECD and Food and Agriculture Organization of the United Nations, “OECD-FAO Agricultural Outlook 2014-2023,” Accessed April 2, 2015, http://dx.doi.org/10.1787/agr_outlook-2014-en.

  [4]Barboza David, “Virus Spreading Alarm and Pig Disease in China,” The New York Times, August 16, 2007, Accessed  March 20, 2015, http://www.nytimes.com/2007/08/16/business/worldbusiness/16pigs.html?pagewanted=all&_r=0.

  [5]UN comtrade, http://comtrade.un.org/db/mr/rfCommoditiesList.aspx?px=H2&cc=02.

  [6]USDA Foreign Agricultural Service. “Production, Supply and Distribution Online,” Accessed  March 20, 2015, http://apps.fas.usda.gov/psdonline/psdQuery.aspx.

  [7]UN comtrade, http://comtrade.un.org/db/mr/rfCommoditiesList.aspx?px=H2&cc=02.

  [8]Gale Fred, Marti Daniel and Hu Dinghuan, “China’s Volatile Pork Industry,” April 2009,  Accessed  March 25, 2015 from http://www.ers.usda.gov/media/262067/ldpm21101_1_.pdf.

  [9]Schneider Mindi, “China’s Pork Miracle? Agribusiness and Development in China’s Pork Industry,” February 2014, Accessed  March 20, 2015 http://www.iatp.org/files/2014_03_26_PorkReport_f_web.pdf.

  [10]Shull Philip, “Chinese Government Tackles High Production Costs and Uncompetitive Prices in New Agriculture Strategy”, March 19, 2015, Accessed  March 30, Link to Article.

  [11]Wines Michael, ”China Plans to Release Some of Its Pork Stockpile to Hold Down Price,”.July 2011,  Accessed March 20, 2015 http://www.nytimes.com/2011/07/16/world/asia/16china.html?_r=2.

  [12] Han Siqi, “Environmental Impacts of China’s Pork Industry,” February 27, 2014, Accessed March 29, 2015 http://www.wilsoncenter.org/infographic-environmental-impacts-china%E2%80%99s-pork-industry

  [13]FAOSTAT,  http://faostat3.fao.org/home/E.

  [14]Gale Fred, Marti Daniel and Hu Dinghuan, “China’s Volatile Pork Industry,” April 2009,  Accessed  March 25, 2015, from http://www.ers.usda.gov/media/262067/ldpm21101_1_.pdf.

  [15]EU SME Center, “Guideline: Exporting meat products to China,” November2o13, Accessed  April 1, 2015, http://www.ccilc.pt/sites/default/files/…guideline_exporting_meat_products_to_china.pdf

  [16]Office of the United States Trade Representative, “2014 National Trade Estimate Report on Foreign Trade Barriers,” March 31, 2014, Accessed  April1, 2015, https://ustr.gov/sites/default/files/2014%20NTE%20Report%20on%20FTB.pdf.

  [17]Office of the United States Trade Representative, “2014 Report on Sanitary and Phytosanitary Measures,” March 2014, Accessed April 1, 2015, https://ustr.gov/sites/default/files/FINAL-2014-SPS-Report-Compiled_0.pdf.

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

PENN WHARTON PPI
RESOURCE SPOTLIGHT:

  • <h3>NOAA National Climatic Data Center</h3><p><img width="200" height="198" alt="" src="/live/image/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg" class="lw_image lw_image483 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 3x" data-max-w="954" data-max-h="945"/>NOAA’s National Climatic Data Center (NCDC) is responsible for preserving, monitoring, assessing, and providing public access to the Nation’s treasure of <strong>climate and historical weather data and information</strong>.</p><p> Quick link to home page: <a href="http://www.ncdc.noaa.gov/" target="_blank">http://www.ncdc.noaa.gov/</a></p><p> Quick link to NCDC’s climate and weather datasets, products, and various web pages and resources: <a href="http://www.ncdc.noaa.gov/data-access/quick-links" target="_blank">http://www.ncdc.noaa.gov/data-access/quick-links</a></p><p> Quick link to Text & Map Search: <a href="http://www.ncdc.noaa.gov/cdo-web/" target="_blank">http://www.ncdc.noaa.gov/cdo-web/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>USDA Nutrition Assistance Data</h3><p><img width="180" height="124" alt="" src="/live/image/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg" class="lw_image lw_image485 lw_align_right" srcset="/live/image/scale/2x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 2x, /live/image/scale/3x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 3x" data-max-w="1233" data-max-h="850"/>Data and research regarding the following <strong>USDA Nutrition Assistance</strong> programs are available through this site:</p><ul><li>Supplemental Nutrition Assistance Program (SNAP) </li><li>Food Distribution Programs </li><li>School Meals </li><li>Women, Infants and Children </li></ul><p> Quick link: <a href="http://www.fns.usda.gov/data-and-statistics" target="_blank">http://www.fns.usda.gov/data-and-statistics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The World Bank Data (U.S.)</h3><p><img width="130" height="118" alt="" src="/live/image/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg" class="lw_image lw_image484 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 2x, /live/image/scale/3x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 3x" data-max-w="1406" data-max-h="1275"/>The <strong>World Bank</strong> provides World Development Indicators, Surveys, and data on Finances and Climate Change.</p><p> Quick link: <a href="http://data.worldbank.org/country/united-states" target="_blank">http://data.worldbank.org/country/united-states</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The Penn World Table</h3><p> The Penn World Table provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for some or all of the years 1950-2010.</p><p><a href="https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form.php" target="_blank">Quick link.</a> </p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>MapStats</h3><p> A feature of FedStats, MapStats allows users to search for <strong>state, county, city, congressional district, or Federal judicial district data</strong> (demographic, economic, and geographic).</p><p> Quick link: <a href="http://www.fedstats.gov/mapstats/" target="_blank">http://www.fedstats.gov/mapstats/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>HUD State of the Cities Data Systems</h3><p><strong><img width="200" height="200" alt="" src="/live/image/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg" class="lw_image lw_image482 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 3x" data-max-w="612" data-max-h="613"/>The SOCDS provides data for individual Metropolitan Areas, Central Cities, and Suburbs.</strong> It is a portal for non-national data made available through a number of outside institutions (e.g. Census, BLS, FBI and others).</p><p> Quick link: <a href="http://www.huduser.org/portal/datasets/socds.html" target="_blank">http://www.huduser.org/portal/datasets/socds.html</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Aviation Administration: Accident & Incident Data</h3><p><img width="100" height="100" alt="" src="/live/image/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg" class="lw_image lw_image80 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 2x, /live/image/scale/3x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 3x" data-max-w="550" data-max-h="550"/>The NTSB issues an accident report following each investigation. These reports are available online for reports issued since 1996, with older reports coming online soon. The reports listing is sortable by the event date, report date, city, and state.</p><p> Quick link: <a href="http://www.faa.gov/data_research/accident_incident/" target="_blank">http://www.faa.gov/data_research/accident_incident/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Reserve Economic Data (FRED®)</h3><p><strong><img width="180" height="79" alt="" src="/live/image/gid/4/width/180/height/79/481_fred-logo.rev.1407788243.jpg" class="lw_image lw_image481 lw_align_right" data-max-w="222" data-max-h="97"/>An online database consisting of more than 72,000 economic data time series from 54 national, international, public, and private sources.</strong> FRED®, created and maintained by Research Department at the Federal Reserve Bank of St. Louis, goes far beyond simply providing data: It combines data with a powerful mix of tools that help the user understand, interact with, display, and disseminate the data.</p><p> Quick link to data page: <a href="http://research.stlouisfed.org/fred2/tags/series" target="_blank">http://research.stlouisfed.org/fred2/tags/series</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Internal Revenue Service: Tax Statistics</h3><p><img width="155" height="200" alt="" src="/live/image/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg" class="lw_image lw_image486 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg 2x" data-max-w="463" data-max-h="596"/>Find statistics on business tax, individual tax, charitable and exempt organizations, IRS operations and budget, and income (SOI), as well as statistics by form, products, publications, papers, and other IRS data.</p><p> Quick link to <strong>Tax Statistics, where you will find a wide range of tables, articles, and data</strong> that describe and measure elements of the U.S. tax system: <a href="http://www.irs.gov/uac/Tax-Stats-2" target="_blank">http://www.irs.gov/uac/Tax-Stats-2</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Center for Education Statistics</h3><p><strong><img width="400" height="80" alt="" src="/live/image/gid/4/width/400/height/80/479_nces.rev.1407787656.jpg" class="lw_image lw_image479 lw_align_right" data-max-w="400" data-max-h="80"/>The National Center for Education Statistics (NCES) is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations.</strong> NCES is located within the U.S. Department of Education and the Institute of Education Sciences. NCES has an extensive Statistical Standards Program that consults and advises on methodological and statistical aspects involved in the design, collection, and analysis of data collections in the Center. To learn more about the NCES, <a href="http://nces.ed.gov/about/" target="_blank">click here</a>.</p><p> Quick link to NCES Data Tools: <a href="http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4" target="_blank">http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4</a></p><p> Quick link to Quick Tables and Figures: <a href="http://nces.ed.gov/quicktables/" target="_blank">http://nces.ed.gov/quicktables/</a></p><p> Quick link to NCES Fast Facts (Note: The primary purpose of the Fast Facts website is to provide users with concise information on a range of educational issues, from early childhood to adult learning.): <a href="http://nces.ed.gov/fastfacts/" target="_blank">http://nces.ed.gov/fastfacts/#</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>