International and Domestic Implications of China’s Drought

Shanghaiist has posted a gallery of photos from Netease, showing the effects of China’s severe drought which threatens to become the worst in 60 years—200 years, in the case of Shandong province. Historian Jeremiah Jenne notes on his blog, Jottings from the Granite Studio, that:

China’s history is full of natural disasters, and the government response to these events has always been seen as a barometer of a ruler’s effectiveness – the state of the Mandate if you will permit the anachronism. But floods and earthquakes – however cataclysmic and traumatic – come and go, historically speaking it’s the droughts which really bring the crazy. (see Rebellion, Boxer)

With crops failing and rising commodity prices exacerbating already rising food prices, the government faces a serious test of it’s ability to respond. Modern ballistic rain dances [cloud seeding] can only do so much. As one of the driest winters on record turns to spring and rhombus of a new planting season, farmers look anxiously Heavenward, and consumers being to look with increasing askance to leaders for a solution to rapidly spiraling prices on key households necessities.

The New York Times, though, suggests that the impact of China’s droughts on food prices will be most keenly felt elsewhere:

World wheat prices are already surging, and they have been widely cited as one reason for protests in Egypt and elsewhere in the Arab world. A separate United Nations report last week said global food export prices had reached record levels in January. The impact of China’s drought on global food prices and supplies could create serious problems for less affluent countries that rely on imported food.

With $2.85 trillion in foreign exchange reserves, nearly three times that of Japan, the country with the second-largest reserves, China has ample buying power to prevent any serious food shortages.

“They can buy whatever they need to buy, and they can outbid anyone,” Mr. Zeigler said. China’s self-sufficiency in grain prevented world food prices from moving even higher when they spiked three years ago, he said.

The Silk Road Economy blog shows how Egypt and the Middle East, with their heavy dependence on imports, are particularly vulnerable to the price increases that occur when China starts buying wheat on the international market.

Also at the New York Times, Paul Krugman suggests that current high food prices and the political turmoil to which they have contributed offer an ominous preview of a world with a profoundly changing climate. The Wall Street Journal, meanwhile, examines the financial implications of China’s drought, among other factors.

February 10, 2011 8:37 PM
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