The Year of the Water Dragon, whilst normally providing good joss for those followers of Chinese astrology, is also proving to be a challenging one on various fronts.
Not only is there the change of leadership to be managed, much of which of course will be carried below the surface of the water (useful for a water dragon), but also there is a fundamental change in the economic environment.
With overseas demand for Chinese goods falling, where is new demand to come from? If this is to be internally driven then how is this going to be managed through, with a Chinese banking system that is already under some considerable pressure?
Then there are the social issues of domestic inflation, pressure for jobs and the related levels of unemployment. To this we can also add the level of social unrest between locals and transitory workers, with some flaring into riots and most notably the remarkable ‘rebellion’ in the village of Wukan which played out like an oriental version of ‘Passport to Pimlico’. Add to this the strikes and demonstrations in certain factories for higher pay, some of which has resulted in even certain manufacturing companies leaving the country to find other lower cost sites.
The days of the ‘China Price’ are seemingly now over. Additionally, the balance of the population has changed for the first time in several thousand years – more Chinese now live in the burgeoning cities than in the country. So who is going to feed the populace?
The figures are staggering. China has to feed 20% of the world’s population and has only 8% of the world’s available arable land. To further exacerbate this, as incomes have risen so has the demand for better diets away from water, rice and vegetables, to more meat and cooking oil for frying. So the demand for palm oil as well as wheat and corn has risen substantially.
As yet the Chinese do not allow the use of genetically modified grains, although this may change over the next few years. China now accounts for 20% of global corn consumption. Seemingly China’s corn imports in January and February this year totalled 1.26m tonnes – four hundred times more than the same time last year!
This may have been somewhat distorted as traders were taking advantage of record levels of Chinese corn prices being amongst the highest in the world and were importing overseas supplies to sell at a quick profit. Thus it will be interesting to see if this eases off over the next few months. However, it does mean though that fundamentally the Chinese economy is changing and the increased demand for food products is going to increase; any weather interruption elsewhere in the world will have a disproportionate price impact in China.
Is the US less than it was and will be even less in the future?
Some interesting figures have crossed my desk regarding the relative decline in the value of the US economy. In the year 2000, the US accounted for approximately a third of the global economy: today it accounts for less than a quarter. If this continues and the BRICS along with Indonesia and Turkey don’t come to a grinding halt, then this could drop to around a sixth.
With the recent discussions around the Buffett Tax, it is also worth reminding ourselves about the strains of the US middle class who seem to be under increasing pressure. For the income gains in 2010, the top 1% of earners gained 93% of the value and the remaining 99% were either seeing no increase or in fact seeing falling incomes. That is a squeezed middle.
The great strength of the US economy has been its ability to reinvent itself in times of stress. The question is can it do it again when faced with the twin headed hellhound Orthrus of the deficit and the debt? This of course won’t be really addressed until post the election, but in the meantime is there enough economic momentum to sustain the recovery? All is likely to depend upon the level of corporate confidence, and the next wave of corporate results this week could help us here.
And finally……following on from last week’s revolting egg story (for which I can only apologise – it still lingers on), then quite obviously a bacon one would be appropriate for this week.
The subject of coffins rarely gets discussed over our dining table, although some family members seem to have quite firm views as to where and when they wish their mortal remains to be disposed of. At this point, before I am exposed, I must disclose that yes, part of my father’s remains (for reasons I won’t go into here), are still on the No19 Southdown Bus from Brighton to Rottingdean.
So when it comes to coffins, most don’t seem to want to have a gleaming mahogany finish with brass handles anymore and seem quite attracted to an eco friendly wicker basket of some type. But why so dull and unimaginative when a bacon coffin can be yours for quite literally an eternity – well yours anyway.
With the new bacon coffin, you’ll spend eternity with your favorite cured meat. Actually all is not quite as it seems, as it is in fact not literally made from bacon; the coffin is painted to look as if it is covered in savoury strips. An article from Seattle’s King5.com reports that local company J&D’s Foods created the casket. This isn’t the first time the company has found inspiration in bacon. J&D is also responsible for unleashing Bacon Salt and Baconnaise (some hideous sauce I presume) on the world.
A bacon coffin doesn’t come cheap — $2,999.99 plus shipping. But the interior does come with a bacon memorial tube and a bacon-themed air freshener. So you’ll have that going for you… which is nice. British questions obviously come to mind such as – is it smoked (which may be more flavoursome but somewhat less ethical), and of course is it back bacon or streaky?
Smoked for me please – and slightly crispy would be best – but I suppose that both may happen anyway as part of the ceremony.
Have a good week.
Justin Urquhart Stewart
Seven Investment Management Limited