The Effect of Swine Fever on China's CPI
The swine fever is very severe disease with high rate(nearly 100%) of death and strong infection, which originated from Kenya in Africa in 1921. The first case of diagnosis on pigs in Mainland China is August 3, 2018 in Shenyang, then spread to Henan, Jiangsu and finally reached 31 provinces till April 19, 2019.
The Swine fever on pigs, although made a big influence on the market and hyped the pork prices in some regional areas in Chine since the end of last year, however, does not affect either food CPI or total CPI of China at all. This may be as results of several reasons: 1. The central and local government played a much more important role in adjusting the pork price, than other open markets of other countries, in the perspective of supply and demand. The shock is controlled and suppression effect by the government becomes a considerable factor. 2. There is usually a lag on the price change due to a provincial shock, regarding the whole market. The liquidity from other provinces also suppressed the jump of pork price. 3.Although pork is a big part of protein for Chinese, its weight in the basket of CPI commodities is not significantly higher than others and so weakened.
The future research will focus on the explaining power of price shock to the pork industry in stock market, the substitute effect of chicken industry and explore if there is any anomaly and trading opportunities.
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