The figures show that inflation is expected to decrease in 2023 and 2024 in all markets considered here, except Brazil, and that the consensus seems to be that China’s emergence from COVID-19 would not induce a secondary wave of Chinese or global inflation. What is however noteworthy is that there are marked differences between the views of different institutions for the EU specifically, both for 2023 and 2024. This is mainly underpinned by high energy prices in the EU and has implications for the Eurozone’s main trading partners. In this regard, the Eurozone is China’s greatest trading partner with bilateral trade in 2022 amounting to almost USD 850 billion. From an agricultural perspective, the EU and Brazil are the main exporters to China, followed by the US. Significant production cost pressures in markets such as the EU or Brazil could fuel food inflation in China and provide upside risk to the modest inflationary outlook shared for China. A more likely outcome is however that some trade patterns and trends, apparent over the last few years might change. Historically, the US was the main agricultural supplier to China. They were however recently overtaken by the EU. In light of the above, China might resort to US agricultural imports, yet again, as cost pressures in the EU continue to hold. Renewed trade tensions between China and the US, on the back of the US noting that China did not fulfill their side of the Phase 1 trade deal, could however upset this view. Changes in trade patterns can also provide opportunities for countries such as South Africa to increase exports to China. To capitalise on opportunities that result from changes in trade flows hinges on requirements that we can address issues such as animal disease outbreaks which have been affecting our access to Chinese markets.
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