The Coronavirus and Swine Fever are causing a major increase in prices for food and goods in China.

File photo of Chinese pigs. CNBC/Getty.

The Coronavirus and African Swine Fever are causing a major increase of prices for food and goods in China. CNBC. Pork prices have increased by 116% since this time last year with food prices 20% higher than they were last year as well. During the same period consumer inflation has increased by 5.4% while Reuters predicted a 4.9% rise of consumer prices. The rise in pork prices is due to the African Swine Fever, which killed a large number of Chinese pigs. Pork is very popular in China. The Coronavirus is also contributing to the price rise as it has disputed supply lines and resulted in hording. 

My Comment:

China is having an awful time of it. Both the Coronavirus and African Swine Fever would be major challenges but to deal with both at the same time is difficult. It's crippling the Chinese economy and may even make it difficult to feed the people of China. 

China's economic activity has basically been shut down. Millions of people are in quarantine and not able to work, but all of those people still need to eat and purchase necessities. None of these people are getting paid either, making purchasing supplies pretty hard. I don't know if China has the same problem of people living paycheck to paycheck but even if they don't people will run out of money fairly quickly, especially with higher prices. 

The Swine Fever is a huge deal too and was even before the Coronavirus outbreak. China loves pork and it's one of their major foodstuffs. With pork prices increasing it makes it hard to feed people what they want to eat under normal circumstances. But with the Coronavirus too? It might mean that they won't have enough food period. Plus the slaughter houses might have to be shut down as well, further complicating things

The good news is that the Coronavirus seems to mostly be an urban problem. The smaller towns and cities haven't been as effected as the big cities. That's probably due to the fact that the crowded conditions of the big cities allow the virus to spread. And it may also have something to do with the high levels of pollution in these major cities as well. But the point is that these non-urban areas are where most of the food is produced. 

This economic disruption could be a boon to American companies. We already are sending quite a bit of pork to China and the country has dropped many of their tariffs. Another side benefit is that this incident is demonstrating the problem of sourcing all your supplies from one country. If that country starts having problems you are going to have to scramble to get a new supplier. This may mean that American and other countries could choose to buy American products. 

Of course, the economic damage could get even worse if the Coronavirus isn't brought under control. Despite the quarantine China hasn't gotten the virus under control and it is still spreading at a rapid pace. With the death toll now over 1000 and more than 40,000 confirmed cases, it's clear that this problem isn't anywhere near being done. 

I think it's very possible that this situation could bring down the Chinese government. The people of China believe in something called the mandate of heaven and not being able to fight the Coronavirus and a tanking economy could finally convince the people of China that the communist government no longer has it. With Hong Kong already having a major protest movement it's possible that we could see some kind of revolution in China. 

As for the outbreak itself, it seems to be spreading outside of China now, which means that the rest of the world could have some of the same economic disruptions. The good news is that African Swine Fever isn't going to effect the rest of the world. But a whole lot of people could get sick, miss work or even die if this outbreak isn't brought under control.