The Economist reveals why China secretly stockpiles large amounts of supplies

The Economist pointed out that China seems to be rapidly hoarding materials such as food, metals and energy - and at a time when prices are high. This move may not only exacerbate inflation, but also show that the Beijing authorities are preparing for the survival of a long-term conflict, especially worried that the new US president may cut off key supply routes to China.

The Economist analysis pointed out that China's economy has been plagued by mismanagement and a real estate crisis in recent years, causing the authorities to want to get rid of resource-intensive industries. However, data shows that China's imports of various commodities surged by 16% last year. According to estimates by Panmure Liberum Bank, depending on the commodity, China's accumulated inventory since 2018 is sufficient to meet its annual demand by at least 35% to 133%. Gabriel Collins, a former analyst at the US Department of Defense, believes that if China's stockpiling behavior is compared with its military construction, it is very worrying.

The analysis pointed out that China's National Bureau of Statistics has stopped publishing inventory data for many commodities. However, according to the US Department of Agriculture, China's wheat and corn stocks will account for 51% and 67% of the world's total by the end of this season, an increase of 5 to 10 percentage points from 2018. Soybeans are China's largest agricultural import product, and its inventory has doubled since 2018, and is expected to reach 42 million tons by the end of this season.

The analysis also points out that China's crude oil reserves have increased from 1.7 billion barrels to 2 billion barrels since 2020. According to the Rapidan Energy Group, a US research company, since the beginning of this year, China's crude oil inventories have increased by an average of 900,000 barrels per day, bringing China's inventory to nearly 1.3 billion barrels, equivalent to 115 days of import demand. China's underground centers for storing natural gas have increased sixfold between 2010 and 2020 to 15 billion cubic meters, with a goal of reaching 55 billion cubic meters next year. JPMorgan Chase Bank predicts that if a dozen liquefied natural gas tank clusters along China's coast are added, its total natural gas reserves will reach 85 billion cubic meters by 2030. As of spring, China has stored 25 billion cubic meters of natural gas, equivalent to 23 days of consumption, and this will reach 28 days in 2030, nearly twice as much as five years ago (15 days).

According to The Economist, although China is the world's refining center for many metals, it relies on imports for most of the raw materials it needs. In terms of energy, although China has a large amount of coal, it is still not enough to meet domestic demand, and it must import 40% of natural gas and 70% of crude oil. Since 2000, citizens' food needs have also gone from mostly coming from domestic production to more than a third being imported. Realizing this, China began to build up "strategic" reserves of food and defense-related minerals at the end of the Cold War, and then added oil and industrial metals reserves at the peak of its economic boom.