China should stop hoarding food and fertiliser, says former World Bank chief

China Should Stop Hoarding Food, Says Former World Bank Chief

China should stop hoarding food and fertiliser – David Malpass, former head of the World Bank, has urged China to curb its accumulation of food and fertilizer reserves, arguing that the country’s actions are intensifying global supply chain challenges. Speaking in an interview with the BBC’s World Business Report, Malpass highlighted China’s role in the current crisis, which has been exacerbated by the Iran war and its impact on international trade. “China holds the largest reserves of essential food and fertilizer, and they can choose to ease their buildup,” he stated, emphasizing the need for the nation to balance its strategic reserves with market transparency.

Global Supply Chain Pressures

Malpass pointed to the Strait of Hormuz as a key bottleneck, noting that its closure has disrupted critical shipping lanes and fueled fears of resource shortages. This has led to heightened demand for fertilizer, a staple for spring planting, and increased pressure on China to stabilize global markets. The country’s export restrictions, implemented in March and building on controls since 2021, have drawn scrutiny, with China contributing over 25% of global fertilizer production. Analysts warn that China’s continued hoarding of food and fertilizer could undermine international price stability.

China’s Justification for Stockpiling

According to the Chinese embassy in Washington DC, the nation’s export restrictions are aimed at ensuring domestic food security. Liu Pengyu, a spokesperson, stated, “China’s actions are designed to secure its supply chains, and the blame for global disruptions cannot solely fall on the country.” However, Malpass countered that China’s influence on global markets is undeniable, urging the country to reassess its strategy. “By maintaining large reserves, China may be amplifying the crisis rather than mitigating it,” he said, suggesting a more cooperative approach could ease tensions.

Broader Economic Implications

The discussion extends beyond food and fertilizer, touching on China’s economic classification as a developing nation. Malpass questioned whether China’s status reflects its current economic power, pointing out that it ranks second globally in economic output. This debate comes as the country seeks to maintain its role in international institutions like the World Bank and WTO. Liu Pengyu defended the designation, asserting, “China remains the largest developing country due to its vast population and ongoing development needs.”

Trade Negotiations and Geopolitical Tensions

With the Trump-Xi summit approaching, trade and supply issues have become central to diplomatic discussions. Malpass stressed that China’s policies could be pivotal in shaping global economic outcomes, particularly if they align with international efforts to resolve the Iran conflict. He argued that China’s control over shipping routes and its stake in global trade makes it a key player in stabilizing markets. “Their continued stockpiling may create ripple effects worldwide,” he warned, calling for a coordinated response to the crisis.

Global Collaboration and Market Stability

Malpass also emphasized the importance of international cooperation in addressing the root causes of the supply crisis. “China’s hoarding of food and fertilizer has created a domino effect,” he said, urging nations to work together to restore balance. The spokesperson for the Chinese embassy reiterated the country’s commitment to food security, but Malpass suggested that a more flexible approach could benefit both China and global markets. “By adjusting their stockpiles, China can help alleviate pressure on other countries,” he added, highlighting the interconnected nature of modern trade.

Looking Ahead: Policy and Perspective

As global markets watch China’s next moves, the debate over its stockpiling strategy continues. Malpass noted that while China’s actions are understandable from a domestic perspective, the broader implications require careful consideration. “The world is interconnected, and China’s decisions affect everyone,” he said. Analysts agree that the nation’s role in managing food and fertilizer supplies will be critical in the coming months, as the balance between self-reliance and international trade remains a key challenge.