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[quote user="Murphy Siding"] [quote user="Bucyrus"] There is a pent up demand for pork in China because scarcity has kept the price too high for much of the market to afford.  But now, with China’s new prosperity from manufacturing, more people have the money needed to buy pork.  That is the reason for the sudden surge in pork consumption in China.  The pent up demand is suddenly unconstrained, and able to be fulfilled if the supply is made available.    [Red is emphasis added by Murphy Siding] [/quote]     Only if the Chineese are willing to pay what others around the world (The USA for example) are willing to pay for the goods. Even if you  are a communist country, the laws of supply and demand are still applicable.[/quote] That is fundamentally true, but while capitalism calls for selling at the highest possible price, it is often possible to make more money by selling at a lower price, because it attracts a larger market and more sales.  So price is one factor but market size is also a factor.   The Chinese pork market is vastly larger than the U.S. market, so it might pay to cultivate the larger market by temporarily subsidizing that market with prices lower than the U.S. price.    Look at it this way:  Smithfield pork will be Shanghui pork and Shaghui will be selling pork to both the U.S. and Chinese markets.  Do you think the price to each market will be the same?  China has a communist government.  They take care of people cradle to grave.  They are not going to let their people starve just because the people can’t pay the world market price for food.  The Chinese government will subsidize the world market price to their people without hesitation if they have to.  And they will be entirely able to do so because of their vast wealth from their manufacturing success.  They are in no way committed and bound to the dictates of pure capitalism. It is true that the laws of supply and demand are inviolable, as you say, but they don’t have to be followed.  And command and control economies such as the one in China are almost defined by choosing not to follow the laws of supply and demand if there is a greater societal reason not to.
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