Again we connect to China with an apple but this time it’s the fruit.
As incomes rise, so too has fresh fruit consumption in China. In addition to buying pork and owning dogs, consuming pecans and carrying Coach purses, an increasingly affluent Chinese worker is eating apples. Or, as one new urban worker said, “Chinese people are eating more and more fruit…as our lives get better.”
Producing more than half of the world’s apples, China supplies the US with close to two-thirds of the concentrate that we use for apple juice. The apples are grown in China, the concentrate is made there and then it is shipped to the US and bottled as apple juice.
That takes us to our demand and supply curves. More demand for apples from the Chinese consumer shifts the apple demand curve to the right and price jumps. Then, on the supply side, when the cost of production for apple concentrate rises, so too does apple juice. Sounds a little like oil?
At Econlife, we looked at why the Chinese were eating more pecans and pork and how they own more dogs and Coach handbags. Now we can add apples and see again that the Chinese consumer affects many of us in the US.
Sources and Resources: To see who grows what, it is actually really interesting to look at this USDA report on worldwide production of apples, grapes and pears. As this WSJ article and marketplace.org report also indicate, the numbers for Chinese apple production are massive compared to everyone else’s. And finally, as always, Professor Timothy Taylor’s explanation of why world commodity prices fluctuate is excellent in his Teaching Company lecture on the race between supply and demand.
Past EconLife posts on the Chinese Consumer: