Just as consumers began returning to restaurants for their first meals in months, Chinese leader Xi Jinping began a campaign of austerity, ordering all of China to reduce its “wasteful eating and drinking.” It was a surprising command given that most of the rest of the world’s governments are relying on vast stimulus packages to help them scramble from the deep economic hole left by Covid-19. 

From an economic perspective, the move makes almost no sense. It’s counter-productive to the effort to revive the still reeling consumer economy in China. Assuming China’s leaders know this, what might really be going on? 

It would make more sense if China is anticipating some event — like the possible reelection of U.S. President Donald Trump in November — that would further destabilize the global trading system in the months ahead, threatening China’s supply of imported food. 

Among the major economies of the world, China has managed to recover the fastest from the economic shock caused by Covid-19. But on the consumption side, China’s performance remains weak. Through the end of July, restaurant sales remained close to 30 percent below what they were during the same period last year. Through July, tobacco and liquor sales remained 10 percent below what they were in 2019. Anemic restaurant sales also led to less investment in that sector. To revive those segments of the economy, the Chinese government should try policies that spur greater spending in restaurants and bars.

Instead, Xi instructed the nation to “strengthen the law, intensify regulation, enact effective policies, [and] build long-term institutions in order to resolutely proscribe food and drink waste.” According to official state media, the order led to a meaningful reduction in portion sizes in the cafeterias of government offices, schools, and state-owned enterprises all over China. Millions of restaurants launched a concerted “empty plates” campaign. There was even new legislation floated that would create a “black list” system for wasteful restaurants or individuals. State media deemed wedding and birthday banquets “disaster zones of waste.” If China was in the midst of a booming economy with high inflation, this might all make economic sense. At a time when reviving the economy and the spirit of the Chinese people are urgent priorities, however, such a call against “waste” is counterintuitive.

There are other possible economic explanations for this new austerity push, but none of them are convincing. One is that food inflation has run high in China since the 2019 swine flu outbreak. But the rate has recently come down. At the start of the year it was hovering around 20 percent. By July it fell to 13 percent. Given deflationary pressure in the non-food sector, this moderate degree of food inflation does not justify an austerity campaign while an economic recovery is ongoing. Another explanation for this sudden crackdown on waste might be that China wants to reduce a potential trade deficit — or increase its trade surplus — because food represented more than $50 billion in imports so far this year. But at $230 billion through July, China is running some of the highest levels of trade surplus it’s seen in recent years. Even if China doubled its imports of food, edible oil, and animal feeds, it would still maintain a healthy trade surplus for the year.

If the leadership anticipates a disruption in the flow of imported food, it makes sense to condition Chinese consumers in advance.

So the food austerity campaign only really makes sense if China’s leadership thinks there will be an even greater shock to the global trading system in the months ahead — a shock that could jeopardize the flow of food and animal feed to the country. Between 2010 and 2019, Chinese food imports rose from $34 billion to $80 billion. This year, total Chinese food imports will likely reach $100 billion, suggesting a greater dependence on imported food than ever before. Because of China’s dominance in manufacturing, the slightly larger food import cost hardly diminishes the country’s healthy trade surplus. It does, however, make China more vulnerable to additional U.S. trade sanctions or a global embargo against it. 

Last year, China imported more than 100 million tons of grain and more than 10 million tons of meat and dairy from the rest of the world. That amount of meat and dairy alone is enough to provide protein for roughly 40 billion meals, enough to feed all of China for close to one month. Any substantial limitation on this flow of food would immediately lead to higher prices for consumers, or even rationing. So if the leadership anticipates a disruption in the flow of imported food, it makes sense to condition Chinese consumers in advance. Adopting more austere eating habits now would make an actual disruption in the food supply seem less burdensome in the future.

There’s at least two potential scenarios China might be anticipating. First, as trade tensions continue to escalate between China and the United States, and the possibility of a second term for Trump looms large, China might be preparing for a reality in which the Trump administration exerts pressure on the other two major exporters of food to China — Brazil and Australia — to limit their sales. Although this likely won’t lead to a cessation of food exports to China, it could potentially disrupt China’s food supply to some extent. Recent tensions between China and Australia might already be making this a real concern. Second, China itself might be planning some kind of military maneuver — like an attack along its border with India or an invasion of Taiwan — that it believes would invite a trade embargo against it. If the Chinese are already used to eating less, it would go a long way toward ensuring domestic stability in either of these scenarios. 

It’s possible the anti-waste campaign just reflects Xi’s own love for austerity, as the state media has highlighted, but it would be strange timing as the economy continues struggling to get back on its feet.

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