The Chaebol Returns To The Presidency 1967 [EN]: Chapter 138

138. Achilles Heel

Seoul.

A cabinet meeting was in session.

The agenda was China’s economic sanctions.

The Minister of Trade reported.

“China is impeding Korea’s trade and production activities using its administrative power without any diplomatic or trade documentation.”

The President asked,

“Have you protested?”

“Of course. But the answer is consistent. The central government claims it has not imposed any trade restrictions, and it is merely an administrative procedure autonomously executed by the local governments.”

“That’s a shallow trick to avoid Korea’s retaliatory regulations.”

“That’s right. It’s a very weak justification to shut down the undersea oil pipeline, breaking treaties in response.”

“Hmm….”

This time, the Minister of National Defense reported.

“The Chinese Navy has announced large-scale naval exercises in areas close to Block 7. However, they notified us this afternoon that it will be implemented tomorrow. It’s nothing more than a formality—a mere show of force.”

“A kind of surprise show of force.”

“That’s right.”

The Minister of Economy and Finance said,

“Your Excellency, this series of measures by China are organized economic retaliation against Korea. Should we respond in kind? For example, a complete withdrawal of Chinese technical personnel.”

“They might be aiming for that.”

“…….”

“They might take advantage of our withdrawal to fill the positions with their own managers and nationalize the assets, because they are a communist country.”

“The current measures are bait.”

“But don’t worry. I have prepared a good plan, and its effect will soon appear. This is intertwined with politics and diplomacy, so it will only be resolved by solving this politically. Let’s be patient. We will be able to take advantage of those bastards.”

“…….”

*

People in major cities, including Beijing, staged sporadic protests in front of stores.

“There’s no cooking oil to eat! I can’t buy it even if I pay three times the price!”

“What are we supposed to eat!”

“What kind of people’s government is it that can’t even protect the people’s table!”

Even in the old days of absolute monarchs, the ultimate rule was that the people were fed and content.

Patriotism and ideology are secondary to the food that goes directly into one’s mouth.

The protests of ordinary citizens were a shock to the Party leadership.

“Citizens are protesting to the public security officers that they cannot cook because cooking oil is too expensive.”

“Damn it, tell them to steam it, bake it, instead of frying it!”

“We can’t steam Dongpo pork [braised pork belly] and stir-fried shredded pork with sweet bean sauce, which we eat often. Fried dumplings are delicious, but steamed dumplings are dry and nobody wants to eat them.”

“…….”

*

Deng Xiaoping’s office.

The Minister of Agriculture made an emergency report.

“Pork prices have soared by 70%, Comrade Chairman! It is a necessity for the people, and dissatisfaction is rising.”

“There have been no reports of pig diseases, so why is it suddenly rising?”

“Taiwan has stopped exporting pork.”

“Stopped? Is it for political reasons?”

“I don’t think it’s political. A Korean buyer contracted at a premium price.”

“From Korea? Are they undercutting their own people for a few more bucks? Increase the import unit price and tell them to resume. Maybe it’s a trick to raise prices in Taiwan.”

“That’s… it’s a one-year production contract, so we can’t get it back even if we pay more, Comrade Chairman.”

“One year? Then are we helpless?”

“For now, that’s all we can do.”

“Then import from Europe and Southeast Asia.”

“I’ve already looked into it, but Europe’s pork futures for three months have all been sold out. Southeast Asia has very little production, so it’s not of much help.”

“Oh, what a dilemma. There’s nothing we can do. If we can’t import, increase domestic production. We have plenty of land, so just increase the number of pig farms. If we give subsidies, we can normalize it if we suffer for only 100 days, which is the pig breeding period. Let’s solve it fundamentally.”

He tried to break through with his characteristic optimism.

“I understand, Comrade Chairman!”

China hurriedly designated about ten pig farming zones in rural areas and gave subsidies to build large-scale pig farms.

They hurriedly brought in piglets.

Pork will begin to be supplied after 100 days.

On the other hand, they sounded out the United States about importing grain feed.

*

A US grain broker shrugged to a Chinese merchant.

“It’s too late. You can buy any other grain, but there is no soybean available for three months.”

“No stock? The United States is having a bumper crop, isn’t it?”

“Soybean futures for the next three months have already been sold out.”

“Futures are just paper, and you’ll sell the spot [physical commodity] at maturity, won’t you?”

“We didn’t roll over the futures and converted all of them into spot this month. That’s why there is a shortage of soybeans. You’ll have to wait until next month’s maturity. There’s nothing we can do if they convert to spot then, too.”

“You mean I can’t buy soybeans even if I pay in dollars?”

“You can buy it, but if you want to grab the 30% that comes out as spot from the distribution, the seller will call for a high price.”

“I still have to buy it. We’ve brought in tens of thousands of piglets and have to meet the deadline.”

“Oh! You’re in a hurry. I won’t be of much help. Anyway, good luck.”

As China placed large-scale orders in a situation where distribution volume was insufficient, soybean prices soared in just a few days.

It was 30% more expensive, but even this was less than 1/5 of the desired amount.

The more they tried to buy, the higher the sellers called the price.

When they secured about half of the amount, the soybean price had jumped 50%.

The Achilles heel [a weakness or vulnerable point] of China that the Korean president found, anticipating China’s trade retaliation, was soybeans.

China accounts for 22% of the world’s population, but China’s arable land area is only 7%.

It seems that crop harvests will continue to increase with the development of agricultural machinery, but the consumption of meat (pork) and milk has exploded due to increased income, and arable land was insufficient. Here, corn and soybeans, which are feed for livestock, were absolutely lacking.

In particular, soybeans were more than just feed; they were a necessity.

Producing 1 kg of pork requires 3-4 kg of soybeans.

The soybean cake left after squeezing oil from soybeans becomes pig feed.

Recycling in this way could balance the cost of imported soybeans.

Soybeans were not only ingredients for tofu, soy milk, and soy sauce, but also raw materials for cooking oil in Chinese cuisine, which has many fried and stir-fried dishes.

As a necessity, it also had a large impact on the price of the shopping basket.

During Chairman Wang’s time, there was an analysis that the Tiananmen Square incident in 1989 was related to the surge in prices, so soybeans were a ‘political crop’ in China.

About 90% of the soybeans consumed by China are imported, accounting for 50% of the world’s soybean imports, most of which come from the United States.

The President was able to strangle China by hoarding American soybeans.

*

The Chinese leadership was turned upside down.

Deng Xiaoping raised his voice to the Minister of Agriculture.

“What happened? There is no US soybean stock?”

“The traders found all the soybeans in the US futures maturity this month and hoarded them in warehouses.”

“Hoarding? Is the United States starting a trade war?”

“That’s not it. The US government explained that hot money [speculative capital] flowed in, anticipating that prices would rise further due to information that we were drastically increasing the number of livestock raised, and hoarded them.”

The hot money scenario that the President and Kennedy devised to hide the existence of Korea, which hoarded the soybeans, was working.

“This can’t be! The US government is making excuses that it’s not their responsibility. By the way, if they hoard spot, it means it’s difficult to import soybeans even if we pay the increased price, right?”

“That’s right. It has risen by nearly 50%, but we have not secured even half of the required amount, Comrade Chairman. Prices are soaring day by day.”

“Soybeans are more expensive than pork, so aren’t the pigs that eat those soybeans golden pigs? How can consumers afford to buy them? Since it’s not even half of the required amount, won’t pork prices rise even more than they are now?”

“Unfortunately, that’s what we’re expecting.”

“What a mess. Are there no imported grains that can replace soybeans?”

“Unfortunately, there are none. US soybeans are used not only for pig feed but also as raw materials for food cooking oil, so they cannot be replaced. Currently, the price of cooking oil on the market has also jumped three or four times, and there is not enough stock, so there are riots among the people.”

“Ha… damn speculators!”

“What should we do?”

“How can we handle the huge trade deficit? We can’t even preserve prices to catch inflation. The consumption is so high that even if the government takes on the pork price, it cannot handle the fiscal deficit. Can’t we import the insufficient pork from other countries?”

“Imports are possible, but absolutely insufficient. Our consumption is so high that it’s not even enough to whet our appetites. In addition, there is not enough feed for the piglets that have been brought into the pig farming complex that was created at a huge cost, so it is not even close to the demand. The more we raise them because the feed price is so expensive, the more the deficit will snowball.”

“Ah, this is a dilemma. Pork and soybeans are the people’s hearts. Is there no solution, no solution?”

“…….”

Deng Xiaoping was always optimistic, but this was a rare case of despair.

*

Taiwan.

The Chinese Foreign Minister met with the Taiwanese President and politely asked.

“Comrade Chairman hopes that the pork you are exporting to Korea will be returned to the mainland.”

The President said sharply.

“A merchant goes a thousand miles for a penny of profit. Why would we give up a deal that benefits Taiwanese pig farmers?”

“We will give you 10% more than the pork price set by Korea. Isn’t it a more profitable choice for Taiwanese pig farmers?”

“I’m sorry, but we already have a one-year contract. If we break it, we have to pay three times the penalty. Can China afford three times the penalty?”

“Three times?”

“Try negotiating directly with Korea.”

“That’s because we are in a bad relationship with Korea right now, President. Is there really no other way?”

“There is one breakthrough.”

“What is it, President!”

“Isn’t the root cause of the friction between China and Korea due to the issue of Taiwan and China’s UN representation?”

“That’s right.”

“Try having an under-the-table conversation with Korea. Solve it politically.”

“…….”

*

The President’s office.

The Chinese Foreign Minister asked the President in a low posture.

“Wouldn’t it be possible to re-export the pork you import from Taiwan to China? Is it necessary to import more than twice the amount of meat than Korea’s consumption, Your Excellency?”

“We import it because we need it.”

“The pork price has risen a lot, which will be a great profit for Korean pig farmers.”

“China is now building invisible non-tariff barriers to trade and business with Korea. You have to remove the nail first.”

“What kind of nail are you talking about?”

“You know the cause of this situation well.”

“…….”

“China either permanently does not demand UN representation, or China also becomes independent and joins the UN at this opportunity. Then the root cause will be resolved.”

The Foreign Minister, who had been in a low posture, now raised his head stiffly.

“Your Excellency, doesn’t that mean giving up the One Country, Two Systems [policy of governance]?”

The President explained.

“South and North Korea have also joined the UN separately. But neither the South nor the North has ever removed ‘unification’ from the national agenda. The UN is only an international organization, not an organization that determines the political tasks between countries and nations. You just have to get rid of the One Country, Two Systems framework.”

“…….”

“The Cold War era of East-West confrontation is gone, and now it is the era of war of who lives well. If 1 billion people cannot join the UN, China will be isolated from international organizations and will only lose. It will become a global lost child. Face the fact that time is absolutely not on China’s side.”

“Hmm, thank you for the advice. I will pass it on to my home country.”

“Due to the UN representation issue, Korea and China are in a cold war. If you solve this, the pork export issue can be solved as much as you want.”

“…….”