CHENGDU, China — The Sichuan peppercorns are ripe here in southwestern China, with a spicy, minty fragrance emanating from the rows of scrubby trees.
“It’s hard to sell them this year,” said Liu Cuihua, 71, as she used a pair of shears to clip clusters of green pods off thorny stems. “Prices are too low.”
From Sichuan peppercorns to cotton to housing, the concern this year in China is sinking prices. It’s a stark difference from the West, where consumers are coping with eye-watering inflation.
“In the United States, you have people with plenty of money to spend and not enough stuff to buy,” said Jacob Gunter, a senior analyst at the Mercator Institute for China Studies. “In China, you have the opposite problem. Demand has really been in the dumps.”
China’s consumer prices grew 2.5 percent in June from a year earlier, a two-year high, but still far behind the United States, where inflation is above 9 percent, and the euro zone, where it exceeds 8 percent. Economists say China’s “core” inflation is even lower, with prices of many everyday goods steady or down. The divergence illustrates how the world’s second-largest economy has drifted from the West following a trade war and China’s sealing of its borders in the pandemic.
Sichuan peppercorns, or “huajiao” in Chinese, are used in home cooking, but they appear in more extravagant quantities in restaurant dishes, where they’re applied by the fistful for their festive appearance and tongue-prickling taste. They’re often used in pricier meat dishes and elaborate hot pot banquets, rather than in cheaper vegetable meals, making them a small measure of Chinese consumer sentiment.
Shoppers have had to economize on more than just a pinch of spice.
China’s “zero covid” policy has largely allowed the country to avoid the death tolls seen elsewhere, but at a painful economic cost. Lockdowns have repeatedly halted factory production and transportation, holding up delivery of sofas, cars and numerous other items for overseas consumers. Within China, the restrictions have left many unemployed or underemployed, and led consumers to tighten their belts.
“The trend is likely to continue,” said Zhiguo He, a business professor at the University of Chicago, describing the coronavirus controls as “draconian.” New coronavirus cases in Shanghai in recent days have raised the specter of a wider lockdown in the country’s most populous city.
Beijing has declined to follow the United States in providing large-scale stimulus directly to consumers, which has helped the U.S. economy rebound but accelerated inflation. There has been official support for some sectors in China, like housing, but home prices have still fallen for 10 months.
In Chengdu, taxi driver Yu Qibin, 48, says he has noticed an uptick in pork prices, but his living costs are otherwise stable. And while gas prices have risen in China, Beijing’s decision to keep buying oil from Russia means that prices at the pump haven’t soared as much as in the West.
But Yu says his taxi fares are down a lot this year, as pandemic restrictions continue to hamper tourism. Visitors to Chengdu from higher-risk regions face a week of quarantine even if they test negative for the coronavirus.
“I haven’t had much business,” he said.
The Biden administration is considering whether to lift some Trump-era tariffs on Chinese goods, which could help ease U.S. inflation and provide a bit of a boost to China’s economy. Even if those tariffs are lifted, some trade restrictions would remain in place, especially a recent U.S. ban on the majority of China’s cotton supply, due to the risk of forced labor in the Xinjiang region.
‘You hardly earn anything’
Liu, the farmer, says she hasn’t seen the kind of price inflation that has wreaked havoc on consumers’ wallets in other countries. What she has seen is her income shrink, as Sichuan peppercorn prices have fallen to around 90 cents a kilogram this year from about double that last year.
On a recent afternoon, Liu sat at home in Dongsheng village, south of Sichuan provincial capital Chengdu, snipping the seed pods off the stems, which are covered in large thorns like a rose. Then she spread them out on a tarp on the ground, out of the direct sun, and pointed an electric fan at them to speed their drying.
“It’s all this work and you hardly earn anything,” she said.
This early crop of green pods can be used fresh in cooking, or to make an infused oil that’s used to add zing to stir-fries and other dishes. But local media have reported Sichuan peppercorn oil factories slashing their orders of the spice this year, as they forecast fewer purchases by consumers.
In early fall, the mature seed pods will be collected and dried, the black seeds inside discarded and the fragrant husks retained. These will make their way to restaurants across the country, and to factories where they are used to make other foods.
Sichuan residents say the recent fall in prices is partly due to vendors trying to offload last year’s stores as the new harvest arrives. At Chengdu’s Five Rocks spice wholesale market last week, vendors sat by heaping mounds of Sichuan peppercorns from last year’s harvest in different shades of red, brown and green. There were few buyers. Asked how business was going, several vendors, who declined to give their names, said sales were slow because of the pandemic’s effect on restaurants.
On Saturday evening in Chengdu, Wang Dong, manager of the 1802 Mingzhuanghui restaurant, ladled out thick slices of fish from a spiced broth bobbing with Sichuan peppercorns into the bowls of guests. They were holding a dinner to thank loyal customers and to promote their wine business.
“The entire restaurant industry has been hurt by the pandemic,” Wang said.
Prices of ingredients have been largely stable this year, though there have been spikes in costs of seafood flown in from the coast during the periodic lockdowns, he said. Still, Wang added that the idea of raising menu prices hasn’t crossed his mind.
“Restaurants that raise their prices are liable to go out of business,” he said.
In Dongsheng village, Fu Deli, who has grown Sichuan peppercorns for more than a decade, lamented the depressed market for his produce.
“It’s mainly gone well until this year,” he said.
Lyric Li in Seoul contributed to this report.