China playing ketchup

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To better understand the dynamics underlying the current economic crisis you wouldn't always think to start with tomatoes.

Yet in a landmark case last month the EU it was ruled that tomato puree grown and packaged in China could be labelled as "produced in Italy" on the proviso that Italian water or salt was added somewhere in Europe. The case became hugely controversial, partly as a debating point in the Italian elections, but mainly because of the meteoric rise of China's tomato industry.

In late 2012, when China finally overtook the US as the largest global trader of goods, another less talked about record was also being broken. China finally overtook California as the largest global producer of tomatoes.

The impact of this, coming from a country where tomatoes don't feature heavily in dietary habits, has been to terrify Italian and Spanish producers, who ten years ago led world markets.

While US trade has been squeezed in recent years, the tomato puree economy has paralleled the growth of the Chinese economy. In 2000 the US imported and exported two trillion dollars worth of products.

But following the burst of the dotcom bubble, the 11 September attacks and China's entry into the World Trade Organisation in 2001, the gap began to narrow. By 2003 the gap between all US and Chinese trade had narrowed to half. Simultaneously the gap between Chinese and American tomato production had also halved. On the eve of the financial crisis in 2008 this difference was about a quarter.

Come 2009, at the nadir of the crisis, the US economy plummeted further, while China recovered faster. Between 2000 and 2010 US tomato production grew by only 12 percent, while Chinese production grew by 53 percent.

In an article that would make keen tomato enthusiasts blush, Jim Beecher, the well-known president of the World Processing Tomato Council, claimed that "Over 100 tomato processors from around the world gathered Xinjiang Uygur region in China to tour tomato farms. In the past three years the consumption of tomato ketchup in China has increased by 15 percent. It is inspiring!"

While consumption of tomato ketchup may not be inspiring to everyone, least of all Italian and Spanish producers. It seems at every point, when tomato production has dipped, so has the respective economy.

Nonetheless, while China is now the leader in global trade, it is not likely to overtake the US in provision of services until 2015. Until that point, the US will need to watch its back, in case China manages to ketchup.