(Bloomberg) — The fall holidays in China are usually boom-time for pork consumption, as parties and cooler weather entice households to splurge on the nation’s favorite meat.

The Mid-Autumn Festival on Friday typically gathers friends and family over celebratory fare like braised pork belly or sweet and sour ribs. This year, the lunar holiday is followed in short order by the weeklong National Day break, which should extend demand for the more expensive meatier dishes beloved by Chinese.

But consumption is falling flat and supplies are ample. Much of the blame lies with a weak economy and financial uncertainty that to some degree has affected all of China’s commodities markets. Prices of hogs and pork, which usually rise in anticipation of shoppers opening their wallets, have actually fallen. It’s a troubling sign for an industry that has yet to recover from the constraints imposed by the pandemic.

“Pork is selling poorly,” said Yao Shangli, a wholesaler based in Shanghai supplying restaurants in the city. “Look at the economic situation now. The economy is bad. There’s no demand. There wasn’t a wave of stock-building before the holiday either,” he said.

Chinese pork consumption is nearly five times that of 40 years ago, mirroring the rise of the middle classes. But even relatively well-off households are watching the pennies as the economy slows and a protracted property crisis saps confidence.

The impact will be felt as far afield as the Americas, whose farmers supply most of the animal feed for China’s vast pig herd. There’s also a direct impact on financial markets because of the meat’s weighting in the basket of food monitored by China’s central bank, with a drop in pork prices contributing to deflationary pressures in the economy.

In the wet markets of Guangdong in southern China, sales of fresh pork have been slow, said Citic Futures Co. Meat that should have sold out in the morning was still sitting on shelves in the afternoon, according to a report from the broker at the weekend.

Slaughter Rates

Hog prices nationwide have dropped over 5% so far this month, and wholesale pork prices have also turned lower. Slaughter rates at abattoirs are flat.

Carcass sales have slowed and slaughterhouses aren’t getting many orders, according to commodities consultancy Mysteel, which cited the impact of the sluggish economy.

“This round of restocking for the holidays is basically over and demand didn’t really kick off,” said Zhu Di, an analyst with GF Futures Co.

Demand for cured pork usually rises toward the end of the year and that could give the market a boost, according to Zhu. “But I’m not sure how much it will be,” she said. “There’s too much supply. We are quite pessimistic about prices in the fourth quarter.”

That puts Chinese farmers in a bind. Profitability is already lagging pre-pandemic levels, due to a combination of oversupply, weak demand, high feed prices and the costs of fending off diseases like African swine fever.

With hopes dashed this time around, the focus will switch to the run up to the next festival period around Lunar New Year — the period of heaviest demand for pork in the Chinese calendar.

The Week’s Diary

(All times Beijing unless noted.)

Thursday, Sept. 28

• China weekly iron ore port stockpiles
• Shanghai exchange weekly commodities inventory, ~15:30
• China Intl Aluminum Week in Yinchuan, Ningxia, day 3

Friday, Sept. 29

• China’s Mid-Autumn Festival holiday

Saturday, Sept. 30

• China’s official PMIs for September, 09:30

Sunday, Oct. 1

• Caixin’s China PMIs for September, 09:45

On the Wire

Saudi Aramco will start talks to buy a 10% stake in a Chinese refining and petrochemical company, as it looks to boost its presence in the world’s biggest energy importer.

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How long will it take to fix China’s flailing real estate sector? One of the country’s most prominent economists, who was ejected from its social media platforms for his bearish predictions about the economy, thinks it might take 10 years to fix.

“Fixing the property sector may be a multiyear or even a decade’s work in front of us,” Hong Hao, chief economist for Shanghai-based hedge fund Grow Investment, said on CNBC Tuesday.

That will mean more pain for China’s suffering real estate sector, now two years into its debt crisis. A default in 2021 by China Evergrande Group, one of the country’s largest private developers, sparked contagion across the whole sector as financing dried up. Construction stopped, leading to protests as homebuyers realized they might never get the homes they paid for.

Now with China’s economy underperforming after the COVID pandemic, Beijing officials are grappling with how to wean the economy from real estate without torpedoing the economy in the short term.

For much of the past decade, Chinese developers like Evergrande went on a debt-fueled construction spree, building millions of new homes throughout the country. That’s led to an oversupply, dragging down prices.

“We built way too much housing for Chinese people,” Hong said on CNBC.

Demand is also in long-term decline. Investment bank Goldman Sachs estimated in August that China’s annual urban housing demand peaked at 18 million units in 2017, and will fall to 11 million units this year and 9 million units by 2030.

On Tuesday, Hong pointed to slowing rates of urbanization, with fewer rural Chinese moving to the cities for work. “Two years ago, we were selling 18 trillion yuan [$2.5 trillion] worth of property,” he said. “This year, we’d be lucky to do even [10 trillion yuan], and going down the road, we’d be lucky to do even [5 trillion] or [6 trillion].”

Bearish takes

Hong is an outspoken commentator on China’s economy, growing his audience during his tenure as the head of research of BOCOM International, a division of state-owned Bank of Communications.

Yet Hong’s takes were censored last year amid China’s tough COVID lockdowns in cities like Shanghai. Hong argued that the lockdown, which trapped millions of people to their apartments in a bid to stop an outbreak, would hurt China’s economy and would encourage capital flight.

Both WeChat—the ubiquitous messaging platform—and Twitter-like Weibo suspended Hong’s accounts in May 2022. Hong soon resigned from BOCOM, which the company said was for personal reasons.

When Hong got a new gig at Grow International a few months later, he warned that those working at state-owned brokerages were starting to face restrictions about what they could say. “Even if you don’t speak the truth, market prices will tell the truth,” he told Reuters at the time.

Hong’s suspension was an early indicator of Beijing’s censorship of bad economic news. This year, regulators are asking analysts and economists to stop using negative language to describe China’s economy—think “subdued inflation” rather than deflation—and the statistics bureau has stopped releasing some indicators like consumer confidence and youth unemployment.

China’s economic recovery has stagnated. Retail sales and manufacturing have grown at lower-than-expected rates for much of the year, and foreign trade has plunged. Still, Chinese economic data beat forecasts last month, suggesting that government support measures may finally be having an effect.

China’s property crisis

China’s real estate sector contributes as much as a third of the country’s GDP. Yet the sector’s liquidity crisis shows no signs of ending anytime soon.

China Evergrande, whose default arguably triggered the crisis in the first place, missed a payment on an onshore yuan-denominated bond on Monday. The developer revealed over the weekend that it could not issue new debt. Chinese authorities are also probing the developer’s former CEO and CFO, reports Caixin.

The bankrupt developer faces a liquidation petition on Oct. 30.

Another major Chinese developer, Country Garden, is also having debt issues. The developer, which has four times as many projects as Evergrande, recently made a $22.5 million interest payment with just days to spare.

While China has relaxed some real estate policies in a bid to stabilize home prices, analysts think that the glory days of the sector are over.

That may be by design, as officials try to wean China off its real estate sector. On CNBC, Hong suggested that once China’s economy relies on other industries rather than the property sector, then “we will have a better, much healthier Chinese economy than before.”

“Not having an overbearing Chinese property sector actually is good for the Chinese economy going forward,” he said.

This story was originally featured on Fortune.com

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