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Little Lobsters, Big Economics

Summary

Today, China eats more crawdads than the rest of the world combined. The story of this crustacean’s journey from Louisiana to China is one of accident, ingenuity and natural market forces. In a time of isolationism and trade wars, it is important to remember the little things that drive the larger economy within a globalized world.

Crayfish, crawfish, crawdaddies, crawdads, mudbugs – even yabbies in Australia. In China, they call them xiǎo lóngxiā, or ‘little lobsters.’ Whatever they are known as, most Americans imagine the little lobsters as a meal for Cajuns chowing down by the bayou, but nowadays they are more aptly pictured in a Chinese restaurant boiling in a hotpot. Since the 1990’s, China has catapulted to the center of the world for crayfish production and consumption. By 2019, 90% of all crayfish were consumed in China, with most farmed there as well. This is the story of how Louisiana’s little lobster moved to China, and how it became the world’s smallest emblem of globalization along the way.

The Journey of the Crayfish

Simon Cheung, an anthropologist at the Chinese University of Hong Kong, has documented how Louisiana’s crayfish made their way to Japan in the 1920s, where they were kept as pets. As Japan invaded its neighbor in the 1930s, the crayfish entered China, though for several decades, few other than the poorest farmers bothered to eat the pests that were considered to have been intentionally imported by the Japanese to ruin local crops. By the 1980s, their popularity had grown greatly among peasant farmers, and, in the 1990s as many farmers began moving to cities as laborers on construction sites and restaurants, cities began developing a taste for the little lobster.

China’s crayfish craze first emerged in Nanjing, a megacity just south of some of the country’s best habitats for crayfish. As more farmers poured into the city at the turn of the century, city slickers got a taste for the little lobster, causing industry growth to balloon. In the early 1990s, 6,700 tons of crayfish were harvested in China, and there were two crayfish processing plants. By 2011, China was eating almost half a million tons of crayfish a year. By 2017, the country was devouring 1,129,700 tons annually. Just a year later, that number had jumped to 1,638,700 tons, a 50% rise. All signs point to the fact that this trend is likely to keep crawling upward.

Crayfish Millionaires

Crayfish have become big business in China. The provinces of Hubei, Jiangxi, and Jiangsu are all important to the trade, though few rival the Jiangsu county of Xuyi, an area an hour and a half drive north of Nanjing. The county is almost as large as Rhode Island and boasts more than 33,600 acres of crayfish pools that produce six million tons alone – and for those that need to walk off a few crayfish calories, the country even plays host to its own crayfish museum. The little lobster brings in about seven billion RMB (~US$1 billion) in revenue to the region and an additional three billion RMB through ancillary trade within the industry. The crayfish industry has minted money, with thirty Xuyi residents working in the industry amassing fortunes over ten million RMB (~US$1.4 million) and at least six hundred more becoming RMB millionaires.

The rise of China’s crayfish millionaires and their industry have threatened many American producers through their ability to beat on pricing. In 1996, crabby Louisiana crayfish producers formed a lobby and were able to spur the US Congress to enact anti-dumping measures against China. Despite these efforts, many in the industry found themselves underwater, in what the New York Times called “the battle of its life.” In just three years from 1993 to 1996, Chinese imports cost Louisiana’s crayfish industry 4,000 jobs and more than half its fair market value.

Despite the damage to American producers, most of China’s crayfish are eaten locally, not exported. Crayfish are particularly popular with diners during the summer months, where pounds of crayfish are pounded down with beers. They are prepared in a variety of ways, sometimes boiled in garlic, lightly breaded in egg yoke or even eaten raw. The most popular way to prepare the crustacean is by boiling it in “13 Spice,” a collection of a baker’s dozen of specific spices that gets the flavor just right. American fast food franchises in China have even begun adapting, with Pizza Hut offering crayfish as a topping and Lays offering crayfish flavored chips. In 2018, Taco Bell began offering a crayfish taco, though only available in China. 

Crayfishs’ Role in Globalization

The little lobster makes a big point. Today, the media is prophesying the end of globalization. In mid-May, The Economist asked “Has Covid-19 killed globalisation?” In recent weeks, the Trump administration has increasingly implemented steps to prevent the spread of semiconductor technology to Chinese competitors. Hong Kong’s precarious situation means that many are concerned that the city’s free-wheeling capitalists and everything they represent may be drawing to a close; following which, the United States declared the end of Hong Kong’s ‘special economic status’.

Crayfish symbolize that governments, as big as they may appear, are at most transient players in the evolution of globalization. No government decided to import crayfish into China, no national leader deemed crayfish an important industry. The rise of this dirty crustacean was a spontaneous process, driven by bottom-up demand from the poorest parts of the Chinese market.

At its core, consumer taste is the origin of trade, and globalization is the immutable byproduct. Despite US tariffs on outbound American vehicles, Tesla continues to post record profits in the Chinese market and commands a 25% market share in the country. Although Washington will halt semiconductor sales to Huawei,  US$75 billion in revenues from chip exports to China will continue to flow. The list is endless, but the message is the same: global consumers have increasingly global tastes.

Too often, discussions of globalization, economics and China are framed in terms of top-down processes. But globalization happened, not because governments decided that it should, but because consumers in Britain wanted spices from India, consumers in America wanted avocados from Chile, and consumers in China wanted purses from Italy. It was not top-down, but rather a bottom-up process. If we have to go to the bottom of a crayfish pond to be reminded of it, all the better.

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