But China's agricultural independence may be enough to cushion price shocks.

According to Barclays, the recent surge in global grain prices has raised concerns of a possible repeat of the food price spikes in China. The risk of a significant rebound in inflation in H2 would constrain the ongoing monetary policy easing, hurting growth prospects.

Here's more from Barclays:

Our study shows that while China is going to be increasingly exposed to bouts of food inflation, there are little signs of a meaningful “food event” on the near-term horizon, even if assuming a further 20-40% pick-up in global grain prices.

Our benign outlook is based on: 1) the latest surge in prices being driven by supply not demand shocks; and 2) the fundamental drivers for China’s cyclical inflation, excess liquidity, output gap and inflation expectation being well anchored in 2012.

In our view, the rapid rises in food prices in China were usually more a symptom than a cause of China’s inflation problem. Food inflation remains largely domestically determined, despite greater reliance on imports. Other than soybeans, there is relatively small immediate pass-through from global food prices to domestic CPI.

Domestically, a bumper summer harvest has been secured and benign weather conditions point to healthy crop yields ahead. The pig production cycle suggests that sufficient supply will keep meat prices controlled. A major transmission channel for food supply shocks is through expectations, hoarding and speculative behaviour.

First, China is self-sufficient for wheat and rice, and yields are expected to be healthy this year. Rice and wheat are the most important crops for the nation’s food security.

Second, the immediate pass-through of global corn prices to domestic prices is small, though in the longer term they show strong co-integrating relationships

Third, the largest pass-through would be from rising global soybean prices, and here the effect to CPI is small but cannot be ignored. China has been the world’s largest soybean importer, and its reliance on imports has reached 80% of its consumption.

sbr.com.sg