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FEATURE STORY: China As A Source Of Global Demand For Commodities And Energy Resources
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China As A Source Of Global Demand For Commodities And Energy Resources
workers conduct a safety inspection on a natural gas transmission facility in April 2014 in Henan province      无论是在电视新闻中还是在报刊杂志上,我们常常会看到我国内需扩大,消费升级等字眼。内需即我国国民生产生活的总需求。无论是为推动经济发展扩大内需,还是人民生活水平提高而增加了对商品的需求量,我国对进口商品和能源资源的需求是非常可观的。本期我们就来聊一聊中国对于全球能源及商品经济的需求的影响。

      经过几十年的飞速发展,中国经济无论在数量还是质量上都有了质的飞跃,无论是对国内还是对国际经济的进出口方面,都有了巨大的提升。与中国有着密切能源合作的国家不少, 如澳大利亚、加拿大和印度等,他们向中国出口了大量的金属矿石能源资源,在2008年全球金融危机期间,这些国家也由于向中国持续出口商品,保障了其国内经济的持续发展。中国国内的快速建设也增加了对全球铁、煤、石油等金属矿产和能源资源的消耗需求,这在一定程度上缓解了全球大宗能源商品价格下跌的趋势。



China's economic growth and increasing value of exports has driven the demand for resources to record levels. China's demand for resources is especially important for countries like Australia, Canada or India, which supply China with significant amounts of metal ores and energy resources. These countries have also benefited from export of commodities to China during the 2008 global financial crisis, which was an important supporter of their domestic economic growth.

During the last decade, China's ambitious projects of residential construction and infrastructural development increased the global demand for various metal ores and energy resources, such as iron, coal and oil. This helped to mitigate falls in global commodity prices, as most developed economies experienced a drop in demand for commodities during the global financial crisis. However, domestic factors such as an oversupply in residential property after China's macroeconomic stimulus in 2008 and 2009, had a direct impact on China's falling demand for iron ore and other metal ores. Some commodities, such as coal, are produced domestically in a large quantity, which significantly lowers the need for importing coal.

BT 201801 Feature 03 2Natural Gas as a Substitute of Oil

China is the largest oil importer in the world, with an average import of 8.5 million barrels per day (bpd) between January and September 2017. The fall in global oil prices in recent years is mostly attributed to OPEC's decisions on oil production and the discovery of new oil reserves in the United States and China. China's demand for oil prevented a further fall in price, although recent data shows that domestic demand for oil has reduced.

China's import levels of oil have also been supported by the increase in strategic petroleum reserves. According to the International Energy Agency, the country now holds around 850 million barrels of oil and has spent more than $20 billion to fill up its strategic oil reserves since 2015.

China's new policies on controlling pollution and an increased percentage of population moving from rural to urban areas has seen a shift of demand to more ecological energy resources such as natural gas. The Siberian pipeline, named “Power of Siberia“, is the first pipeline to connect Russia and China and is expected to deliver the first cubic metres of gas in December 2019. This $400 billion deal will stretch for 30 years to supply more than 1.15 trillion cubic metres of Russian gas to China.

155759f04a756bfaa5041c2317631f58Metal Ore Demand and Urbanisation

China accounts for around 66% of global iron ore demand, 33% of aluminium ore demand and almost 50% of world's coal demand. Furthermore, iron ore and other metals have a share of more than 50% of China's resource imports other than oil. These metals are mostly used for production and steel products, and also reflect China's rapid rate of urbanisation.

China has also large reserves of iron ore, but location of its reserves in the west and north of the country increases the price of domestic iron above the price of internationally available version. In addition, domestic reserves of iron ore have a low iron content which makes the processing process relatively more expensive.

Despite the fact that oversupply of housing capacity is still apparent in some areas, demand for iron and metal ore may persist in future due to China's urbanisation rate, manufacturing and vehicle production.

BT 201801 Feature 05Environmental Issues

China's efforts to reduce air and environmental pollution affected the use and demand for coal and other commodities in the industry. In fact, investments in high-polluting facilities have been reduced and the country has introduced various policies to limit the use of coal and control air pollution.

1Demand of Agricultural Products

China's demand for agricultural products is also showing an uptrend over the last decade, although domestic production of some cultures has proved to be self-sufficient. China imports significant amounts of soybeans, cotton and wool, while demand for grain, fruit, vegetables and meat is largely met by local supply. Local production of some agricultural products has been partly supported through various policies with the objective to become self-sufficient, such as in case of some grains.

bigstock Agricultural Concept 35027702Conclusion

China's economy is a key source of global demand for commodities and energy resources and will potentially remain in that position in the near future, although a slowdown in economic performance could affect China's imports of some metal ores. Furthermore, new environmental policies could affect China's use of coal as an energy resource, and agricultural policies would emphasize the importance of the country being self-sufficient in the production of some grains.

However, recent data has shown that the country's rising export value could be the main driver of the demand for commodities and resources, which means that global factors that affect China's exports could be of higher importance than domestic conditions.

With the Chinese economy slowing down and the global fall of commodity prices in recent years, China's demand for various resources could become unstable. The shift from export-driven growth and manufacturing to domestic-driven growth and service industry could also have a direct impact on the global demand for resources.

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