Effects of Increasing Chinese Demand on Global Commodity Markets

摘要

Chinas stunning economic growth in recent years has increased the countrys demand forenergy and other commodities used by a wide range of industries. This study examines theeffects of Chinas rising demand for commodities on global markets, focusing on crudepetroleum, aluminum, forest products, and ferrous scrap. The study explores the factorsbehind the shifts in trade and prices for each of the four commodities, and finds that theChina impact on global markets is complex and varies across products. We find thatincreasing Chinese demand is one factor contributing to the price increases for crudepetroleum in recent years, but that global production over the 1995-2004 period more thankept pace with the increased demand from China, mitigating the impact of Chinese demandon global prices. Chinas expansion of its aluminum and forest products industries has ledto increased imports of input products such as wood pulp and alumina. This shift in tradepatterns has led to increased global prices for aluminum, while paper prices have remainedgenerally stable. Global market prices for ferrous scrap have increased sharply, reflectingincreased demand from China and other countries.