China has made a bold move lately and has virtually put the world “on notice” that it wants to be the authority in global raw materials markets and setting prices for these commodities. It is well known China is the world’s biggest consumer of industrial metals and energy products, but they want to move away from being dependent on outside financial centers for their purchases.
China has long pledged to open up their markets to foreign investors – with current raw material trading there still off limits to average overseas investors – as currency restrictions are still a roadblock. It appears now, however, that perhaps they want to establish commodity dominance before their currency obstacle is removed.
“We’re facing a chance of a lifetime to become a global pricing center for commodities,” said Fang Xinghai, vice chairman of the China Securities Regulatory Commission, said at the Shanghai Futures Exchange’s annual conference in the city on Wednesday, sharing his fundamental assessment of the commodity futures market. Qinghai added, “On the way to realize this goal, we’ll see very intense competition. We have the advantage of trading size and economic growth, but our legislation is still not sound and we lack enough talent.”
The agricultural commodity markets have had a boost in volatility lately that has been attributed to China’s involvement. They really want to set global prices for raw commodity markets…? Well, they will have their work cut out for them.
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