China's Impacton World Commodity Markets
IMF Working Papers, May 1, 2012
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- China's Impacton World Commodity Markets
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Bibliographic details
- Authors: Shaun K. Roache
- Published: May 1, 2012
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475503364.001
Summary
- Shocks to aggregate activity in China have a significant and persistent short-run impact on the price of oil and some base metals.
- Shocks to apparent commodity-specific consumption (in part reflecting inventory demand) have no effect on commodity prices.
- China’s impact on world commodity markets is rising but remains smaller than that of the United States.
- The smaller impact of China relative to the United States is mainly due to the dynamics of real activity growth shocks in the U.S., which tend to be more persistent and have larger effects on the rest of the world.
Key findings and themes
- Aggregate-activity shocks vs. commodity-specific consumption shocks:
- Aggregate activity shocks in China → significant, persistent short-run effects on oil and some base metals prices.
- Apparent commodity-specific consumption shocks (including inventory demand) → no effect on commodity prices.
- Comparative impacts:
- China’s influence on world commodity markets is increasing.
- The United States continues to exert a larger influence than China because U.S. real activity growth shocks are more persistent and have larger spillovers.
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