Commodity Imports-A real windfall for China
China, the largest importer of natural resources, is benefitting from a windfall of over $600 from its daily commodity imports.
This saving opportunity mainly came up following the decline in industrial commodities like oil, copper, iron core since last summer.
It is assumed that this annual headline saving is in line with the Chinese government initiatives to strengthen bond ties with its trade neighbours.
Based on a report released on Sunday, the finance ministry revealed a budget of 154,6 billion yuan this year, marking a 33% increase over 2014,on building up reserves of gains, edible oils and other commodities.
China is strategically boosting its commodity imports supported by the low global prices.
At the same time, Beijing wishes to provide continuous support to its long term allies like Russia as per the Commerce Ministry spokesman’s statement.
In guise of providing a 90-day oil supply by 2020, China is maximising over the commodity purchase and simultaneously replenishing its strategic petroleum reserves.
It is not the first time that Chinese authorities have had this strategic thinking.
In 2009, after the financial crisis, China government had stocked up on copper and sold it two years later, making huge profits.
Nevertheless, the country might find itself in troubled waters if there is a decline in global and domestic demands for manufacturing goods.
Source:The Wall Street Wall Journal