China wants to set the world’s commodity prices.
The world’s second-largest economy warned conventional financial hubs that it wants to create its own raw material markets for setting prices, according to a new report from Bloomberg News. By doing this, it would give China a greater say in determining how much commodities cost.
With China as the planet’s biggest consumer of energy and metals, it’s a move that makes sense for the country experiencing an economic downturn. Presently, Chinese firms and traders have to depend on London and New York to establish benchmark prices for commodities that they regularly handle and use.
Fang Xinghai, vice chairman of the China Securities Regulatory Commission, revealed at the Shanghai Futures Exchange’s annual conference in the city that it plans to start with crude oil, iron ore and natural rubber futures as the first commodities to open its domestic market to foreign investors.
“We’re facing a chance of a lifetime to become a global pricing center for commodities,” Fang said. “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.”
He conceded that China will likely experience resistance and pushback from competing rivals.
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