Attention to the phenomenon of commodity market volatility, understanding the root causes of fluctuations in commodity prices respond to new challenges posed by market volatility, is the moment of China's open economy is facing a major issue.
     In general, the new century, fluctuations in commodity prices has several characteristics: First, strong growth in metal prices; second CRB index (Editor's note: from the U.S. Commodity Research Bureau based on the world market, 22 kinds of basic economic sensitive to commodity prices establishment of a futures price index) did not include the crude oil price fluctuations in the range of bulk commodities, among the best; 3 is an international dry bulk freight rates for shipping freight in particular, there have been sharp fluctuations in the same time.
     Shipping prices for commodities and volatility?
     In recent years, bulk commodities and the reasons for the maritime market volatility?
     First, from the relationship between supply and demand fundamentals change in perspective, the more recent period of commodity raw materials and oil demand is a significant increase in varying degrees, constitute the type of commodity price changes to promote the basic reason. 2000-2007 years, oil consumption index rose to 181 from 163, an increase of 11%, an increase of more moderate. Faster growth of several key metals, including aluminum demand growth of 51.4% (from 249-377), iron ore, an increase of 68% (from 139-234), copper up 18.4% (from 207-245). Bulk commodities and energy consumption growth, accompanied by these commodities in international trade and the rapid expansion of the scale of international shipping.
     Demand for rapid growth, how to price movements, depending on the supply side response. The formation of new investment in commodities production cycle is longer, and therefore the use of idle capacity and actual production of depleted upper limit is close to capacity, short-term expansion of production capacity are more constrained, the marginal cost of increasing output rising faster. Mainly derived from the demand shock changes in supply and demand constitutes a promotion of the fundamental causes of short-term price spikes. The price is high and supply tight for some time, with the financial crisis deepening around the world facing economic contraction and recession, demand for commodities demand and consequent collapse of the sea and cause prices to fall precipitously to form a volatile market conditions in recent years, these basic reasons for .
     Second, from the monetary conditions to see the U.S. dollar exchange rate and U.S. monetary policy, factors such as U.S. dollars are also worthy of attention. While the dollar exchange rate and the U.S. money supply is inherently elastic contact were observed here for the sake of brevity the discussion. U.S. dollar exchange rate factors from the perspective of the U.S. dollar against major currencies index of 103.5 from the early 2002 devaluation of March 2008 65, the depreciation rate of 37%.
     As the U.S. dollar is the most international trade in goods and services, pricing, and settlement currency, other conditions remaining unchanged, including the U.S. dollar will affect the changes in commodity prices in international trade, including price changes in the object. Assume that U.S. dollar nominal effective exchange rate affect the same proportion as changes in commodity prices can be said that these changes in commodity prices, price spikes in 2002-2008, approximately 35% can be attributed to U.S. dollar exchange rate factors. However, even excluding the impact of U.S. dollar exchange rate movements, copper, iron ore, the international ocean shipping price index, there are still 2-5 times the levels soar.
     With extraordinary loose Fed monetary policy, market liquidity relative excess supply of U.S. dollars. Too much money would, like the Austrian School describes as a "honey" as a period of time for more adhesive to attach to the economic system within the supply relative to demand, a significant lag in response to sector objects, commodities and assets in these sectors has raised the price level. It can be said on behalf of monetary and exchange rate factors such as soaring commodity prices have played an aggravating factor.
     Once again, from the perspective of the impact of financial investors, a number of bulk commodities such as copper, oil, grain futures and derivatives market, presence of financial investors to understand the behavior and relations between prices and market movements to become one of the factors. Participants involved in financial speculation over the possibility to enlarge prices determined by market conditions fundamentals volatility. The rise of commodity derivatives market is a relatively recent phenomenon, a small number of large international investment banks a greater impact on these markets, with a high degree of concentration and structural characteristics of oligopoly there is reason to infer an unprecedented scale in recent years, financial investors to participate in a certain larger degree of deviation from fundamentals price fluctuations.
     Taken together, the relationship between supply and demand in determining price movements should be the basic variables. Correct use of this simple economic analysis of common sense, it is easy to see different kinds of "conspiracy theory" to explain one-sided point of view and non-falsifiable sense of the word "Huyou" sex. Dollar currencies other factors as well as financial investors, speculative behavior, would also enlarge the role of price fluctuations occurring waves.
     Country's economic recovery in commodity prices has a key role in recovery
     The new century in commodity prices and volatility in freight rates for shipping a time when China's economic catch-up speed and the relative influence of the world significantly improve the period, the China factor, the impact on the global market significance can not be ignored.
     China's impact on international commodity markets, a concentrated expression of the growth in demand for China-related relative importance for global growth. Accompanied by urbanization, industrialization and rapid progress, more recent period, China's commodity consumption, the absolute volume of a substantial growth in the share of total world consumption increase rapidly. In recent years, China's annual oil consumption was 10 years ago nearly doubled, average annual consumption of copper and iron ore is about three times 10 years ago, aluminum consumption is around four times 10 years ago.
     Open environment of China's consumption growth, on the one hand through the expansion of domestic production to achieve the other hand, achieved through the growth of imports. More recent 10 years, China's import structure has undergone significant changes, primary commodities accounted for a substantial increase.
     By the developed countries, the financial - economic crisis and the slowdown in growth rate in emerging economies the impact of the tightening situation in the international bulk commodities and ocean freight prices in the sharp decline in mid-2008, however, experiencing more than six months after the bottom fell earlier than expected early in 2009 after another recovery. China's iron and steel, power generation and other industrial production activity and rapid recovery in commodity prices rebounded on the relevance and leading the trend, suggesting a faster recovery of our economy on the rebound in commodity prices crucial supporting role.
     China's manufacturing productivity revolution to the changes in commodity markets have indirect effects. Over the past ten years, China's economic catch-up speed, outstanding performance in the tradable sector productivity revolution in manufacturing. Over the past decade, China's manufacturing labor productivity before and after the OECD average of more than 10% above the national average, the cumulative growth rate of about 1.85 times. China is a huge big country economies, the productivity revolution in the tradeables sector will have a profound impact at the international level. United States relational forms of internal and external macro-economic changes, now we are here to discuss issues are indirectly linked.
     Simple logic is that in the RMB exchange rate flexibility and low system background, China's tradable sector productivity revolution on the U.S. macro-economic objective to generate two effects: First, China's exports or the United States through lower import prices curb U.S. consumer prices rise, Second, through China's capital outflow and the United States long-term capital flows to curb the U.S. interest rate increases. Early period of the U.S. fiscal and trade deficits scale is usually accompanied by long-term interest rates and CPI rise to the macro-adjustment of the external constraints and pressures. However, in 2001-2006, before and after the above-mentioned relations are showing a new form: Although the size of the twin deficits continued to deteriorate to unprecedented levels, but no change in long-term downward trend in interest rates, with inflation measured by increase in CPI are very mild. Chinese export prices derived from productivity catch-up effect and effect of capital outflows, should be to promote the formation of these new forms of relations between the external conditions.
     Whether China should adopt a more flexible exchange rate system is a controversial academic and policy issues. Given China's exchange rate policy and economic structural conditions, the productivity revolution, along with China export-oriented export inexpensive goods and are willing to accept low interest rates, saving money. This change in itself should be a positive impact on the United States, specific effect depends on the United States how to deal with. The United States as well take advantage of this opportunity to make use of an external low-cost funds into the scientific and technological innovation and infrastructure investment, might be able to promote an early breakthrough in the global technology industry, cutting-edge, forming a virtuous cycle of global economic growth. However, in practice the United States is not a good use of this opportunity. Due to the excessive believe that the financial advantage hypothesis, the U.S. policy stance to demonstrate opportunistic tendencies, a large number of low-cost funds are used for residents of over-consumption and pushing up real estate and financial derivatives asset prices, resulting in the development process of the formation of asset bubbles increased flow of credit expansion sexual excess, the bubble burst face subordinated debt - financial - economic crisis. From this perspective, China's productivity revolution as an important factor in the contemporary economic globalization, objectively speaking, constitute a period of loose monetary policy, the external conditions.
     Surge in import prices caused by China's national welfare losses
     Can generally peaceful environment, otherwise acquire through market transactions to meet the development needs of the bulk of domestic resources, commodities, to test the development strategy of major powers, opening up key to the success factors. Over the past period of time, China's use of the relatively open global market environment, through increased domestic production and expansion of foreign imports to meet the general rapid progress of urbanization and industrialization, the bulk of the massive growth in demand for resource commodities. This shows that the selection and implementation of China's opening up of market-oriented development strategy is indeed feasible. But in recent years development experience also shows that commodity price fluctuations brought about a reversal of China's new challenges.
     First, through import prices on China's macro-economy stability of the pressure. Data show that China's import and export price changes have the following characteristics. First, import prices rose more than export prices rise; followed by the import price of primary goods, the import price of manufactured goods rose above the rose; again is the highest rise of crude oil and minerals. Soaring prices of imports of goods can not be flexibly adjust the exchange rate under the premise of a certain degree of price pressure into the so-called "imported inflation."
     Second, import and export price ratio is used to measure changes in the narrow terms of trade adversely affect economic well-being. A brief estimation results show that changes in the narrow terms of trade benefits the national economy in 2003-2008 led to losses of more than 1 trillion yuan, roughly equivalent to the economic growth over the same period 1 / 10. 2008 changes in the terms of trade led to economic welfare losses of about 478.9 billion yuan, a considerable in the same year the economic growth of 15% from top to bottom. Of course, if we consider changes in China's labor productivity factors, elements of this period of China's terms of trade will continue to improve dramatically.
     Third, to China's foreign economic and trade relations to bring new contradictions and new problems. For example, in China as the world's largest importer of iron ore, the relevant departments and industry organizations and international oligarchs supplier's annual iron ore price negotiations on the continuation of negotiations beyond the general business disagreements and controversies. This year in particular China Steel Association and the international iron ore suppliers, the stalemate in negotiations took place in Chinese foreign executives on suspicion of theft of state secrets by the security department, I Criminal Detention event, on China's foreign economic and trade relations and even an impact on diplomatic relations or even a certain impact on .
     Bulk resource commodity supply and demand price fluctuations and the global economic system of China's new challenges, in essence, should be accompanied by China's rapid economic catch-up phase of the whole process of long-term problem, the next adjustment method may have diverse and long-term characteristics. The following discussion of several possible ways to adjust.
     First, the role of market mechanism, a positive response under the long-term supply-side adjustments. A market economy based on the basic mechanisms to cope with demand growth regulation is to boost output of the basic supply-side response. Such as the scattered data show that the global non-ferrous metals sector exploration investment and 2 billion U.S. dollars from 2002 up to 2008, 13 billion U.S. dollars, such investments should help to improve the long-term supply capacity. Reaction in the shipping industry, ships new office seems more apparent. Data show that the world's new shipbuilding orders for 60 million tons from 2002 up to 2007, 157 million tons, an increase of about 1.6 times.
     The second is to encourage enterprises to learn step by step "go out" on a global scale and better allocation of resources. Implementation of the enterprise "going out" policy on the related industries will help increase in foreign investment in production capacity to expand and enhance Chinese enterprises downstream of the manufacture and supply of raw materials within the supply chain integration and coordination, also contribute to the stock of China's international investment position of the structure of rationalization.
     The third is to enhance our country's macroeconomic stability, reduce the volatility of commodity demand, thereby avoiding the face of international supply lines are too steep sections. China's economy to reach the present stage, macro-economic expansion will be accompanied by the upstream industry's rapid growth in demand for bulk commodities. As the superpower status of China's incremental demand surge in global supply and demand will lead to significant change. Fluctuations in aggregate demand in our country to the international commodity market conditions have a considerable extent under the conditions of dominant influence, through structural adjustment towards the more balanced pattern of growth through improved macroeconomic policies to enhance macroeconomic stability, sustainable economic growth in China is not only a requirement, but also help to curb demand for imported goods, on his way through the vigorous, and to avoid entering the international short-term part of the supply line is too steep. If China's total demand stimulus too fast, it is possible to promote international market prices and China's import prices rise too fast too early, resulting in our own hands, the conflict of interest situation of each stroke.
     Fourth, should be to promote bilateral and multilateral occasions to strengthen and improve financial supervision and control of commodity derivatives to limit excessive speculation larger price fluctuations.
     5 is a more long-term it is expected to realize the scope of a fundamental adjustment. Countries in the field of alternative energy effort, the final phase-change human reliance on fossil energy, be difficult to sustain a situation of special significance. Current national priorities degree of all walks of life to this goal has been a broad consensus, the actual R & D and investment efforts are also increasing, but because the nature of the issue decided that substantive solutions may be necessary to achieve stability in the longer term. (Lu Feng)