The 'China' Boost For Global Commodities

As China opens up from covid curbs, the commodity world order, especially steel, aluminium and pharma, is set to change globally, as well as in india.

- Rajiv Ranjan Singh

AFTER A STRING of negative news including lockdowns in major cities, the Evergrande real estate crisis and regulatory crackdowns on tech behemoths, the Chinese government decided to tear down most zero-Covid restrictions, providing a dose of good news to the global community.

The decision came when countries globally were struggling with moribund economic growth, while four-decade high inflation pushed central bankers to hike rates at a pace not seen in a long time. China played a key role in lifting the global economy after the 2008-09 subprime crisis and the global community expects a similar miracle from China yet again.

The Chinese reopening has wide ramifications for the world economy, especially global commodity markets and their ripple effects on India.

CHINA, A MIGHTY FORCE

China is a trading Goliath that accounts for 20% of global exports and a 19% share of the global economy. It commands less than 3% of world currency reserves and international payments but the size of the renminbi bloc, a group of countries that use the currency, has nearly doubled to 29% of global GDP from just 15% in 2000. In the same period, the size of dollar currency blocs has declined from 50% of global GDP to 34% today, according to a Morgan Stanley report.