London Commodity Markets takes a closer look at China

Although the geographical size of China is perhaps not that difficult for North Americans to appreciate, their population is another matter. As China has become the second-largest economy in the world, it is without question transformed into an enormous force in the world’s commodity markets; so much so, in fact, that the recent commodity supercycle is now generally seen as a byproduct of China’s emergence.

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Mining

China’s mining industry is quite large, but in many respects quite out of date. It is difficult to find specific numbers regarding mining’s contribution to China’s economy, but direct mining activities are likely not much more than 5% of China’s GDP, and the industry employs about 4% of the country’s workers. 

China is exceptionally rich in natural resources, but the country has been exploiting them at an unsustainable rate. Nevertheless, the Asian nation is a leading producer of a whole host of minerals and metals, including aluminum, antimony, barite, cement, coal, gold, iron, lead, molybdenum, rare earths, salt, tin and zinc. Due to the enormous appetite for raw materials, though, China is in the rare position of in many cases being the world’s leading producer of a commodity as well as the world’s leading importer.

China is the world’s leading producer of iron ore and gold. Its recent production of 1.2 billion metric tons of iron ore accounted for a whopping 43% of the world’s production (150% more than Australia), while it holds 9% of the world’s iron reserves. Nevertheless, it is the largest iron ore importer as well, taking 52% of world exports.

With gold, China is the #1 producer, with 13% of the world’s production against a bit less than 4% of global reserves. The country is likewise a major producer of silver and platinum group metals (PGMs), and the world’s leading exporter of rare earth metals.

 

Energy

With its enormous population and economy, it is of little surprise that China is an equally enormous consumer of energy. As its economy has grown, the country has found itself increasingly in the position of being a large net importer for much of its energy needs.

China is the world’s second-largest oil consumer at nearly nine million barrels per day and the world’s fourth-largest oil producer at about 4.3 million barrels per day. With that sizable gap between consumption and production (4.6 million barrels per day), China is the world’s second-largest oil importer. 

Natural gas is also a significant market. China is the world’s seventh-largest producer of natural gas(3.3 trillion cubic feet) and the fifth-largest consumer (3.8 trillion cubic feet). With the 12th-largest reserves (107 trillion cubic feet), China is the 16th-largest natural gas importer, but this number could rise as pipelines and  facilities come online around the world.

Last but not least is coal. It is difficult to exaggerate the importance of coal in China. At over 3.2 billion short tons, China is not only the largest consumer of coal in the world, but it also consumes half of the coal supply globally. The nation is the leading producer of coal (about 3.2 billion tons) and while the gap between production and consumption isn’t that large (114 million tons, or less than 4% of consumption), it’s enough to make China the second-largest coal importer in the world (Japan is #1 with 181 million tons). China has the third-largest coal reserves in the world (about 13% of the global total at 128 billion tons), but the quality of those reserves is up for debate.

 

Agriculture

While China’s immense appetite for minerals ores (like copper and iron) and energy (crude oil and coal) absolutely drives global markets and is a worthy topic of discussion, so too is its agricultural sector. Agriculture is a large part of the economy (over 10% of GDP), not only from the value of products grown, imported and exported, but also in the number of people it employs and the extent to which it drives the economy away from the industrialized areas.

China is the world’s largest producer of rice (38% more than India), but readers may be more surprised to learn that it’s the largest wheat producer (42% more than #2 India) and the largest producer of fresh vegetables (almost 5x larger than #2 India). They are also the world’s second-largest corn-grower (reaching about 55% of the United States’s production, but producing 3x as much as #3 Brazil) and the fourth-largest soybean producer (albeit tiny compared to the United States, Brazil and Argentina)

In terms of trade, China is both the world’s largest agricultural exporter (in terms of total value) and the world’s second-largest importer (behind the United States). On balance, it is a net importer of agricultural commodities. China imports a large amount of soybeans, palm oil, cassava, corn and rapeseed, while it is a leading exporter of garlic, apples, other fruit, dried beans and vegetables (fresh and preserved).

Source: Insider Monkey to read or comment on the full and original article click here

 

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