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May 20Th Strengthens China'S Pricing Power For Commodity Pricing

2010/5/20 10:01:00 36

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Timely conversion of huge foreign exchange into commodity reserves

Recently, the lack of pricing power in China's commodities and the news of the increase in US debt are under way.

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Widespread concern.

Yao Jian, spokesman of the Ministry of Commerce, said 16, "the pricing power of our country in the international trading system has almost collapsed.

A major problem facing China is the lack of pricing power for commodities. "The international capital flows report" (TIC) released by the US Treasury on 17 shows that as at the end of 3 in 2010, China held a total of US $895 billion 200 million of US Treasury bonds, compared with February, holding us $17 billion 700 million, and it was again the largest holder of US Treasury bonds after its 4 month reduction.

These two seemingly unrelated messages have great relations.

The author believes that instead of holding large foreign exchange holdings of US bonds, it is better to use the foreign exchange reserves of US $2 trillion and 400 billion to make these foreign exchange reserves into commodity reserves through appropriate mechanisms, so that China's right to speak in commodity pricing negotiations will be greatly enhanced.

Due to the lack of pricing power, China has to pay more for imports. Statistics show that between 2003 and 2009, Chinese enterprises only spent more than about 700000000000 yuan on the price of iron ore alone, equivalent to 2 times the total profits of the steel industry in the same period.

In terms of exports, only 10 years from 1995 to 2005, China's rare earth exports lost billions of dollars in foreign exchange.

The lack of pricing power of commodities caused the sharp rise in the prices of China's import commodities, which not only caused huge economic losses to our enterprises, but also led to the price of raw materials in China and the middle and lower reaches.

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The rise in prices has raised the cost of business and weakened our country.

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The international competitiveness has a serious negative impact on the sustainable development of China's national economy.

Why, "what does China buy?"

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What will it go up? What will China sell?

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What will fall?

In a word, China has no pricing power in commodities.

Why do we have no pricing power? The lack of pricing power in China's commodities has both historical reasons and institutional deficiencies.

Insiders pointed out that if we want to form "China price", we must speed up the development of our futures.

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To enhance China's "right to speak" on commodity pricing and strive to make China the global pricing center for some large imports.

All kinds of commodities futures should be established and improved as soon as possible.

paction

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Developing risk prevention tools, resolving price risks through long-term contracts, and improving industrial concentration.

At present, there are about 1200 large and small steel enterprises in China, of which 70 are large steel enterprises.

Compared with the same industry in the world, the concentration ratio of China's steel industry is obviously low, expanding overseas resources and controlling the supply of bulk commodities from the source.

In order to get the pricing power of the international market, we must change its passive situation.

China's $2 trillion and 400 billion foreign exchange reserves have much to do with commodity pricing rights.

First of all, we should use the foreign exchange reserves of US $2 trillion and 400 billion to establish a national strategic reserve center for bulk commodities.

For example, rare-earth can use foreign exchange to build reserve centers.

Not long ago, Baotou Steel rare-earth established its own rare earth reserve center and received some government funding.

But this is just an enterprise level, which is far from enough. It must rise to the national level and be led by the state.

Second, we need to expand our overseas resources with us $2 trillion and 400 billion of foreign exchange reserves and control the supply of commodities from the source.

In recent years, although the speed of China's large overseas reserves has accelerated overseas, the way of overseas mergers and acquisitions of Chinese enterprises is not smooth.

First, China Petroleum Corporation in 2002 bid for Russian oil producer Slavic oil company and CNOOC bidding American Oil Co Unocal failure in 2005.

The vigilance of developed countries to Chinese acquisitions has been deepened, especially in terms of strategic energy and resources.

Although this road is very difficult, we can not avoid it.

Especially in the current world economic downturn, the use of huge foreign exchange funds to increase the pricing power of China's commodity prices is just in time.