Research Into Impact Of External Shocks On China’s Commodity Market Cycle

The commodity market has become the main organizational form of China’s commodity circulation.The development of commodity market plays an important role in increasing employment, promoting consumption, interlinking supply and demand and stabilizing economic operation. However, the commodity market has inevitably taken on periodic fluctuation as a reflection of economic fluctuations in the field of circulation. It’s a very significant topic that this paper attempts to study the impact of different types of external shocks on China’s commodity market based on dividing the stages of our commodity market cycle under the condition of open economy.This study will help us to further enhance the understanding of economic fluctuation and more accurately grasp the macroeconomic trend.Based on the related literatures which were reviewed, this paper firstly analyzes the mechanism of external shocks influencing on the domestic commodity market operation, specifically including international trade transmission mechanism and path, the international financial transmission mechanism and path, and the factors affecting the transmission effect. Secondly, we typifies the stages of the commodity market cycle within the nonlinear framework by the four mechanism of STAR model.The results of estimation show that there is asymmetric significantly different and conversion speed between phases of China’s commodity market cycle.We judge that China’s commodity market cycle will remain in recession in a period of time in the future on account of the macroeconomic trends at this stage.On further estimation it is found that the marginal effect of different types of external shocks using multivariate ordinal probit model. The empirical test shows stable international interest rate and RMB exchange rate, small-scale short-term international capital flows,steady upward international commodity prices,which are helpful to improve the possibility of transformation period of our commodity market to the prosperous stage.In addition,the impact of external shocks are more significant after the international financial crisis. Finally, we put forward some suggestions on how to enhance the ability of China’s commodity market to withstand external shocks in order to promote the prosperity of commodity market, based on the current situation of our commodity market cycle.