The Influence Of Commodity Prices On China’s Economy

With decades of rapid development, China has played a prominent role in the field of global economic, political and security has become the second-largest economic country of the world. But the level of opening to the outside world higher and higher, the demands of the development of industrialization and urbanization further upgrade, China is out of stock of resources to support the large and rapid growth of demand, as a serious resource dependent country, then causing our country the increasing international demand of energy, raw materials and other commodities. Although overall economic growth of China is slowing in2013, the commodity imports is still accelerating. The imports of crude oil, soya, iron ore and copper have reached record levels. The imported crude oil is280million tons,increased by4%, imported soybean is63.38million tons,increased by8.6%.In recent years, due to the remaining effect of the financial crisis in2008, the international environment still change. For example continuing to implement quantitative easing monetary policy in the United States, extreme weather of Australia influence the world’s food and other commodity markets in2011, political tensions in the Middle East and the China factor all caused the price of commodities to the upward trend. In China’s case, whether the increase of imports and price volatility impact on the economy or not, the positive or negative effects, how to effect, how much it influence, all is still worthy to analysis.Based on oil and soybean as representatives of international commodities, through the basic analysis of the present situation and the corresponding price conduction, using specific data to establish VAR model, and using the impulse response chart to analysis the impact of international commodity price changes on our residents’consumption level, the money supply, industrial added value growth rate and import and export growth and the difference between them. The empirical analysis show that: the international commodity price fluctuations have an impact on all the economic indicators, but it is not a significant effect on the money supply. Individual analysis shows international soybean price impact CPI longer and greater. However the international crude oil prices on industrial added value growth rate and imports and exports growth are in a positive response before a negative response, and then slowly disappear. At last, according to the analysis above I put forward the corresponding policy recommendations.