Commodity trading in China has a short but high-growth history. With an increasing product variety and deepening liquidity pools, the mainland's futures market is playing an increasingly important role in serving the

national economy National may refer to: Common uses * Nation or country ** Nationality – a ''national'' is a person who is subject to a nation, regardless of whether the person has full rights as a citizen Places in the United States * National, Maryland, ce ...

. At present, the commodity markets in China are still in a development stage, with only a few exchanges in China trading in a small group of commodities. In the next few years, the Chinese government will gradually allow more commodities products to be traded in China along with various related

derivatives The derivative of a function is the rate of change of the function's output relative to its input value. Derivative may also refer to: In mathematics and economics *Brzozowski derivative in the theory of formal languages *Formal derivative, an ...

Size

Trading volume of the nation's three commodity futures exchanges totaled 40.97 trillion yuan in 2007, up 95% from the year before. The aggregate trading volume of these exchanges amounted to 728.46 million hands in 2007, up 62% over the previous year. More than half of the transactions took place on the

Dalian bourse The Dalian Commodity Exchange (DCE) () is a Chinese futures exchange based in Dalian, Liaoning province, China. It is a non-profit, self-regulating and membership legal entity established on February 28, 1993. Dalian Commodity Exchange trades in ...

, while turnover on the

Shanghai bourse The Shanghai Futures Exchange (SHFE; ) was formed from the amalgamation of the national level futures exchanges of China, the Shanghai Metal Exchange, Shanghai Foodstuffs Commodity Exchange, and the Shanghai Commodity Exchange in December 1999. It ...

amounted to 23 trillion yuan, accounting for half of the total. The boom of large trading market across the country has contributed to the increased flow of vegetables and fruit from south to north and west to east and promoted the country's commercialization of agricultural products.

Development

The demand for commodity futures as hedging tools has been on the rise as the Chinese economy continues to advance at a brisk pace. The country is now one of the largest producers and consumers of a wide range of commodities, including oil,

steel Steel is an alloy made up of iron with added carbon to improve its strength and fracture resistance compared to other forms of iron. Many other elements may be present or added. Stainless steels that are corrosion- and oxidation-resistant ty ...

, copper,

corn Maize ( ; ''Zea mays'' subsp. ''mays'', from es, maíz after tnq, mahiz), also known as corn (North American and Australian English), is a cereal grain first domesticated by indigenous peoples in southern Mexico about 10,000 years ago. Th ...

, wheat and soybean. To diversify their product ranges, the nation's three commodity futures exchanges are doing research to introduce new contracts. For example, the

plans to launch new contracts on nickel, silver and

futures in the coming years. The

Zhengzhou bourse Zhengzhou Commodity Exchange (ZCE; ), established in 1990, is a futures exchange in Zhengzhou, one of the four futures exchanges in China. The ZCE is under the vertical management of China Securities Regulatory Commission (CSRC). Products ZCE sp ...

is preparing to launch early long-grain non-glutinous rice futures, while the

is preparing to introduce hog futures to protect hog breeders from being exposed to sharp price swings. As a major producer and consumer of commodities, China has large potential for developing its futures market. China's commodity futures markets have expanded product ranges and deepened liquidity pools to cater to the increasingly diverse needs of the nation's rapidly growing economy. With increasing volatility in global commodity markets and prices, companies have been expanding their agricultural product, precious/base metal, fuel oil and other commodity-related investments in China.

Exchanges

There are three commodity exchanges in China after the merger of 50 exchanges into 14 in 1995 and subsequently into three in 1999. The China Financial Futures Exchange (CFFEX), the country's first financial futures exchange, was inaugurated in October 2006. The long-awaited

CSI300 The CSI 300 () is a capitalization-weighted stock market index designed to replicate the performance of the top 300 stocks traded on the Shanghai Stock Exchange and the Shenzhen Stock Exchange. It has two sub-indexes: the CSI 100 Index and the CS ...

, the first mainland stock index futures, will be traded on this bourse, which is working to the launch.

References

Emerging Exchanges overview
- the

United Nations Conference on Trade and Development The United Nations Conference on Trade and Development (UNCTAD) is an intergovernmental organization within the United Nations Secretariat that promotes the interests of developing countries in world trade. It was established in 1964 by the ...

(UNCTAD) * Peck, Anne E.
The Development of Commodity Exchanges in the Former Soviet Union, Eastern Europe, and China
Australian Economic Papers, Volume 40, Number 4, December 2001, pp. 437–460(24)

External links

1998

China: The fall and rise of Chinese futures, 1990-2005
{{Commodity exchanges in China Commodity exchanges in China Finance in China

Size

Development

Exchanges

See also

References

Further reading

External links