- Fears of slowing growth in China and the fizzling out of demand from one of the world’s largest consumers
has weighed on commodity prices in recent months. In our view, these concerns appear to
be overblown, as the long-term outlook for China and its commodity demand is still favourable.
- While there are worries that the transition of the economy away from investment-led growth towards
consumption-led growth will dampen commodity demand, the experience from other emerging markets
reveals that this evolution tends to be gradual. Indeed, China still has a long way to go in terms
of infrastructure development, so significant capital outlays – and commodity consumption – will be
- Moreover, despite decelerating in percentage terms, growth in commodity demand in China will be
occurring off a larger base. Hence, in volume terms, consumption gains for some commodities,
including copper, zinc and oil, are on track to surpass those recorded over the past ten years.
- What’s more, even if the Chinese economy endures a harder landing than we are forecasting, the
story will not change as much as some expect, with commodity consumption still likely grow over
the longer term.