China’s State Council announced plans for further support packages aimed at helping struggling industries and boosting domestic demand. Stimulus packages for six industries–auto, textile, steel, shipbuilding, electronics, and machinery–were already announced earlier. Following the new announcement China will provide support packages for ten more industries, among them the oil refining and petrochemicals industries.
While China initiated the biggest price spike in commodities in the last decade it is now on a path to ease future price surges before they occur. The time for China couldn’t be better, as many commodity producing enterprises and countries are suffering severely under the global plunge in commodity prices, a direct effect of decreased demand worldwide. Many of these entities are now in urgent need of capital to finance projects planned and started during the peak in commodity prices. By investing in struggling commodity enterprises China could help keeping supply on its current level and hence prevent future price surges once demand catches up again.
Australian unions called for a closer monitoring of Chinese investments in the country’s commodity industries. China’s increased investment in struggling commodity enterprises, such as Chinalco’s (China’s largest aluminium producer) recent bid to invest $19.5 billion in Australia’s Rio Tinto, triggered concerns among Australian unions of China manipulating commodity pricing and production.
