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Sources of Chinese Demand for Resource Commodities

Author

Listed:
  • Ivan Roberts

    (Reserve Bank of Australia)

  • Anthony Rush

    (Reserve Bank of Australia)

Abstract

Is China’s demand for resources driven predominantly by domestic factors or by global demand for its exports? The answer to this question is important for many resource-exporting countries, such as Australia, Brazil, Canada and India. This paper provides evidence that China’s (mainly manufacturing) exports have been a significant driver of its demand for resource commodities over recent decades. First, it employs input-output tables to demonstrate that, historically, manufacturing has been at least as important as construction as a driver of China’s demand for resource-intensive metal products. Second, it shows that global trade in non-oil resource commodities can be described by the gravity model of trade. Using this model it is found that, controlling for domestic expenditure (including investment), exports are a sizeable and significant determinant of a country’s resource imports, and that this has been true for China as well as for other countries.

Suggested Citation

  • Ivan Roberts & Anthony Rush, 2010. "Sources of Chinese Demand for Resource Commodities," RBA Research Discussion Papers rdp2010-08, Reserve Bank of Australia.
  • Handle: RePEc:rba:rbardp:rdp2010-08
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    File URL: http://www.rba.gov.au/publications/rdp/2010/pdf/rdp2010-08.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Jonathan Kearns & Philip Lowe, 2011. "Australia's Prosperous 2000s: Housing and the Mining Boom," RBA Annual Conference Volume,in: Hugo Gerard & Jonathan Kearns (ed.), The Australian Economy in the 2000s Reserve Bank of Australia.
    2. Scott Bowman & Patrick Conway, 2013. "China’s recent growth and its impact on the New Zealand economy," Treasury Working Paper Series 13/15, New Zealand Treasury.
    3. Ratti, Ronald A. & Vespignani, Joaquin L., 2015. "Commodity prices and BRIC and G3 liquidity: A SFAVEC approach," Journal of Banking & Finance, Elsevier, vol. 53(C), pages 18-33.
    4. Mardi Dungey & Renee Fry-McKibbin & Verity Linehan, 2014. "Chinese resource demand and the natural resource supplier," Applied Economics, Taylor & Francis Journals, vol. 46(2), pages 167-178, January.
    5. Brendan Coates & Nghi Luu, 2012. "China's emergence in global commodity markets," Economic Roundup, The Treasury, Australian Government, pages 1-30.
    6. Brendan Coates & Dougal Horton & Lachlan McNamee, 2012. "China: prospects for export-driven growth," Economic Roundup, The Treasury, Australian Government, pages 79-102.
    7. Ratti, Ronald A. & Vespignani, Joaquin L., 2015. "OPEC and non-OPEC oil production and the global economy," Energy Economics, Elsevier, vol. 50(C), pages 364-378.
    8. Roberts, Ivan & Rush, Anthony, 2012. "Understanding China's demand for resource imports," China Economic Review, Elsevier, vol. 23(3), pages 566-579.

    More about this item

    Keywords

    China; trade; investment; resource commodities; gravity model;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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