An increase in global bulk commodity prices is a matter of some concern to some industries in China, there is no reason to expect any long-term rise in raw material prices of upstream industries, the National Bureau of Statistics (NBS) said after announcing a sharp expansion of the economy in the first quarter.
Chinese media quoted Liu Aihua, a spokeswoman for the NBS, as saying that improved global liquidity, recovering market demand and supply shortages have led to higher bulk commodity prices.
Raw material prices have been trending upward in China, with the producer price index rising 4.4 percent on a yearly basis in March. According to media reports, the index has been climbing since the beginning of this year, with 0.3 percent and 1.7 percent growth in January and February, respectively.
“As China is deeply integrated into the world economy, the global commodity price hikes may impact a number of industries. Structurally speaking, the impact will be mostly on upstream industries, but there is no basis for long-term increases,” Liu was quoted as saying.
China’s economy grew by 18.3 percent year-on-year in the first quarter of the year, versus 6.5 percent in the last quarter of 2020, thanks to last year’s low comparison base and a steady momentum of recovery, the NBS said,
The country’s first-quarter gross domestic product came in at 24.93 trillion yuan ($3.8 trillion), which represents 10.3 percent growth compared with the level in the same period of 2019, as well as a two-year average growth of 5 percent it added.
According to China Daily, Liu said the PPI surge was largely a structural one due to the higher production material costs. Prices for the means of production rose by 5.8 percent on a yearly basis in March, while price hikes for living subsistence went up by 0.1 percent last month on a yearly basis.
She said upstream product prices will not increase in the long run as supplies are picking up and demand is still recovering, Chinese media said.
Wang Yiming, a member of the monetary policy committee of the People’s Bank of China, the central bank, and vice-chairman of the China Center for International Economic Exchanges, said it was necessary to keep a close eye on international bulk commodity prices.
He said the higher commodity prices resulted from an accelerated global economic recovery, loose monetary policy environment and expanded demand for bulk commodities.
“But bulk commodity prices are likely to face short-term pressure. It is important to track the global market changes, help ease pressure in downstream industries and enhance strategic reserves of bulk commodity,” the China Daily quoted Wang as saying.
According to the NBS, China’s industrial output rose by 24.5 percent year-on-year in the first quarter of the year, sending the quarter-on-quarter growth to 2.01 percent and the two-year average growth to 6.8 percent.
Despite improvements, the NBS said the foundation of recovery is “yet to be consolidated” and faces multiple unstable factors, including external uncertainties surrounding the COVID-19 and international environment as well as domestic long-standing structural issues and new problems.