Commodity trading is an important support for global resource allocation and the construction of international trade centers. On July 7th, the "Commodity International Trade Ecological Integration Zone in the Expo Area" was officially inaugurated. This is an innovative move by Pudong New Area to implement national strategies, expand reform and opening-up, and build a new development pattern of "domestic circulation and international circulation" together. It will help enhance China's international pricing power for commodities.

Play a good card to adapt to the prevailing trend

China is the largest buyer of commodities in the international market. However, despite its huge purchasing power, it has failed to help Chinese enterprises change their embarrassing position as price takers. Analyzing the reasons, apart from factors such as the mature commodity futures trading markets in Europe and America, the international monopoly position of large multinational companies, and the influence of international investment banks and funds, Zhao Pengfei, the deputy general manager of Chinalco International Trade Group, pointed out another "internal factor": "Chinese enterprises often act alone when participating in global trade activities, unable to form a synergy effect, and thus difficult to gain sufficient influence and话语权 in international trade." It is reported that in 2021, the revenue of China's non-ferrous metal enterprises reached 7.9 trillion yuan, and they produced 64.77 million tons of products, accounting for 54.8% of the global total of 1.18 billion tons. The top five electrolytic aluminum producers in China accounted for 32.4% of the global output. However, due to the more developed and mature commodity futures trading market systems in Europe and the United States, and the dominance of financial derivatives trading by international financial institutions, the industry concentration of Chinese enterprises is relatively low, unable to form synergy effects, resulting in the lack of pricing power in bulk commodities for Chinese enterprises.

In the face of the complex international environment, the "Commodity Trade International Ecological Integration Zone" will be a strong card that Pudong plays.

Tailor-made policies promote industry clustering

At the unveiling ceremony, the Pudong New Area Commerce Bureau and the Expo Administration jointly released the "Several Measures on Supporting the Construction of the B2B Trade Ecological Integration Zone in the Expo Area", providing practical policy support for the further aggregation of bulk commodities in the Pudong Expo area.

The "Several Measures" cover various support policies such as economic contribution rewards, encouragement of international trade, key talent housing subsidies, application of special funds, talent settlement green channels, and service specialist mechanism. This set of support policies is a combination of measures implemented by Pudong to optimize the business environment and attract talents in key fields.

By implementing these targeted measures, we aim to attract more multinational companies and large enterprises in the commodities sector, explore the integration of international trade resources within the industry, and enhance China's market influence, competitiveness, pricing power and resource allocation capabilities in the global commodities market through innovations in supply chain management and the use of the RMB for pricing and settlement, etc., said Shi Yihua, the deputy director of the Shanghai Pilot Free Trade Zone Management Committee and the Bureau of Expo Administration.

Build a scale of tens of trillions

After years of accumulation, the Expo area has now achieved the comprehensive conditions necessary for further advancing towards an integrated ecological zone for international trade of bulk commodities.

It is reported that currently, the Expo area has gathered nearly 200 enterprises engaged in bulk commodity trading, covering a wide range of commodity categories, including non-ferrous metals, precious metals, iron ore, petrochemicals, agricultural products, etc. The total annual revenue reached 600 billion yuan, accounting for nearly 20% of the bulk commodity sales in Pudong New Area. Among them, there are over ten enterprises with revenues of over 10 billion yuan and over 10 billion yuan respectively.

In addition to the continuous expansion of industrial scale and the availability of a wide range of trading varieties, the Expo area has gathered a number of well-known leading enterprises from both domestic and foreign in the bulk commodity trading industry. The leading role effect is becoming increasingly prominent. State-owned enterprises include China Baowu headquarters, China Aluminum International Trade, China Copper International Trade, China Gold Trade, and Southern Cement, etc.; international知名企业 include Fortescue Metals, Louis Dreyfus， and Yiliagri， etc.； well-known private enterprises include Hailang Metal Trading Group and Shanghai Taizhi Nonferrous Metals， etc. "The clustering of these leading enterprises has driven the rapid growth of bulk commodity trading volume in the Expo area， laying a good foundation for the construction of a trade ecological integration zone," Shi Yihua said.

According to the forecast, by 2025, the Expo area will have initially established a regional influential integrated area for bulk commodity international trade, with a trade volume exceeding 1 trillion yuan and an economic contribution of over 20 billion yuan. By 2030, it will have been built into a globally influential integrated area for bulk commodity international trade, and at the same time, a RMB cross-border settlement center and pricing center for non-ferrous metals international trade will have been established, with a trade volume exceeding 2 trillion yuan.