Chinese people see US policies as the driving force influencing global commodity price gains, in contrast to a widespread notion that demand in China is driving up prices, an investment firm said today.
"Dollar weakness was cited as the biggest upside risk for commodities in 2011 while a premature removal of Fed stimulus was seen as the biggest downside risk," Barclays Capital said in a report.
The British firm said that in its recent survey of 50 representatives from China's major producers, consumers and trading houses, primarily in the energy and metals sectors, 38% of the respondents believed the biggest upside risk for commodities this year is US dollar weakness.
The response was followed by demand in the emerging markets with 30%. In terms of downward drivers of commodity prices, 39% of the respondents said a premature removal of the US stimulus measures would be the most influential driver, while 26% chose a popping of commodity price bubbles as the greatest factor.
A hard landing in China was pointed to by 20% as the biggest downside risk, while 15% viewed dollar appreciation as the key risk.
The survey showed that most of the respondents were positive on the Chinese economy, despite concerns about credit tightening and a potential hard landing for China.
Eighty-six per cent expected the country's gross domestic product growth in 2011 to come in above 8%, with 32% expecting growth at over 9%. While monetary tightening has been ongoing in China since mid-2010, the current macro environment is not generally seen as restrictive, Barclays said.
Responding about current monetary and liquidity conditions, 72% of the participants thought that monetary conditions are tighter than last year but that further tightening was needed.
Only 15% said monetary conditions are extremely tight and having a noticeable impact on their businesses, while 13% still consider monetary conditions as loose.
