Written by Li Hongting　Translated by Xie Zongming

“Bulk commodity trade plays as an import stabilizer of the trade between Guangxi and ASEAN，” said Huang Weijing， Deputy Chairman of the Standing Committee of the Peoples Congress of Guangxi， at the first China-ASEAN Commodity Trading Innovation and Development Forum during the session of the 20th China-ASEAN Expo （CAEXPO） and China-ASEAN Business and Investment Summit.

In fact， this topic concerns not only China and the ASEAN. With the current global economic and trade uncertainties， the innovation and development of bulk commodity supply chain can direct the optimal configuration of bulk commodity resources of the world， which is highly relevant to peoples well-being. Held on September 18， 2023， the China-ASEAN Commodity Trading Innovation and Development Forum， themed “Forming New Channel for China-ASEAN Bulk Commodities Trade， Promoting New Development for the Dual Circulation”， has served as a good communication channel and platform for China and ASEAN to explore the development path of stable commodity supply within the region.

Stabilizer of regional economy and trade

“Bulk Commodity” refers to physical goods， including crude oil， non-ferrous metals， steel， agricultural products， coal， and other materials， that possess commodity attributes and are subject to large-scale buying and selling for industrial， agricultural， and consumer use. “As the basic good for industrial， agricultural， and consumer use， bulk commodity has a crucial position in global economic development. Since different countries and regions have different resources and economic development model， the demand for bulk commodity varies， which makes it a significant flowing factor in global economy，” said Wang Weijun， Deputy General Manager of Dalian Commodity Exchange at the Forum. Since 2020， the ASEAN and China have become each others largest trade partner for three consecutive years， in which the bulk commodity trade has been playing a crucial role.

According to Wang， who took the futures listed on the Dalian Commodity Exchange for example， China and ASEAN currently have close relations in the bulk commodity trade of palm oil， refined oil， natural gas， coal， rubber， plastic， and rice. Among them， the agricultural products take up the biggest part of import and export， accounting for 15.7% of the total volume. In addition， palm oil and iron ore are two of the most active products in the China-ASEAN market. In 2022， the volume of Chinas palm oil import was 5 million tons， which was mainly from Indonesia and Malaysia. Singapore， on the other hand， plays the role of the distributing center for iron ore trade， providing great convenience for connecting China with its main iron ore export destinations， such as South America and Australia.

China and the ASEAN are both massive economies in the world， for which the cooperation in bulk commodity trade between the two attracts the attention of the world. China-ASEAN bulk commodity trade will see more opportunities of development as the ASEAN-China Free Trade Area （ACFTA） keeps upgrading， Regional Comprehensive Economic Partnership （RCEP） enters into effect， supply chain finance and cross-border RMB settlement services advance， and cross-border barriers lower.

On this trend， Li Shuo， Deputy Director of the Foreign Trade Division of the Ministry of Commerce of China， said， “The enhancement in cooperation in digital economy， e-commerce， smart city， and 5G will help build a more innovative ACFTA， which provides solid support for the innovation and development of China-ASEAN bulk commodity trade.” Besides， the consensus in pursuing environmental-friendly and sustainable development will also bring opportunities to bulk commodity trade. Li Dongping， Vice Principal of China Institute of Finance and Capital Markets， said， “The importance of green biology and diversity， plus the adjustment in economic structure， have increased the strategic significance of certain bulk commodities in the area of new energy. In this context， corresponding international cooperation have become more important.” According to Datuk Dr. Ahmad Parveez Ghulam Kadir， Director-General of Malaysian Palm Oil Board and Research Fellow of the Academy of Sciences Malaysia， Malaysian Government has implemented the Malaysian Sustainable Palm Oil Certification Scheme， aiming to promote sustainable palm oil purchase and consumption.

Guangxi being a promising market

As the only provincial region of China that is connected to the ASEAN by land and sea， Guangxi has its favorable premise and unique advantage for facilitating cooperation in bulk commodity trade and building an ASEAN-oriented base for international land-sea bulk commodity storage， transportation， and trade.

First of all， Guangxi has plentiful bulk commodity resources. Guangxi is Chinas biggest producer of white sugar， timber， and raw silk. It is also one of the biggest producers of alumina， live pigs， pulp， Chinese medicinal herbs， and non-ferrous metals. Meanwhile， Guangxi serves as an important port for importing distinctive ASEAN bulk commodities like timber， non-ferrous metals， oil and gas， coal， and fruits. Secondly， China and the ASEAN have been keeping close economic and trade relations. The construction of logistics facilities like the Beibu Gulf Port has been advancing fastly. Factories of edible birds nests and oil have been built in the China-Malaysia Qinzhou Industrial Park， so as to promote China-Malaysia bulk commodity trade. In July of 2021， Guangxi government issued the Implementation Plan for Combining Futures and Spot Market Services for Guangxis Bulk Commodity Trading Market， becoming Chinas first region to have overall arrangement of the collaborative development of futures-spot markets.

Furthermore， according to Zhou Jian， Chairman of the International Manganese Institute China Committee， the Qinzhou Port， located in Guangxi， is the second largest manganese-importing port of China. Taking this advantage， the Beibu Gulf （Guangxi） Bulk Commodity Trading Platform kicked off in November 2022， with the ambition to gradually expand its range from manganese products to port-related industries， such as new energy materials， chemicals， palm oil， non-ferrous metals， and ASEAN fruits. Currently， the value of the deals done on the platform has reached 12.7 billion yuan. The Forum also witnessed the official launch of the Beibu Gulf （Guangxi） Bulk Commodity Futures and Spot Collaborative Trading Platform and the Xinhua （Beibu Gulf） China Manganese Ore Price Index， which will further help Qinzhou build an ASEAN-oriented bulk commodity cross-border trade hub and benefit China-ASEAN bulk commodity trade and cooperation.

Today， Guangxi is becoming a promising market in this area as the New Western Land-Sea Corridor being elevated to a national strategy， which provides further opportunities for creating a Guangxi-ASEAN bulk commodity trade new pattern. Zhou Shi， Researcher and Deputy Director of the Research Office at the Institute of Market and Price Research of the National Development and Reform Commission of China， suggested that Guangxi should continue to extensively cooperate with the ASEAN in four aspects， namely building high-standard spot goods trade platform， facilitating the channels for China-ASEAN bulk commodity trade， promoting financial services innovation with RMBs inter-regional use as the emphasis ， and creating international， law-based， and convenient business environment， so as to achieve mutually beneficial cooperation and common development.

Optimizing bulk commodity trade

Bulk commodity is characterized with its resource intensity and fluctuating price. Bulk commodity trade is not only trade in goods but also a complex system combining logistics， finance， futures trade， and spot trade. Therefore， the stability of supply chain is vital in this industry， which requires the supplying company of bulk commodity to upgrade from conventional traders to integrated service providers. Companies need to switch to provide a whole-chain service that includes the acquisition and collaboration of upstream mineral resources， logistics and warehousing， subsidiary product manufacturing， and industrial distribution， so as to form a fine system of supply chain.

At the Forum， professionals and company representatives discussed the possible solutions for China-ASEAN bulk commodity trade cooperation and development in the future. Peng Lei， General Manager of Wuchan Zhongda Futures Co.， Ltd.， said in the stance of a trader that， focusing on the purpose to serve the real economy， with the core being the industry and the foundation being the futures-spot collaboration; starting from the vast market demand， with trading as the core; taking the investment in scientific research as the driver to enhance the understanding of the industrial chain are the three key points for developing integrated services in the bulk commodity supply chain. Both sides should work together to build a more advantageous system of bulk commodity trade based on this idea.

According to Li Donping， new technologies like big data， cloud computing， and AI algorithm can greatly help predicting the price trend of bulk commodity. It is important to utilize these valuable technologies to analyze bulk commodity prices， so that to promote further improvement in the efficiency of bulk commodity trading infrastructure.

As for the exploration for new patterns of China-ASEAN bulk commodity trade， Fan Wentao， General Manager of Qianhai Mercantile Exchange of Hong Kong Exchange， suggested that， the current bulk commodity trade between China and the ASEAN is generally growing， and bilateral financial cooperation is continuously strengthening. This provides a good market and opportunities for establishing an international bulk commodity trade and resource allocation platform， and China and ASEAN can jointly create a hub for bulk commodity trade. In addition， he also mentioned suggestions like China and ASEAN building high-quality bulk commodity trade markets for products in which both sides are highly interdependent and have advantages， such as aluminum， copper products， rubber， palm oil， and others. These markets can also promote the reform of the bulk commodity trading system and mechanism through pricing in Chinese yuan or settlement in the local currency of the trading partner.

The innovation and development of bulk commodity trading are a never-ending topic. The inaugural session of the Forum within the framework of the CAEXPO and CABIS not only confirms the increasingly closer international connection and supply between China and ASEAN in the field of bulk commodities but also makes us to believe that， in the future， with the assistance of the Belt and Road Initiative and the RCEP， both sides will welcome more cooperation opportunities.