A Study Of The International Market Competition Strategy Of China's Resource Products

Since the reform and opening up especially 1990s of the last century, people all over the world fix their eyes on the success of China's economic development. China has become the secondly greatest engine of the world's economic development. But as a big buyer and big provider of numerous commodities in the world market, China now is besieged on all sides. On the one side, China take absolute market share in the import markets of several commodities such as coke and rare earth, but China hasn't got correspongding price superiority. On the contrary, the prices of these commodities are in a posture of long-term dropping. On the other side, the prices of the world's primary commodities such as iron ore and oil, which China has to import, rise to a newly high level these years. China is suffering a lot while importing at high prices. China factor does not bring the suited benefit but great loss, which is inconsistent with basic economics knowledge. We call it as "China great market absurdity".This article begins with the "China great market absurdity". It studies the cause and the solution of the absurdity. Firstly, we check the existence of the absurdity by studying China's market power in the commodity market. The results about the coke and the rare earth tell us China's coke only has limited pricing power and China's rare earth nearly has no pricing power, which does not match the great market share China has. The unit price of the oil from Middle East to China is long-standing one dollar per barrel higher than that to the Occident. Therefore China have to pay added hundreds million of US dollars annually, and this is the so-called "Asia Premium", which shows China does not gain the suited benefit it should have and "China great market absurdity" does exist.The existence of "China great market absurdity" is due to the market structure of the international commodity. This article shows the monopolistic character of the two markets. This determines the benefit sharing and the monopolistic side can own more benefit, but the other side is lack of pricing power although has some market shares. The market model shows if one country takes its decision in the three dimensions, it should consider its other strategies to maximize the value. For example, the country can uses its advantages to constrain the counterpart's choices to extend its own choices.This article takes the oil as the example to study the theory of the international oil price formation. The result shows that the international oil price is made up of a marker crude oil price and a premium or a discount. The marker crude oil price always refers to the future prices in the biggest future exchange. This article does econometric research on the interact mechanism between the spot price and future price of oil in NYMEX, in order to find out the function of future market on the oil price. Then this article does econometric research on the correlation of future agreement prices between Shanghai fuel oil and America heating oil. The results show that NYMEX future price has co-integration relation with the spot prices. They are granger causality to each other and the spot price decides the oil prices predominantly. NYMEX heating oil price and Shanghai fueling oil price have high correlation but the former leads the latter. This article also studies the reliance of China's oil import and brings forward the competition strategy and the sharing pricing power.Several innovative opinions are included in this article which shows how to participate the competition of the international commodity market based on others researches.In the theoretical aspects, this article brings forward the concepts of "China great market absurdity", and then put forwards the causes and the solution to them. This article also includes the market share and the benefit sharing and studies the side lack of pricing power how to use its advantage to extend its own strategy. It also studies the international oil forming mechanism and uses the market power to check the pricing power and provides a new theoretical framework.In the empirical aspects, this article takes the coke and the rare earth as an example and does the empirical researches about the market power and the external competition. The results show that China has only limited market power in the international coke market and almost no market power in the rare earth market. China has to face the "China great market absurdity" in the resource product market. We confirm the existence of the "Asia Premium" in the oil import market by lots of empirical studies and analyse the causes, impacts and solutions.In the solution aspects, due to China's coke enterprises export their products at the cost of the environment, this article puts forward the idea to establish the exchange market of carbon emission for the purpose of constraining the malign competition and improving the profits and mark-ups of the whole industry. Furthermore, this article also puts forward many other new strategies. For example, the establishment of the exchange should conjugate the competition of pricing power. Strengthen the integration of stronger and weaker industries and establish the state negotiation system and the export price league.