Shanghai – the New Chicago

A report in China Daily said that Shanghai wants to transform itself into a global commodities trading center. Indeed, the Shanghai Futures Exchange has already introduced several new products, including a silver futures contract, and is working on a crude oil futures platform. The paper said the Exchange is about to begin test trading of the oil system. This comes as Hong Kong Exchanges and Clearing (HKEx) awaits regulator approval in Britain on its takeover of the London Metal Exchange. HKEx was recently described by China Daily as having “close ties with the regulators in Beijing.” Now Meishan Port south of Shanghai has begun discussions with the LME to be listed as a metals delivery port and operate as an LME-approved warehouse. China has until now banned foreign-owned metals warehouses but the Hong Kong takeover of the LME – plus the desire by Chinese companies to gain more control of storage – is seen as likely to ease the way for a policy change. China is likely to expand its influence and control into the commodity realm. Chinese ports, including Dalian and Shanghai, will most likely open LME warehouses.

The growth of the Dalian Commodity Exchange in the country’s north is now planning to introduce an iron ore futures contract. Dalian is already the world’s leading exchange for trading soybean futures displacing Chicago. When we look at critical metals on which the US is 100% import-dependent, 21 come from China. Indeed, China produces 90% of the world’s Rare Earths, 80% of the world’s antimony, magnesium metal and tungsten; and between 50% and 80% of another 15; barite, bismuth, cement, fluorspar, fused alumina, germanium, indium, lime, magnesium compounds, mercury, natural graphite, natural zeolites, pig iron, silicon, and wollastonite.

Our computer model has been forecasting that China will be the new financial capital of the world by 2032. Everything is still moving in that direction. If you are not in Asia, you will be left behind. The West is still struggling to maintain political power. Governments will NOT reform and unfortunately the West has to learn the same lesson as did Russia and China – Marxism just does not work and the sooner the West gets that through its thick skull, the more stable the world economy will be. But unfortunately, the West just has to Crash & Burn for politicians are all about holding on to personal power rather than saving their nation.