China feasts on global commodity glut, makes $460 billion in gains

The pain from the rout in global commodity prices is sweeping through nations from Brazil to South Africa. The biggest beneficiary? Arguably it’s China, the nation often blamed for driving prices lower due to its slowing economic growth.

China’s annual savings from the commodities rout amount to $460 billion, according to calculations by Kenneth Courtis, former Asia vice-chairman at Goldman Sachs Group. About $320 billion of that is from cheaper oil, with the rest from other energy, metals, coal and agricultural commodities.

Benefits are rippling through the economy, pushing down or steadying prices of everything from home heating and petrol prices to the cost of raw materials at factories. That’s also boosting China’s efforts to recalibrate its economic growth model away from a reliance on heavy industries and investment toward consumption and services.

"It’s shown up in low consumerprice inflation and more stuff that households have been able to buy," said Louis Kuijs, the head of Asia economics at Oxford Economics Ltd. in Hong Kong and a former World Bank economist in Beijing. "Manufacturing companies would have had even worse profit developments if it had not been for those low commodity prices."

China saved $188 billion in import costs last year on a basket of 10 commodities ranging from oil to soybeans and natural gas, the Ministry of Commerce said in a statement this month.