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China Set to Revamp Commodities Markets

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The much-anticipated move would serve a number of purposes, including China’s long-held ambition to more directly influence the price of the imported commodities on which its economy relies. It would also help burnish the yuan’s appeal as an international currency to rival the dollar in financial markets.

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The much-anticipated move would serve a number of purposes, including China’s long-held ambition to more directly influence the price of the imported commodities on which its economy relies. It would also help burnish the yuan’s appeal as an international currency to rival the dollar in financial markets.

China is on the cusp of its biggest move yet to open up its vast commodities markets, after the Shanghai Futures Exchange unveiled an internationalisation plan to streamline access for overseas investors.

The country’s biggest raw materials bourse is soliciting views on a proposal to let participants post foreign exchange as collateral for yuan-denominated trades, according to a statement on Tuesday. Restrictions on foreigners and their capital are an oft-cited reason for China’s failure to punch its weight in international markets.

The much-anticipated move would serve a number of purposes, including China’s long-held ambition to more directly influence the price of the imported commodities on which its economy relies. It would also help burnish the yuan’s appeal as an international currency to rival the dollar in financial markets.

SHFE, set up in 1999 and run by China’s government, offers trading in contracts from copper and steel to gold, crude oil and petrochemicals. The country is the world’s largest buyer of raw materials, but benchmark pricing for key commodities is usually set elsewhere, including New York and London for oil, London for base metals, and Singapore for iron ore.

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Chinese authorities have pledged to expand cross-border financial services in Shanghai, the nation’s premier commercial hub. A plan released in April vowed to help international investors become more deeply involved in trading platforms, and included a push to expand yuan-denominated pricing at the Shanghai Gold Exchange.