China has announced plans to boost strategic commodities reserves of crude, strategic materials and farm goods in significant quantities, officials said. The stockpiling is set to begin in 2021, although China-watchers say it has already been going on for quite some time.
This is ostensibly being done so that China can withstand any shocks to supply chains (like the one that happened this year due to Covid19) or a significant deterioration in trade relations with the U.S. and Europe, for example.
It is apparently part of the shift to “internal circulation,” or greater self-reliance, which is part of a five-year plan continuing until 2025.
But as Michael Every of Rabobank asks: “What possible disruption could be on the horizon that would require China to have a large enough buffer of all conceivable inputs –in remote inland areas to boot– that it needs to use up its precious USD reserves in a bulk splurge now?”
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