China's quest for pricing power: financial hierarchy, autonomy and commodity futures markets

Commodities are crucial for understanding China's economic rise, but the financial aspects of commodity markets are often neglected in existing debates. However, commodity prices are increasingly determined through trading in futures markets. Historically, most commodity benchmarks were traded on futures exchanges in New York, Chicago and London (the infrastructural component of commodity pricing), dominated by Anglo-American financial institutions (investors), denominated in US dollars (currency), and supervised by regulators in the United States or United Kingdom (regulatory). The article develops the concept of (commodity) pricing power as resulting from a combination of these four different sources of power that further solidifies US financial hegemony, while putting China into a subordinate position. It provides a novel perspective for understanding the politics of commodities, as well as global finance and China's role therein. Based on policy documents, financial data and more than 200 expert interviews, the article explores China's efforts towards establishing its own commodity benchmarks, tracing how (a lack of) commodity pricing power emerged as a problem for Chinese authorities and was subsequently pursued as a national development strategy for gaining more autonomy from US-dominated markets. While we often perceive China as a powerful actor, the article illustrates how the market-based, financialized set-up of international economic affairs can fundamentally constrain China's global influence, even placing it in a position of profound vulnerability.