CN : Strategy - The central government’s tone against surging commodity prices has turned much tougher

During the State Council executive meeting on 19 May, the central government mentioned that it will pay “a lot of” attention to the adverse impact of surging commodity prices. The tone turned much tougher compared with that in the communique released after the Politburo meeting on 30 Apr. The State Council mentioned some immediate measures to tame commodity prices, including increasing export tariffs and lowering import tariffs. It remains to be seen whether the measures will work, as many commodities are priced globally. However, it should not be a surprise to see profit-taking for commodity stocks in the near term, given their huge gains YTD and higher policy risks.

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