By Ren Xingzhou & Liao Yingmin, Institute of Market Economy, DRC

Research Report, No.139, 2020 (Total 5883) 2020-6-10

Abstract: As COVID-19 pandemic has wreaked havoc to the world, the global economy shows evident signs of recession, with industrial chains and supply chains impacted. In the midst of external downturn, China’s economy is facing with high downward pressure. The country’s real economy is suffering from shrinking market demand, inadequate funds, piled inventory, volatile prices and unstable industrial chains and supply chains. In response to these difficulties and risks, it is imperative to help businesses steer clear of them by following the requirement made by the central leadership to “anchor the industrial and supply chains”. Futures market has the functions of price discovery, hedging and risk management. Therefore, the futures market needs to play its due role for real-economy businesses in providing effective hedging and risk management mechanisms, innovating and diversifying service modes, and anchoring both up-stream and down-stream supply chains of commodities, in a bid to ease the difficulties faced by these companies.

Keywords: futures market，commodities, industrial chain, supply chain, easing difficulties