The spillover effects of China's industrial growth on price changes of base metal

This paper uses SVAR model to examine the spillover effects of China's Industrial growth on the overall price changes of base metal, and individual price changes of six base metals, based on monthly data from 1999m01 to 2016m06. A novel finding is that China's industrial growth not only has direct lagged positive effects, but also has indirect contemporaneous positive effects on price changes of base metals except zinc. Therefore, China's real activity has large positive composite effects on prices of base metals excluding zinc. In addition, we find that in comparison with the scale of the positive effects of Chinas real activity, US dollar exchange rate has much larger impacts on base metal prices. Thus China's influences on base metal prices are probably exaggerated.