Who buys the world’s stuff? China is often called ‘the world’s factory’; is there a corresponding world’s supermarket?

Political economist Ho-fung Hung has argued that the global economy relies heavily on US demand. If, say China, Japan and Korea made a pact to increase trade amongst themselves, who, he provocatively asked on Twitter, would they sell to. Would they export to Mars?

Beneath this tongue-in-cheek remark lies a serious economic issue. A lack of domestic demand has long been a glaring weakness in China’s economy, something its leaders are (arguably belatedly) now keen to address.

Chinese demand has, of course, been pivotal to the global economy this century. The commodities supercycle of the 2000s, driven by rapid Chinese economic growth, saw buoyant sustained commodity prices (intermittent crises notwithstanding). Over a two-decade period, a World Bank paper points out, “China accounted for four-fifths of the increase in global metals demand and half of the increase in global energy demand over this period”.

Some investors have been hopeful for a fresh surge in commodity demand, spurred by the green energy revolution and investments in energy-intensive technologies such as AI data centres.

However, a global recession could dampen these expectations. Moreover, as US tariffs take effect, a critical question arises: Who will absorb the supply of goods that the world continues to produce?

Supply, demand, and uncertainty

We recently considered the complex considerations that influence investor appetite for commodities. Investors may turn to gold because they see it as a safe asset, a hedge against inflation and uncertainty. Whereas demand for metals such as copper and iron is broadly driven by expectations about economic growth.

So far, so obvious. The subtlety comes from spotting opportunities and risks as market dynamics shift.

As Citi’s Global Head of Commodities Research told Bloomberg, tariffs have so far been bullish for copper, with stocking, pre-buying and a move to keep more scrap onshore. However, that increased demand could fall in the next few months, due to the direct effect of tariffs on copper imports and the potential for decreased economic activity in the US and globally.

Copper demand is particularly sensitive to investment rates due to its role in critical infrastructure. However, the broader trend remains: tariffs increase the cost of commodities and goods, while their inflationary pressure can simultaneously suppress demand. Investors will need to navigate these conflicting forces carefully in the months ahead.

Safe harbours or an appetite for risk?

In the immediate aftermath of Trump’s tariff announcement, we saw the JPY rise, while demand for gold remains strong.

This raises key questions:

• Will investors continue flocking to traditional ‘safe-haven’ assets, or is the risk landscape undergoing a fundamental shift?
• Will the U.S. dollar (USD) gain or lose ground as confidence in the U.S. economy fluctuates?
• Can cryptocurrency live up to its reputation as ‘digital gold’?
• And what are the less obvious opportunities for speculation amid global volatility?

All investors will have different appetites for risk and differing strategies to maximise returns. One thing is clear: as uncertainty increases and the trading environment rapidly evolves, a reliable multi-asset trading platform becomes essential for traders to effectively implement their strategies.

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All opinions, news, research, analysis, prices or other information is provided as general market commentary and not as investment advice and all potential results discussed are not guaranteed to be achieved. The information may have been derived from publicly available sources, company reports, personal research, or surveys. Past performance is not indicative of future performance. Trading carries risk of capital loss. Service available to professional clients only.