The world is used to seeing China as an importer of raw materials and an exporter of manufactured goods, but a change is occurring that has global implications for commodities. While China is still the worlds biggest importer of commodities, the nature of its exports are changing. The big growth in exports this year has been in semi-finished products, most of which fit into the broad definition of commodities. While not raw materials, these include steel, aluminium products and refined fuels. What is happening in China is that as the country has overbuilt capacity in heavy industries, it is now being forced by economics to seek export markets for intermediate commodities that had previously been consumed at home. The old dynamic, where Chinese demand for raw materials forced up commodity prices while Chinese exports led to lower prices for manufactured goods, is breaking down. It now appears that Chinese exports of semi-finished commodities are driving down the price of those goods and threatening industries that produce them in other countries. At the same time Chinese demand growth for raw materials is slowing just as producers of these commodities, such as iron ore and coal, have ramped up output in the apparently mistaken belief that Chinese consumption would rise for several years to come. Chinas exports of steel products have jumped 27.8 percent this year to 52.4 million tonnes in the first six months of the year from the same period in 2014. If this pace of exports is maintained for the whole year, it means that about 12 percent of Chinas total steel output will be exported. At the price received for steel exports in June of US$575 a tonne, first half steel shipments were worth about US$7.3 billion. Aluminium has also seen a massive increase in exports, with shipments of semi-finished products leaping 44.3 percent in the first six months of 2015 over the same period a year earlier. Exports totalled 2.22 million tonnes and the June customs value was US$3,364 a tonne, giving a total of around US$7.5 billion for first half exports, at June prices. The major oil products exports in the first half were jet kerosene (up 19.9 percent to 5.537 million tonnes), gasoline (up 14.6 percent to 2.544 million tonnes) and diesel (down 9.6 percent to 1.971 million tonnes). Putting the three together and using Junes customs data, the value of exports of these three refined fuels was about US$6.1 billion in the first half. Commodity exports gaining Putting the value of oil, steel and aluminium exports together gives a first half total of about US$21 billion, or about 8 percent of Chinas total first half trade surplus of US$263 billion. If 8 percent doesnt sound that significant, consider that the trade surplus for the first half of 2015 was almost 2.5 times the amount for the same period last year. The rise in the trade surplus was driven largely by lower imports, with the slump in commodity prices playing a large part in that. The trend of higher exports of semi-finished commodities may have some way to run yet, especially if domestic demand growth in China continues to disappoint. Already other nations are feeling the pressure of Chinese exports, with steelmakers across the globe clamouring for protection. Most at risk would be companies in developing nations close to China, such as India and countries in Southeast Asia. Many of these countries are trying to replicate the Chinese economic story by rapidly expanding their industrial bases, but they lack the economies of scale to compete with Chinese semi-finished commodities. Even developed nations, such as Australia and those in Europe, face increasing risk of further loss of industries. Australias remaining aluminium smelters appear at constant risk of being closed, as does its remaining steel manufacturing, especially since all vehicle production in the country will end by 2018. Its likely that affected industries will lobby for protection from Chinese exports, but this may end up being self-defeating as protectionism is unlikely to lead to long-term economic success.