For many investors and analysts, China continues to be a main draw. The nation's large population, changing dynamics and fast-growing economy are all hallmarks of the emerging market thesis. However, to support its quickly budding economy, China's hunger for commodities and natural resources continues to increase at a rapid pace. So much so, that executives at mega-miner Rio Tinto (NYSE:RIO) expect Chinese demand for several key commodities to almost double within 15 years. Even with commodity prices rising over the last two years and some Chinese demand already factored in, the long-term argument is still there. For investors, there's still time to profit from China's big three.

TUTORIAL: Economic Indicators To Know

Corn, Coal and Copper
Chinese demand for a variety of various natural resources continues to grow, but the trio of corn, copper and coal could be the best ways for investors to profit from its voracious appetite. Each is seeing tremendous demand growth as the nation needs to feed and provide power for its expanding population.

Power outages and black-outs have become commonplace in the nation as it continues to need more energy to support its population. To support its energy habits, China has emerged as the largest consumer of coal. Burning nearly 10 million tons of the fuel source daily, China currently receives 70% of its energy from coal. Coal consumption in the nation is nearly 3 times that of the United States. Despite efforts to add a variety of renewable energy, long-term demand for coal in the nation is strong. Analyst's estimate that China's thermal coal imports will rise to 200 million tons in 2015 from around 90 million tons this year.

China is also the second-largest consumer of corn. Urban incomes have more than tripled over the last decade and the country's newly emerged middle class has acquired a taste for protein. Corn is the main feed for both chickens and pork, both of which have seen their consumption double as well. China is on pace to purchase 5 million metric tons this year, up from about 2 million tons in 2010. The lack of water and arable land will make China a net-importer of the grain for quite awhile.

As both a component of infrastructure and consumer products, copper remains an important commodity in China. China currently accounts for 40% of world copper consumption and demand for the red metal is expected to grow by 7% this year. Analysts also expect the nation to undergo a large-scale restocking during the second-half of this year.

Playing The Three C's
Despite, the recent debates on whether China will face a soft or hard economic landing, it still needs to power and feed its people. For investors, playing the three C's is a great way to continue to stay invested in China. Adding a fund like the Market Vectors Hard Assets Producers ETF (NYSE:HAP) is an easy way to play the overall theme. However, there are plenty of individual ways to hone in on that exposure.

With coal prices and demand rising in China, the Market Vectors Coal ETF (NYSE:KOL) is still the best way to play the sector. The ETF follows 36 different coal companies including heavyweights like Peabody Energy (NYSE:BTU). For a direct Chinese play, Yanzhou Coal Mining (NYSE:YZC) recently boosted its dividend and reported an EPS gain of 22% in Q1.

Tracking a basket of copper miners, the Global X Copper Miners ETF (NASDAQ:COPX) is a great way for investors to play Chinese demand. In addition, until a physically backed copper ETF launches, the iPath DJ-UBS Copper ETN (NYSE:JJC) allows for investors to play the price of the physical metal.

Finally, with corn demand soaring, agricultural processors like Bunge (NYSE:BG) and Archer Daniels Midland Company (NYSE:ADM) will continue to see impressive gains in the region. The Global X Farming ETF (NASDAQ:BARN) offers a great catch-all play on the sector.

The Bottom Line
With its fast growing economy and enormous population, China's appetite for commodities seems never ending. The trio of corn, copper and coal represent a great long-term proposition as the nation pulls out all the stops to feed and power its people. For investors, adding a position in any of the ETFs listed or funds like the Teucrium Corn (NASDAQ:CORN) makes sense. (For additional reading, also check out How To Invest In Commodities.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  2. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraPro Nasdaq Biotech

    Obtain information about an ETF offerings that provides leveraged exposure to the biotechnology industry, the ProShares UltraPro Nasdaq Biotech Fund.
  3. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Europe Financials

    Learn about the iShares MSCI Europe Financials fund, which invests in numerous European financial industries, such as banks, insurance and real estate.
  4. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Insurance

    Learn about the SPDR S&P Insurance exchange-traded fund, which follows the S&P Insurance Select Industry Index by investing in equities of U.S. insurers.
  5. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Emerging Markets Small Cap

    Learn about the SPDR S&P Emerging Markets Small Cap exchange-traded fund, which invests in small-cap firms traded at the emerging equity markets.
  6. Mutual Funds & ETFs

    ETF Analysis: ETFS Physical Platinum

    Learn about the physical platinum ETF. Platinum embarked on a bull market from 2001 to 2011, climbing to record prices along with other precious metals.
  7. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Turkey

    Learn about the iShares MSCI Turkey exchange-traded fund, which invests in a wide variety of companies' equities traded on Turkish exchanges.
  8. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  9. Mutual Funds & ETFs

    ETF Analysis: Guggenheim Enhanced Short Dur

    Find out about the Guggenheim Enhanced Short Duration ETF, and learn detailed information about this fund that focuses on fixed-income securities.
  10. Mutual Funds & ETFs

    ETF Analysis: iShares US Oil&Gas Explor&Prodtn

    Learn about the iShares U.S. Oil & Gas Exploration & Production ETF, which provides an efficient way to invest in the exploration and production sector.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  3. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  4. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  5. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  6. Lion economies

    A nickname given to Africa's growing economies.
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  4. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  6. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!