The impact of climate policy uncertainty on commodity futures markets: a geopolitical perspective on climate change

Abstract This study investigates the impact of U.S. climate policy uncertainty (USCPU) and China’s climate policy uncertainty (CNCPU) on Chinese commodity futures prices, Sino-U.S. bilateral trade, and the financialisation of Chinese commodities from the geopolitical perspective of climate change, employing a nonlinear autoregressive distributed lag (NARDL) model. The results reveal that CNCPU exerts a long-run positive effect on the Chinese commodity market, whereas USCPU generates a short-run negative effect. After the Paris Agreement, China’s energy security has been strengthened, yet its agricultural market remains at a climate-competitive disadvantage, and non-ferrous metals have emerged as a more effective safe asset against climate policy uncertainty than precious metals, the traditional safe-haven asset. Sino-U.S. bilateral trade and commodity financialisation are identified as important channels through which CNCPU and USCPU influence Chinese commodity prices. The findings suggest that climate policy uncertainty has become an implicit geopolitical tool.