China's State Reserves Bureau trader shorted copper — a $150M loss the state absorbed

Liu Qibing was the chief trader for the State Regulation Centre for Supply Reserves (SRCSR), the trading arm of China's State Reserve Bureau (SRB). Between 2002 and 2004, he made approximately $300 million in profits for the Chinese government by speculating on copper futures. But in spring 2005, he began shorting copper — and the market turned against him.

By September 2005, Liu had built a short position of 220,000 tonnes of copper at an average price of $3,500 per tonne. When copper prices continued rising, the losses mounted to approximately $150 million. Under pressure from supervisors to recover the losses, he doubled down instead of reporting them. In November 2005, Liu Qibing disappeared from public view.

The SRB initially denied knowing Liu, then acknowledged him and claimed he acted without authorization. The bureau tried to drive copper prices down by auctioning 80,000 tonnes of stockpiles and shipping 50,000 tonnes to LME warehouses in Korea, but traders did not believe the data and prices kept rising. Remaining short positions were extended into 2006 and 2007. Liu Qibing was prosecuted, and the case concluded in March 2008.

Doubled down to recover $150M in losses instead of reporting them, then disappeared; the state absorbed the loss and he was prosecuted.

Liu was the only authorized trader in SRCSR's futures group for over a year — there were no checks and balances on his positions.

His supervisors pressured him to recover losses by doubling down instead of reporting them, the classic rogue trader pattern.

SRCSR had no mandate to speculate for profit, yet Liu made $300M doing so without any regulatory oversight — the CSRC did not supervise derivatives trading by other government agencies.

When a trader is the only person authorized to trade, there is no risk management — only trust. Liu made $300M and was a hero; the same lack of oversight became a scandal when he lost $150M.

The SRB copper scandal exposed a gap in China's regulatory system: the CSRC did not supervise derivatives trading by government agencies. The prosecution was the legal consequence, but the organizational failure was never addressed. The SRB's attempt to manipulate copper prices by releasing stockpiles failed because market participants did not believe the data. The case remains one of the largest rogue trading incidents in the metals market.