Advertisement
Some would tell you that China is impervious to the oil shock, but they would be wrong.
- Saudi Arabia is known as the “swing exporter” in the oil market because it can either pump out more or less oil in response to shocks, but China has emerged as the world’s first oil “swing importer.”
- China cut its average daily waterborne oil imports by the same amount as the combined oil consumption of Germany, France and the UK in May, without suffering economic harm.
- China’s ability to smooth out large supply disruptions will lower the geopolitical risk premiums that traders add to oil prices, and also makes China far less vulnerable to any oil embargo via naval blockade.
Really? China looks like it took the blockade in a head-on blow to growth. Check out what’s been smashed by slashing oil imports.
The full text of this article is available to MacroBusiness subscribers
Cancel at any time through our billing provider, Stripe
About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
Advertisement