NCPA - National Center for Policy Analysis

China Leads the World in Oil Imports

June 9, 2015

Although data opacity makes objective analysis difficult, market observers reported in April that China has surpassed the United States as the world's largest oil importer.

Keith Johnson wrote in Foreign Policy on May 11, 2015, "… China's continued and, indeed, deepening reliance on volatile regions for the world for energy supplies, especially the Middle East, points to continued security vulnerabilities for Beijing for decades to come." The recent South China Seas tensions confirm analyst observations that Beijing has strategic concerns surrounding safe hydrocarbon passage through the Malaccan Straits. China is taking advantage of lower priced crude today and ample crude tanker supply to build offshore and onshore reserves.

As the yuan goes global and stronger, crude oil priced in U.S. dollars becomes cheaper, sparking a Chinese hydrocarbon consumption growth rate increase. The possible launch of the Shanghai International Energy Exchange this year could induce greater investment in Chinese crude hedging, which when combined with a more liquid and stronger yuan could lock-in consumption growth.

Unlike Saudi Arabia, China currently is a net exporter of petrochemicals. China's rapidly increasing investment in downstream petrochemical refining and manufacture gives it the flexibility to export product while simultaneously meeting increasing domestic demand for both commodity and bespoke chemical products. China is now is the "fastest growing petrochemical industry worldwide."

China is embracing crude oil and natural gas consumption at a rapid pace. Recognizing the need to accommodate domestic lifestyle changes, Chinese leadership is hedging its geopolitical risk by growing a strategic crude oil reserve and increasing its natural gas import ability. Building out its petrochemical refining infrastructure while accommodating consumer demand for gasoline and diesel vehicles presage significant and long-term growth in Chinese demand for imported oil and gas.

Source: Tom Morgan, "China Now World's Largest Oil Importer; Effect on Global Market, " Forbes, June 8, 2015. 

 

Browse more articles on Environment Issues