It may be that the previously near-automatic feed-through of increased China economic growth on oil prices is not as marked this time around as in previous years
Although this unrestrained surge of COVID infections has caused an even deeper impact on activity in the near-term - which Eugenia Victorino, head of Asia strategy for SEB in Singapore exclusively toldlikely dampened to 2022 GDP growth of 2.8 percent – China’s annual Central Economic Work Conference signalled in the middle of December that boosting growth will be the priority in 2023.
With COVID infections having peaked on the east coast, and although a difficult time lies ahead for central and rural China, activity will begin to accelerate by March at the very latest, thinks Rory Green, chief China economist for TS Lombard, in London. “We noted in December that China was looking to kick-start consumer activity and sentiment in 2023, a message emphasised in [Premier] Xi Jinping’s New Year speech,” Green exclusively told OilPrice.
This said, it may be that the previously near-automatic feed-through of increased China economic growth on oil prices is not as marked this time around as in previous years. “China’s central leadership is relying on reopening and the removal of negative policies - property, consumer internet, and geopolitics - rather than aggressive stimulus, to drive activity,” Green told OilPrice.com.
For oil prices, he underlined, it is apposite to note that transportation accounts for just 54 percent of China’s oil consumption, compared to 72 percent in the US and 68 percent in the European Union. Last year, net oil and refined petroleum imports were 8 percent lower by volume than the pre-pandemic peak, with infrastructure and export-oriented manufacturing partly offsetting lower mobility and less property construction.
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