New Kid on the Block? China vs the US in World Oil Markets

Over the past three decades, China has rapidly emerged as one of the most important economies in the world. Three decades ago, China was the 11th largest economy by world share of GDP, and in 2019 the country has become the second largest economy in the world. Following this rapid expansion, China is now the world’s largest net importer of petroleum and other liquid fuels.

In the new CAMP working paper 02/2019, Cross, Nguyen and Zhang compare the contributions of demand shocks from China, the US and the rest of the world. They ask the following questions:

  1. Have demand shocks from China or the US had a greater impact on the real oil price over the past two decades?
  2. Are oil prices more responsive to demand shocks from the US, China or the rest of the world?
  3. Was the recent surge in demand for China large enough to cause the oil price rice of mid 2003-2008?

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