• Paul Smith and Tatiana Lyubimova

What's Driving China's Crude Oil Demand?

Updated: Apr 18, 2021

Over the past decade, China's economy has exploded. As of 2019, its GDP was thought to be about $12 billion, putting it behind the United States as the world's second biggest economy. As a result, commodities trading in China has a direct effect on the entire world's economic picture.

Oil is one of the most important commodities driving the Chinese market. China is considered the number 1 importer of crude oil; their needs account for 17% of the world's oil trade. What's driving that demand though? How can commodity traders get an accurate picture of China's oil consumption?

Why is it Important to Capture Data Directly in China?

Data from worldwide sources, like the UN, are a good place to start, but in order to get the most reliable information, one has to go directly to the source. It is essential to get as much data from inside China as possible.

Transparency is at the heart of Chinese commodities data. Much of the country's metrics are sourced directly from government agencies whose goals directly align with the Chinese government. The farther away from the source data you get, the more likely other nations and their biases may affect the financial information in profound yet critical ways.

What are Key Data Sources for Predicting Demand?

It's essential to cut through political commentary and get the most accurate data possible when dealing with commodities trading. In the spirit of accuracy, here are the best Chinese-based sources for gauging oil demand:

  • The CNBS (Chinese National Bureau of Statistics)

  • The General Administration of Customs

  • The Ministry of Commerce

  • The World Bank

  • The Hong Kong Trade Development Council

What Challenges Do Companies Face in obtaining Chinese Data?

By far, the biggest challenge in directly obtaining Chinese oil information is the politicization of data. By its very nature, the Chinese government is bureaucratic; there can be red tape and issues of transparency involved in obtaining verified data directly from the source.

The other problem is China's immense size and diverse population. It's easy for small and systematic reporting errors to snowball into much larger statistical problems, making China's data potentially skewed. A commodities trader working in China with something like crude oil needs to take a comprehensive view of all the data sources available, and most importantly, be skilled at finding alternative data streams.

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