China’s oil market is sending alarm signals, but signs of resilience should concern US officials ahead of President Donald Trump’s summit with Chinese leader Xi Jinping in Beijing this week.
After rising to record highs last year, China’s crude oil imports suddenly took a U-turn in April and fell to their lowest level since 2022. That’s no big surprise, given the heights oil prices are reaching these days. And it’s exactly the pain point Trump will aim to leverage in his meeting with Xi: China, as the world’s top oil importer and Iran’s biggest crude customer, arguably has both the motivation and the influence to push Tehran to a more favorable negotiating position.
It’s become an article of faith among Trump allies that US interventions in global energy markets over the past year amount to a pressure campaign against China; the country is “in a world of hurt” after losing some access to discounted Venezuelan, Russian, and now Iranian, oil, Rep. Keith Self (R-Texas), said on Newsmax last week. But that doesn’t appear to be true.
Beneath the hood of the topline import figures, domestic oil demand has remained strong, with only a “modest” dip in March and April, the International Energy Agency reported, mostly due to petrochemical factories switching to coal. An initial ban on refined fuel exports from Chinese refineries was quickly loosened, an indication that state planners don’t foresee critical shortages. Thanks to the proliferation of EVs, China’s transport sector is far less oil-intensive than others in Asia. Just prior to the war, China’s domestic oil production reached a record high.
In sum, the message seems to be that, having planned for a moment like this, China’s sensitivity to global oil disruptions isn’t great enough, at least so far, to merit turning against a key ally.
“China is doing just fine,” Melanie Hart, senior director of the Atlantic Council’s Global China Hub, told reporters yesterday. The war “is not putting the screws on China from an energy perspective.”
Indeed, the vast scale of China’s buying power may actually help Xi undermine one of Trump’s usual trade maneuvers: Badgering countries to buy more US oil and gas in exchange for better tariff terms. Trump has often badgered countries to buy more US oil and gas in exchange for better tariff terms. One such deal he struck with Beijing during his first term was derailed by the pandemic. If recent trends are an indication, securing another one this time could be a hard sell.
If China does agree to buy more US energy, that could backfire by accelerating the drawdown of US reserves and driving up prices at home. As Bloomberg’s Javier Blas observed, the most helpful thing China could do at this point for global oil prices would be to continue to buy less. In other words, China’s enormous influence as a buyer of oil affords it nearly the same level of “dominance” over global prices that Trump is fixated on achieving as a producer.
So while Xi would surely like to see the Strait of Hormuz reopened, he seems to be in a relatively advantageous position for the short term — and longer term, the more the war drags on, the more other countries will look to Chinese electrification tech as a long-term security buffer.