China has released its GDP data for last year, and despite the oil markets eagerly anticipating it, the news has failed to trigger any substantial movements in oil prices.
China is the largest importer of crude oil, so any economic expansion in the nation is an indicator of increased demand, which could force oil prices up. Nevertheless, the data revealed that the Chinese economy grew by 3% in 2022, triggering mixed reactions. On the one hand, this is well below the 5.5% the Chinese Government had been targeting, as well as the lowest reported GDP growth in almost half a century. On the other hand, growth in the final quarter beat expectations, suggesting that the country’s economy may recover this year.
This situation led to the two major crude oil benchmarks, West Texas Intermediate and Brent Crude, initially moving in different directions, albeit only modestly. The price of crude oil heavily influences the cost of transport fuels, but it can also affect the prices of derived goods like Mobil compressor oil.
Speaking to the Financial Times, China finance expert Eswar Prasad from Cornell University said:
“The Chinese economy is at a pivotal point, with disruptions from the protracted zero-Covid policy and its abrupt reversal likely to give way to a resurgence of at least moderate growth by Chinese standards.”
He added that as the country left this problematic period, the momentum for growth would mainly depend upon the sort of interventions that the Chinese Government makes to stimulate the economy.