Oil Price Shock Tests China’s Bet To Insulate Its Economy
- Beijing set an ambitious GDP target of 5.5% for this year
- Low CPI and possible Russian oil discounts could help
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Soaring oil prices triggered by possible sanctions on Russia’s energy supplies will make China’s already-challenging economic growth target for the year even tougher to achieve.
Beijing is betting that its large domestic energy supplies, close ties with Russia and low consumer inflation will insulate it from surging crude prices. But, with oil costs now 40% higher than they were two weeks ago, Chinese businesses are facing a profit squeeze, consumers’ spending power could be hit, and global growth will take a knock, curbing demand for Chinese-made goods.