『Abstract
The integration of China into the world oil market is an important
issue for at least two reasons. First, the influence of the country
on the world oil market is dependent on the level of the integration.
Second, integration into the world oil market means that China
is opening itself up to potential disturbances in the world market
and this leads to significant energy security concerns for the
country. The aim of this paper is to investigate whether or not
China is an integral part of the world oil market. By reviewing
the relevant trade and pricing policies of the Chinese government
as well as the behavior of the Chinese national oil companies,
we find that China is actively engaging itself in the world oil
market. Our time-series results show that the Chinese oil price
is cointegrated with the major oil prices in the world and a high
degree of co-movement between the prices is found. Causality between
the price pairs is found to be bi-directional in most cases. The
empirical results suggest that China is now an integral part of
the world oil market.
Keywords: Oil market integration; Chinese oil policy; Causality』
1. Introduction
2. China and the world oil market
2.1. China's energy security
2.2. Expansion and diversification of Chinese oil trade
2.3. Internationalization of national oil companies
2.4. Internationalization of domestic crude oil prices
3. Empirical analysis
3.1. Shipment based analysis
3.2. Price based analysis
3.3. Data and unit root tests
3.4. Cointegration
3.5. Recursive estimation
4. Concluding remarks
4.1. Conclusions
4.2. Interpretations
References