Abstract
This paper uses time point decomposition methods of fluctuation factors to analyze the role of China's real economic activity in oil price fluctuations. The research results show that demand shocks attributable to Chinese economy could not affect oil prices in recent years, particularly the hikes in 2008, and they further find that oil specific-demand shocks and the demand shocks of the Organization for Economic Cooperation and Development (OECD) had notable effects on the real price of crude oil. As an alternate explanation, we reveal this phenomenon using the proportion of China's oil consumption to total global consumption. Furthermore, this paper finds that the rise in oil prices was caused by the oil specific-demand shocks but that the fall in oil prices was caused by the oil specific-demand shocks and the OECD demand shocks.
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