What factors contribute to the mutual dependence degree of China in its crude oil trading relationship with oil-exporting countries?

Abstract

As Chinese dependence on foreign oil increases over years, oil security becomes one of the top concerns of policy makers. China’s initiative in its various crude oil trading relationships is closely related to its energy security. Therefore, it is helpful to explore factors that are correlated with Chinese activeness and passiveness in its oi trading relationships. This paper explores factors that possibly affect the position of China in its crude oil trading relationships which is quantified by the mutual dependence degree (MDD). The higher the MDD, the more active China is in its crude oil trading relationships. The results show that China has greatly diversified its crude oil import sources and has occupied an active position in its trading relationships with its major oil suppliers. In general, MDD is primarily determined by the oil consumption of China and the oil production of the oil-exporting country. In other words, one’s initiative in the oil trading relationship depends on how significant one is as an oil demander or an oil supplier.