Over the past few months, China has been on a crusade like mission to secure resources across the world. And recently, the Wall Street Journal published that China now imports 8% more oil now form last year, but at the same time, removing subsidies on oil. Both the increase in imports and decrease in subsidies does not mean demand is higher, all it means is supply is increasing. So although subsidies are removed, prices can stay the same all attributed to the Chinese Government in the background buying more oil and manipulating the price per liter. As you can see from this chart from The Economist, prices in China are still higher than US prices which I might add, are affected by tax breaks given to American oil companies. And looking back to 2008, The Chinese held prices below that of the US, which "encouraged [Chinese] households and firms to guzzle more oil, pushing global prices higher."
Some benefits of this system is that it stabilizes growth and when oil prices in the market get too high, the government is able to make the price of oil more affordable to the average consumer.
The downside to this method is that artificiality dictating prices in such a large country greatly affects oil prices in other countries, as well as violating basic economic principals of free trade (but we won't get into that).
Do you think what China's manipulation of the oil price is beneficial to the growth of a country or do the downsides outweigh the benefits? Please comment.
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