Influences Of International Oil Price Fluctuation On China’s Economy: Theory, Mechanism And Countermeasures

Oil is special product，it has the commodity, financial and political triple properties，which determine the complexity of its pricing mechanism and fluctuation principle. It is anew path for the theoretical analysis of the international oil price fluctuations, that seeking tothe theoretical basis of the international oil price fluctuations from the properties of the oil.Commodity attribute is the basic characteristic of oil, the exhaustible resource model, demand-supply model and market structure model are analyses of oil price fluctuation based on theoil market supply and demand. Financial attribute is an important characteristic of oileconomy modernizing, based on different petroleum-financial instruments, the theories offutures markets, petrodollars and dollar exchange rate control can explain oil price fluctuation.The political attribute of the oil is expressed as the competition and control over oil resourcesbetween the countries, interest groups. In this game, political influence and the threat of warcan cause the oil price fluctuations. According to the history and the present condition of oileconomy development, politics control oil price, finance impact on oil price as a tool, and thecommodity attribute determine oil price in essence.It is a clear theoretical path to analyze the macro-economic impact of international oilprice fluctuations from the total supply and total demand. In total supply, international oilprice fluctuation has an impact on production cost, and show the effect of supply shocks. Intotal demand side, international oil price fluctuation influence the consumption demand andinvestment demand, show the effect of market allocation. And it influence on export demand,as an effect of income transfer. Meanwhile, international oil price fluctuation will affect themonetary policy, attributed to the monetary channel theory.Based on the data from January2003to July2012, the ADF unit root test, Co integrationtest, Granger causality test, VAR Model and Error Correction Model, the paper research therelevance of the domestic and international oil prices, as well as the correlation ofinternational oil price and the China’s price index, valume of import and export, registered urban unemployment rate, GDP. The results show that there is a long-term equilibriumrelationship between domestic and international crude oil spot prices or futures prices, theinfluences of the international crude oil futures prices fluctuations on domestic crude oilprices is stronger than it of spot price, and the influences of the Brent crude oil prices ondomestic crude oil prices is greater than WTI crude oil price. There are long-term equilibriumrelationships of international oil price and the China’s price index, valume of import andexport registered, urban unemployment rate, GDP. There are obvious one-way causal relationsof international crude oil prices with China’s, price index and the registered urbanunemployment rate. There are very obvious causal relations of international crude oil priceswith China’s valume of import and export, GDP, and they are presence of symmetry.As important factor of production, the oil price fluctuations affect the total supply andthe general price level through changes in raw material prices, wages and other productioncosts. The total conduction mechanism affect macroeconomic through the domestic andinternational market. In terms of the total demand, the impact of changes in the general pricelevel of consumer demand and investment demand lead to the market mechanism andgovernment regulation mechanism re-allocation of economic resources, which is theallocation conduction mechanism. The international oil price fluctuations trigger theadjustment of monetary policy to impact on macroeconomic through the interest rate channeland exchange rate channel. Adjustment of interest rate affects the demand of investment andconsumption, and the adjustment of the exchange rate impact on macroeconomic throughforeign trade and financial system.A lot of outstanding problems exist in development of China’s energy, including resourceconstraints exacerbated, lower energy efficiency, and the contradiction in systems andmechanisms. Meanwhile the development of China’s energy face severe challenges asintensified competition in the international energy resources, the development of nuclearpower and new energy blocked, adjustment on the global energy pattern and the U.S. strategicadjustment. We need focus on the long-term development of the national economy, andearnestly implements various strategic plans developed at the18th CPC National Congress, overall situations of domestic and international, rethink China’s energy development strategy,effort to increase the endogenous dynamic of the energy security, improve energy efficiency,construct energy strategic reserve system and energy financial system, strengthen theinternational energy cooperation, and implement the strategy of marine economic powerfulnation.