Analysis Of The Interaction Between Oil Price Fluctuation And China's Economy

With the rapid development of the world economy,the demand for energy is also growing.Oil is the most widely used energy in the world so that it plays an important role in the global economy.China has become the world's second largest economy.Its oil supply is heavily depending on international imports.International oil prices have been in frequent fluctuations in recent years.We should find out the reasons for the formation of oil price fluctuation and the negative impact of volatility on China's economy,which is conducive to the healthy development of China's economy.In this paper,we will not only review the history of oil price volatility,but also analyze the factors that can cause the fluctuation of the oil price.We will use the econometric model to quantitatively analyze the relevant variables.We mainly use three models:one is the time-varying parameter vector autoregressive(TVP-VAR)model,which can analyze the relationship between WTI futures price,WTI spot price and Daqing crude oil spot price.Vector autoregressive(VAR)model is employed to analyze the correlation between WTI spot price and China's GDP and the correlation between WTI spot price and China's CPI,PPI.TVAR model is used to analyze the impact of rising oil prices and declines on China's GDP,CPI and PPI.The results show that WTI futures market is in an absolute position.WTI futures prices lead to WTI spot price development;Daqing spot prices have little impact on WTI futures prices and spot prices of WTI.The results show that China is lack of pricing power in the international crude oil market and it is the price taker of the international crude oil market.WTI spot price fluctuations have a certain impact on China's GDP.The rise in the spot price of WTI will drive up the consumer price index(CPI)and producer price index(PPI)in China in the short term.We should not only accelerate the construction of China's strategic oil reserve system when the oil prices are low,but also actively promote the establishment of China's crude oil futures market to improve our pricing in the international crude oil market.