How will the plummeting rouble affect China?
- By Chen Boyuan
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E-mail China.org.cn, December 23, 2014
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Good time for Chinese oil importers?
The slumping rouble may be a nightmare for Chinese exporters, but it is good news for oil companies, along with consumers of crude oil products, and industries, such as aviation, and the downstream.
Xi Jiarui, an analyst at 315.com.cn, an online e-commerce platform, said that all the industries in the crude oil sector will profit in the current wave of rouble depreciation. Oil importers will enjoy lower prices, while end users will not have to pay as much. Ms. Xi also said that by raising tax on fuel prices, the local government will generate more revenue.
When the Brent oil price dipped lower than US$60 for the first time in the past five years, Russia, which heavily relies on oil exports, is bound to suffer, evident in its slumping currency.
Although Beijing and Moscow have signed two major crude oil deals since last year, when oil prices were much higher, China will not sustain heavy losses, contrary to the view held by many; instead, the depreciating rouble will bring more benefits to China.
Li Yan, an analyst at the Longzhong Petrochemical Information Network, noted that prices in long-term deals fluctuate to allow both parties to negotiate within a reasonable range; this is why China does not have to stick to a constant price. Apart from importing Russian crude oil at a much lower price, the slumping oil price and depreciating rouble will give China more bargaining power in bilateral business negotiations with Russia.
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