Why the oil shock can be China’s buying moment

WHEN energy markets are rattled, investors tend to sell first and ask questions later. That instinct has weighed heavily on Chinese equities in the wake of the latest Middle East-driven oil shock.

At first glance, the reaction seems intuitive. As the world’s largest oil consumer, China is often seen as highly exposed to rising oil prices. While this is true in absolute terms, it is an increasingly misleading way to assess risk.

A shrinking dependence on oil

The more relevant question is not how much oil China consumes, but how dependent its economy is on oil.