The United States imports 30% of the oil it consumes, while China imports 70%. Although the drop in oil prices has multiple economic consequences for both countries—some negative and others positive—it is very clear that it represents a greater cost reduction for China than for the US. The competition between these two powers for global hegemony is one of the essential keys to understanding various international events, from wars to economic relations.
The decision to increase production and thereby lower prices has been mainly driven by Saudi Arabia. Many reasons will be aired to justify this move—for example, punishing those who break the rules, such as Iraq. However, other motives will be concealed, such as the benefit this measure represents for China, which has increasingly close relations with Saudi Arabia.
In June 2023, just months before the resurgence of extreme violence in Palestine, China signed an investment agreement with Saudi Arabia worth around 10 billion dollars. In November of the same year, when the war had just broken out, they signed a currency swap agreement worth around 7 billion dollars.
Trump had also called for a reduction in oil prices to help reduce the deficit by paying less for the 30% the US imports. However, the US benefits less from this measure than China does. Some will claim that it was Trump’s request that pressured Saudi Arabia to push this measure. Part of that analysis will come from those who find it easy to base their arguments on the belief that the US always dominates the world and forces decisions on all other countries. They are increasingly mistaken, among other reasons, because there is now another power on the rise, while the former global dominator is comparatively declining.
Quality analysis of the 21st-century economy cannot be made individually or solely through the lens of a particular ideology. They can only be made through continuous dialogue with the growing plurality of voices that interpret and construct the contemporary world. For example, it is interesting to analyze on Chinese social media platforms the emerging strategies to circumvent US tariffs. But that would be a topic for another article.
Emeritus Full-Professor at the University of Barcelona. Number 1 researcher in Google Scholar Scientific ranking in the categories of "Gender Violence" and "Social Impact". Director of REVERS-ED.