Goldman Sachs Research Report: In this area, China is more resilient than the United States.

【By / Observer Network, Liu Bai】As fighting in Iran continues to roil global energy markets, a Goldman Sachs strategist said that China’s economy is “more resilient” than the United States and other economies.

According to a report by Yahoo Finance, in a research note published on March 30, Goldman Sachs’ chief China equity strategy analyst Liu Jinzjin clearly stated that, compared with other global peer economies, China holds a more advantageous position amid this round of oil price volatility. This distinct advantage is not a short-term coincidence, but the result of a decade of energy-strategy planning and buildup in China. 

The United States and the European Union still remain highly dependent on gasoline and other liquid fuels—these energy sources account for about 40% and 44% of their total primary energy consumption, respectively. Meanwhile, China has reduced this figure to only 28%. 

Thanks to diversification in the energy mix, when the price of Brent crude oil reaches $115 per barrel, the data show that the direct “cost” of inflation to China’s economy from rising oil prices is lower than that faced by Western countries. 

Recently, Goldman Sachs commodities strategist predicted that, due to severe restrictions on oil flows through the Strait of Hormuz lasting for about six weeks, the average Brent crude price in March will reach $105 per barrel, rising to $115 per barrel in April. 

Analysts pointed out that under an adverse scenario, if the disruption continues for ten weeks, the Brent crude price could approach or exceed the historical record set in 2008, before gradually falling back to around $100 per barrel by the end of 2026. 

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Liu Jinzjin identified three specific “barriers” that help China withstand global oil shocks. 

First is the leading position of renewable energy. Including nuclear energy, wind power, solar power, and hydropower, alternative and renewable energy sources currently account for 40% of China’s power generation, up significantly from 26% ten years ago. 

Second is the massive scale of strategic reserves. Liu Jinzjin said that over the years, China has quietly built a “oil Great Wall.” 

China’s total strategic and commercial crude oil reserves are now about 1.2 billion barrels; even under the extreme assumption that crude oil imports fall to zero, they would still be sufficient to support more than 110 days of oil consumption demand. 

Third is a diversified supply-chain system. 

Everyone around the world is worried about the Strait of Hormuz—this shipping route carries 20% of global oil transportation, while China has consistently maintained stable crude oil supply lines with non-Middle East countries such as Russia and Australia, as well as Malaysia. 

Affected by the oil price shock, Goldman Sachs economists lowered their forecast for U.S. real GDP growth by 0.4 percentage points; China is the least affected in the Asia-Pacific region. 

Liu Jinzjin also reminded that China’s economy shows strong resilience. The direct impact of long-term rising energy prices on China’s economy may be easier to handle, but spillover effects such as global stagflation risks, U.S. interest rates remaining high, a stronger U.S. dollar, and continuing geopolitical risk premia could also hit China’s stock market. 

What’s worth noting is that in the face of global energy shocks, China has remained calm and composed, and it has recently repeatedly become a topic of heated discussion among the outside world. 

“China has two aces in its hand: electric vehicles and renewable energy.” A March 14 report by The New York Times noted that over decades China has invested tens of billions of dollars in developing electric vehicles and renewable energy, and this long-term strategy is now bearing fruit. 

Earlier, Goldman Sachs estimated in a report that, with a diversified energy mix, multiple sources of supply, and transportation routes that can bypass the Gulf region, only about 6% of China’s total energy consumption is directly exposed to the risk of disruption of the Strait of Hormuz. This gives China the ability to handle conflicts lasting for several months, and the stronger ability to withstand global energy prices will enhance the competitiveness of Chinese exporters. 

On March 29, Britain’s Financial Times also published an article pointing out that the fighting in the Middle East, which could have seriously threatened the energy security of China—the world’s largest oil importer—was met by China leveraging the resilience of its energy system, clean energy technologies, and an autonomous layout across the entire industrial value chain. China has not only attracted massive investments in green energy, but has also become the “last supplier country” for key industrial materials, and has built an image in the international community as a more stable and reliable partner than the United States, further strengthening its position as a “superpower.” 

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