key: cord-0076428-c4tj2802
authors: Huang, Yanrong; Han, Dan
title: Analysis of China’s Oil Trade Pattern and Structural Security Assessment from 2017 to 2021
date: 2022-03-31
journal: Chem Technol Fuels Oils
DOI: 10.1007/s10553-022-01362-y
sha: 42f5381dbb1ed1e5b52826f44a81e2da98930a0d
doc_id: 76428
cord_uid: c4tj2802

Oil is an important strategic resource of the country, and the oil trade structure is related to national oil security. In this paper, based on the data of China’s oil import trade from 2017 to 2021, using the methods of import concentration, the Shannon entropy index, and quantitative evaluation of trade structure, the authors analyze the import pattern and the trade structure security of 7 oil varieties, including crude oil, vehicle gasoline, aviation gasoline, naphtha, aviation kerosene, No. 5-7 fuel oil, unburned petroleum coke, and petroleum asphalt. The research shows that the trend of the large-scale and diversified import patterns of China’s oil import is obvious, and the main importing countries of various oil varieties are relatively stable. The structural security of crude oil is the highest, and the import structure is a medium and highly-centralized oligopoly. The import structure of other oil varieties belongs to a highly-centralized or very highly-centralized oligopoly. The security of the import structure of China’s oil varieties is low and shows a downward trend. As shown by the early warning calculations of the trade structure, increasing the number and transaction proportion of the trading partners in the collaborative growth zone and reducing the number and transaction proportion of the trading partners in reverse inhibition zone, we can optimize the oil varieties import structure of China.

Oil is an important strategic resource of the country. Oil is related to national security, social economy, and sustainable development [1, 2] . Due to the uneven spatial distribution of the world oil resources and the dislocation of supply and demand under the differences in the resource endowment, the contradiction between oil supply and demand has existed for a long time [3] , and the trade gap between oil supply and demand is increasing.

Since 1993, China's oil imports have exceeded its exports, and China has become a net oil importer. In 2015, China's oil consumption was 578 million tons, accounting for 13.3% of the world's total oil consumption [4] . In 2016, China overtook the United States to become the world's largest oil importer. In recent years, China's domestic GDP has maintained a growth rate of about 6%, and the rapid economic growth has increased its dependence on oil demand. According to the data, the imported oil in 2020 is about 617 million tons [5] . At the same time, the growth rate of China's oil production is as low as 2% [6] . The massive growth of China's oil consumption demand and the limited domestic oil supply has strengthened China's demand for oil imports, with an external import dependence of more than 70%, which is much higher than the warning line set by the International Energy Agency for crude oil import dependence [7] .

The impact of the sharp rise and fall of oil prices on China's economy is constantly superimposed. In early 2020, under the influence of COVID-19, the global economic blockade led to a sharp decline in oil consumption. OPEC and other major oilexporting areas made measures to reduce production but failed to reverse the structural imbalance of international oil supply and demand, and international oil prices fell to a historical minimum. In 2021, the slow economic recovery of major economies has stimulated international oil consumption, superimposed the reduction of oil production in major oil-producing areas in 2020, and the short-term oil supply is lower than the actual demand, resulting in the continuous rise of international oil prices. At the same time, the domestic political and social unrest in oil supply, international oil embargoes, sanctions obstructing the key transmission channels, geopolitical tensions, and the destruction of oil production facilities by major natural disasters such as earthquakes, tsunamis, and hurricanes have caused fluctuations in international oil prices [3] .

On the issue of oil trade security, academia has mainly researched the following aspects: first, from the aspects of oil transportation security, the oil transportation channels [8] , ocean transportation [9, 10] , and transportation channel development [11, 12] , it has researched the security and pattern of oil import channels. Second, it has evaluated the oil price and exchange rate security, reducing the risk of oil price and exchange rate fluctuations by optimizing the portfolio investment strategies [13, 14] .

From a financial perspective, this research has made a series of progress by combining financial asset allocation, exchange rate settlement, and oil trade. Third, the research has been focused on how to evaluate the oil trade security. Qu et al. [15] established the oil security evaluation index system and analyzed the oil supply security. Lu et al. [16] proposed the oil security index to evaluate the resource security on the basis of resource supply security, economic payment security, geographical security, and transportation security and analyzed China's oil trade security from the aspects of oil reserve production ratio, oil external dependence, and oil reserve level. Besides, the common oil security research methods include the oil vulnerability index [17] , potential risk index [18] , diversification index [19] , etc. Summing up, the existing oil security research has made a series of achievements, but the relevant research mainly focuses on the analysis of the influencing factors of oil import risks. Oil transportation, oil price, exchange rate, and political risks of the supplier countries are the uncontrollable factors. How to reduce the oil security risks from national controllable factors is worth discussing.

In recent years, scholars began to explore the temporal and spatial security pattern of oil [1, 20] . Yan et al. [20] applied the spatial analysis method to describe the evolution characteristics of the temporal and spatial pattern of China's crude oil import trade. Cheng et al. [3] described the spatial pattern of China's oil import trade by analyzing the data of China's oil import and export trade from 1993 to 2016. From the perspective of the resource flow, Liu et al. [1] quantitatively described the changing trend of China's oil resource supply network and temporal and spatial pattern from 1993 to 2015 based on the complex network method. Existing studies provide new ideas for oil security analysis, but most of them analyze a single crude oil product and do not analyze the related costs of oil, aviation kerosene, fuel oil, and other related products. There is no literature to explore China's oil trade security from the perspective of the import and export trade structure.

Therefore, based on the existing results, this paper proposes a method for structural safety assessment of oil import and export trade. Based on the China Customs data for 2017-2021 years, the Chinese mainland and oil trading partners deal with the 7 main trading entities, including petroleum, motor vehicle gasoline, aviation gasoline, naphtha, aviation kerosene, fuel 5-7, non-calcined petroleum coke, and petroleum pitch. This paper comprehensively discusses the trade pattern and trade structure evolution of seven products in China in recent years, evaluates the comprehensive security level of the oil trade structure, and provides support for the national oil trade security strategy.

The import concentration is generally expressed by the proportion of the total import volume of the top countries or regions in the total import volume. t ij refers to China's import volume of the ith oil variety in country j, and 1 N ij j = t ∑ is the total import volume of the ith oil variety in China in a certain year. Then, the import concentration can be expressed as:

When p = 4, the import concentration index means the proportion of the total import volume of the top four countries or regions in China's oil import volume in the total import volume of the variety. Based on Bain's classification of market structure types [3, 21] , China's oil import structure is divided into six types.

In 1948, the Shannon entropy index was proposed by Shannon, the founder of the information theory, to measure the uncertainty and differences within the system. It is widely used internationally to measure the geospatial aggregation degree of import and export trade. The higher its value, the more scattered and uniform the distribution of trading partners and the less vulnerable it is to interference. Referring to the research of Liu [1] , based on the Shannon entropy index, this paper constructs China's ith oil variety import trade structure security measurement index S i , and its calculation formula is as follows:

Where t ij is the import volume of the ith oil variety from China to country j, and 1 , China to every country, and the higher the security of the oil variety trade structure. However, in fact, only a few countries in the world have large-scale export potential, and some imported products of China's oil varieties are concentrated in a few countries.

Although the above formula can effectively evaluate the overall security of trade networks of different oil varieties, it can not identify the impact of different trading partners on the security of trade structure. Therefore, this paper further analyzes the early warning of the security risks of the trade structure according to the import homogeneity of the ith oil variety in the j country. The calculation formula of homogeneity of a single importing country is as follows:

China has become the world's largest oil importer. Therefore, this paper focuses on the security early warning analysis of the oil import trade. When t ij is the import volume, the homogeneity can be used for the security early warning analysis of import trade structure. For the ith oil variety, the sum of China's import shares to all N countries is equal to 1, that is

According to the function properties in Eq. (3), the function curve of f(x ij ) presents an inverted "U" shape. When x ij = 1/e, the highest import homogeneity of the ith oil in the jth country is 1/e. When 0 1 ( , ) x e ∈ , f(x ij ) increases monotonically, that is, when

China's share of oil imports to other countries is in this range, it has a synergistic growth potential. When

monotonically, that is, when China's import share of oil varieties to other countries is in this range, it has a reverse inhibition potential and needs to make safety early warning.

In this paper, the import volume data of PetroChina crude oil, vehicle gasoline, aviation gasoline, naphtha, aviation kerosene,

No. 5-7 fuel oil, unburned petroleum coke, and petroleum asphalt for the period from 2017 to 2021 are derived from the data of China Customs. The data for 2021 is the total import volume in the first three quarters (January to September) of that year. China's total oil import (export) comes from China's statistical yearbook. For example, in 2019, China's oil import was 581.02 million tons, China's oil production was 191.01 million tons, and China's oil export was only 82.11 million tons. The "oil" data comes from China's statistical yearbook, including crude oil and various products processed and refined from the crude oil, including gasoline, kerosene, diesel, fuel oil, lubricating oil, naphtha, petroleum asphalt, and other petroleum products. This paper mainly studies the pattern and structural security of China's oil import. In order to make the results clear and concise, the trading partner countries that account for a small proportion of China's oil imports will be screened out when visualizing the data.

China is a large oil consumer, with a large gap between oil production and demand and a high dependence on imports. According to the data of the China Statistical Yearbook, in 2014, China's oil import volume was 361.8 million tons. In 2016, China became the largest oil importer in the world. In recent years, the oil import volume has increased year by year, and the dependence on foreign In 2020, at the beginning of 2020, the impact of COVID-19 was on the rise. In the context of the sharp decline in oil prices and the expansion of oil refining capacity, China's economy gradually recovered from COVID-19, and oil demand rebounded. In terms of the month-on-month growth rate of oil imports, the growth rate of oil imports slowed down.

In 2020, the oil demand increased by about 7.4% compared with 2019, and the import volume in 2020 was 617.9 million tons. As shown in Fig. 1 , red blocks represent oil imports, blue blocks represent oil production, and yellow blocks represent oil exports.

In recent years, the growth rate of China's domestic crude oil production has been slow and even decreased, with an annual growth rate of only 0.84% [20] . In 2014, the domestic oil production was 21.143 million tons, the highest over the years. In 2018, the domestic oil production was 189.32 million tons, the lowest in the previous years. In 2020, China's domestic oil production is estimated to be 194.92 million tons. China's oil export increased slightly year by year. In 2014, the oil export volume was 42.14 million tons. The absolute value of the export volume showed an increasing trend, but the month-on-month growth rate decreased.

Therefore, this paper focuses on the analysis of China's oil import pattern and structural security.

This paper analyzes the trade pattern evolution of trading partners of seven products, including petroleum crude oil, vehicle and aviation gasoline, naphtha, aviation kerosene, No. 5-7 fuel oil, calcined petroleum coke, and petroleum asphalt in the period from 2017 to 2021. In this paper, the data of 2021 is the total import volume of the first three quarters of the year (January to September).

According to the data released by the General Administration of Customs, in the past five years, China has had as many as 46 oil import trading partners. The trading countries of oil import trade include not only the petroleum exporting countries but also emerging oil-producing and exporting countries. OPEC countries are still the major oil-importing partners of China. increasingly prominent role in China's oil import pattern, but they currently play just a supporting role [22] . shutting down high energy-consuming and polluting enterprises, and eliminating backward production capacity, the demand for fuel oil in China's industry and electricity will continue to be replaced by other low-cost and environmentally-friendly resources.

It is expected that the consumption market of fuel oil may shrink. quantity. In recent years, South Korea has ranked first in the import volume, accounting for more than half of the import volume.

Its advantage of low transportation cost is unmatched by other countries. Petroleum asphalt is one of the important products of the oil refining industry. Its main application fields include road construction, airport construction, water conservancy construction, and waterproof materials.

The calculated values of CR 4 , CR 8 , and S i of China's oil imports from 2017 to 2021 are shown in Table 3 .

It can be seen, that the CR 4 From the Shannon entropy index S i , the Shannon entropy index of petroleum crude oil is the highest, and the Shannon entropy index in recent five years is higher than 2.7, indicating that the import structure is the safest among the seven oil varieties. The 

Using the early warning calculation method of trade structure, this paper puts forward the optimization strategy of China's oil import structure. Taking 2020 as an example, China imported 15.42% of crude oil from Russia, 19.83% of naphtha from Algeria, 6.02% of vehicle gasoline and aviation gasoline from Vietnam, and 27.84% of petroleum asphalt from Singapore, all of which are located on the left side of the extreme point 1/e, belonging to a coordinated growth region. The proportion of aviation kerosene imported from South Korea is 68.12%, the proportion of No. 5-7 fuel oil imported from Malaysia is 52.33%, and the proportion of petroleum coke imported from the United States is 42.42%, all of which are located on the right side of the extreme point 1/e, and the excessive import share of a single country inhibits the safety of the import structure. The proportion of national oil imports in the reverse inhibition zone is inversely proportional to Shannon entropy, and the proportion of national oil imports in the synergistic growth zone is directly proportional to Shannon entropy. Through the comparison of different years, we can intuitively identify the increase or decrease of countries in the reverse inhibition zone and optimize the allocation of import shares of partner countries.

Based on the data of import trade of different Chinese oil varieties in the past 2017-2021 years, the Chinese mainland and

China's oil trading partners as the main body, this paper makes a quantitative assessment of the import concentration, the Shannon entropy index, and the trade structure of 7 petroleum varieties, namely, crude oil, motor and aviation gasoline, naphtha, aviation kerosene, fuel 5-7, non-calcined petroleum coke, and petroleum pitch. This paper analyzes the import pattern of different oil varieties and the evolution of their trade structure and evaluates the security level of China's oil trade structure. The specific research conclusions are as follows: countries, and the Shannon entropy index remained above 2.7. However, the dependence of China's crude oil imports on Russia and Saudi Arabia has increased, the proportion of oil imported from the two countries has increased year by year, the oil import security structure has increased from the middle and lower-centralized oligopoly type to the middle and upper-centralized oligopoly type, and the security of oil crude oil import structure has weakened. Nevertheless, among the seven oil varieties analyzed in this paper, the import structure of naphtha is relatively the safest. The number of importing countries of naphtha is 28. The proportion of naphtha imports ranking in the top four is lower than that of the crude oil varieties but better than the other five oil varieties. The export volume of the top eight countries with naphtha exports accounts for about 90%, which is a highly concentrated oligopoly import structure.

2. The trade scope of No. 5-7 fuel oil is the most extensive, involving 52 countries or regions, but the transaction concentration is high. In recent five years, the main importing countries of No. 5-7 fuel oil are South Korea and Singapore, accounting for more than 60% of the total, and the top eight countries in the trading volume account for more than 90%. From 2017 to 2021, the import pattern of China's No. 5-7 fuel oil changed from highly concentrated oligopoly to extremely oligopoly. From the Shannon entropy index, the safety of fuel oil has gradually decreased in recent years.

3. South Korea is the largest exporter of vehicle gasoline, aviation gasoline, and aviation kerosene. From 2018 to 2021, the proportion of vehicle gasoline and aviation gasoline exported by South Korea to China remained at more than 30% every year.

From January to September 2021, its export proportion reached 69.3%. In terms of aviation kerosene varieties, South Korea is the largest, with an annual import volume accounting for more than 68%. The import pattern of China's vehicle gasoline, aviation gasoline, and aviation kerosene is extremely oligopolistic, and the import risk is high.

4. The main importers of unburned petroleum coke are the United States and Colombia. Each year, the unburned petroleum coke imported from the two countries accounts for about 50% of the total import volume. In recent five years, the top four importers of unburned petroleum coke have remained Singapore, Malaysia, South Korea, and Thailand, and the import pattern has remained stable. The main importing countries of petroleum asphalt are South Korea and Singapore, and the import proportion increases year by year. In 2021, the import volumes of the two countries accounted for 85.13%, and the import pattern is extremely oligopoly.

The research shows that the trend of large-scale and diversified import patterns of China's oil import is obvious. China's dependence on oil imports is high, the gap between supply and demand is large, and the structural security needs to be improved.

Using the early warning calculation method of trade structure, increasing the number and the transaction proportion of trading partners in the synergistic growth zone and reducing the number and the transaction proportion of trading partners in the reverse inhibition zone can optimize China's oil import structure.

The security of the import structure of oil varieties involves not only the stability of supply but also the rationality of oil resource price. Due to space constraints, this paper does not discuss the risks of China's oil import caused by geopolitical factors, the supply risk caused by price factors, the impact of the epidemic on the economy, and the impact of oil transportation channels, climate change, and other factors on the pattern of oil import. The deficiency of the above research is also an important issue that needs further research in the future.

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This work was supported by the National Natural Science Foundation of China under Grant 72101235.