China's Not-So-Urgent Stimulus Policy

Reactionary stimulus policy? It means it will get worse before it gets better.

China's recent stimulus policy announcements aren't enough. I think if you are objective and look at all the signs, that's the conclusion you come to. Dr. Anas Alhajji has shared his thoughts recently and he's remaining firm that China's demand outlook will get worse before it gets better. He's probably right and judging by the drop in property prices last month, the economic data probably won't turn anytime soon.

As for China's oil demand, the lack of growth, in itself, is bearish for the market because everyone still assumes marginal growth.

With that being said, I don't buy into the idea that China's oil demand has peaked whatsoever. LNG trucks and EVs will dampen growth, but it will not signal that demand has peaked. Here's a good example of why that's the case:

If you look at China's oil demand on a per capita basis relative to the world, it looks like China is finally reaching the global average.

But if you look at it relative to Japan and South Korea, China's oil demand has a long way to go.

I think it's a fair assumption to make that China's oil demand growth, even with adequate stimulus, won't be as strong as in the past, but ignoring the sizable difference in per capita oil consumption above assumes an unrealistic outlook about the future.

To me, China's oil demand will inevitably grow for years to come even with the renewable initiatives.