Goldman Sachs judges that China has structural features in its energy profile that should help it weather the ongoing oil shock stemming from tensions in the Middle East. Analysts point to the country's energy mix, accumulated reserves and a broader import base as factors that reduce its direct exposure to rising crude prices and potential supply disruptions.
Measured against many advanced economies and emerging peers, China is less dependent on oil and gas as a share of primary energy consumption. Oil and gas combined make up about 28% of the country’s primary energy use, a level that leaves more room for other sources to play a role in meeting demand. In addition, alternative and renewable sources - specifically nuclear, wind, solar and hydro - now account for roughly 40% of China’s electricity generation, a figure that reflects significant expansion over the past decade.
Those shifts in the generation mix have reduced the economy’s direct sensitivity to swings in global crude prices. Complementing the move toward diversified domestic output, China has built large crude inventories. Combined strategic and commercial stockpiles are estimated at about 1.2 billion barrels, which Goldman Sachs notes is sufficient to cover more than 100 days of consumption if supplies were disrupted.
Another component of resilience highlighted by the bank is a more diversified import strategy. Beijing has expanded the roster of energy suppliers to include sources outside the Middle East - among them Russia, Australia and Malaysia. That broader sourcing lessens China's exposure to disruptions concentrated in key transit corridors such as the Strait of Hormuz, where tensions related to the ongoing conflict have increased the risk of supply interruptions.
On the macroeconomic side, Goldman Sachs estimates the direct drag on China's growth from this oil shock to be relatively modest. The bank trims its 2026 GDP growth forecast for China by around 20 basis points. By comparison, its adjustments for other economies are larger - about a 40 basis point reduction for the United States and up to a 70 basis point hit for emerging Asian economies excluding China.
While the immediate impact on growth appears manageable, the bank cautions that secondary effects could still transmit to Chinese financial markets. Specifically, risks flagged include the potential for global stagflation pressures, an appreciation of the U.S. dollar and tighter financial conditions internationally. Those dynamics could weigh on Chinese equities by depressing corporate earnings and compressing valuations.
In sum, Goldman Sachs views China’s combination of a lower oil and gas share in primary energy use, a larger role for nuclear and renewables in power generation, sizeable crude stockpiles and a wider set of import partners as meaningful buffers. These factors, together with policy emphasis on diversification, are seen as positioning China to navigate the current oil shock with greater resilience than most of its global peers, albeit not without risk from wider financial and inflationary spillovers.