Opinion | China must capitalise on the fall in oil prices to overhaul its energy sector
Hu Shuli says as a major importer, the country should step up reform of state-owned giants and nurture the development of clean alternatives
In the last weeks of 2014, the plunge in oil prices triggered a shocking tumble of the rouble. Meanwhile, China, the world's largest net importer of oil, held a work conference over the last weekend of December that outlined the country's strategy on energy security.
The meeting called for the development of clean energy, a reduction in the country's reliance on fossil fuels and the protection of its oil and gas supply. It pledged a revolution to improve energy efficiency in both demand and supply, through technological advances and better cooperation between the global powers.
These measures are all commendable, but China's most urgent task is to seize the opportunity provided by current low prices to deepen the reform of state-owned enterprises, upgrade the industry and promote the development of new energy.
The fall in crude oil prices will not only help to lower production costs and spur consumption in China, but, more importantly, it will also boost Chinese reforms. When prices were high, investment inefficiencies and the many problems associated with state-owned firms were easily covered up. But these will be gradually exposed as prices drop.
Of course, the low prices may also deter investments in new energy, thus becoming a drag on efforts to change China's energy mix. To address such problems, the government must craft effective, comprehensive policies.
Like the Chinese economy, the global oil market is also adjusting to a "new normal": the fall in oil prices may be no short-term blip but a long-term trend. In terms of supply, the rise of the non-Opec producers - particularly America, with its newly accessible reserves of shale oil and gas extracted through fracking - has gradually weakened the cartel's powers of control.
In terms of demand, the state of the global economy is one reason prices have dropped. Since 2003, oil prices have largely tracked the fluctuations of the global economy. Notwithstanding short-term rises in price from time to time - due to a surge in geopolitical tensions, for example - the global oil market may well have become a buyers' market.