The Chinese government's penchant for obfuscating national economic data has become a major handicap for the global oil market, just as U.S. President Donald Trump's trade war is making access to accurate numbers more important than ever.
Beijing has recently stopped publishing certain details on its oil trade in a move that complicates life for oil producers trying to calibrate their output by projecting global supply and demand, and increases the chances of their making a wrong call.
China has long released monthly statistics on its refining activity, crude and refined product imports and exports, but not offered data on the end-user consumption of fuel, a crucially important figure. In a country of 1.38 billion, consuming 12-13 million barrels per day or 12-13% of the world's oil, computing that data is not easy. But it needs to be done.
In the absence of official consumption statistics, analysts impute the data from figures on refining activity, stock movements, and oil trade. Their methodologies vary, and some missing links are replaced with educated guesses, resulting in a medley of numbers.
The situation took a turn for the worse at the end of May, when the release of detailed monthly import and export statistics from China's customs department -- not only for oil but all good and commodities -- was abruptly halted, with a woolly excuse of "technical issues" and no new timeline offered.
The mysterious delay left traders who do business with China or monitor its data to devise trading and pricing strategies, confused and agitated. Some suspected it was a ploy on the part of Beijing to throw a veil of secrecy over its imports and exports when Chinese and U.S. officials were involved in intense negotiations over their trade dispute.
Though the country has stayed on track with the release of the broad monthly customs data, which keeps it compliant with its World Trade Organization obligations, the detailed set has now been missing for four months, with no word on whether and when it may be resumed.
The details previously included Chinese exports and imports by country and port, as well as trade figures on naphtha and LPG, two important oil products, the absence of which has made calculating oil demand more imprecise. Year-on-year comparisons, vital for gauging demand growth, have been thrown out of kilter.
As the world's second-largest oil consumer after the U.S. and the biggest contributor to global demand growth, changes in Chinese demand have a major influence on supply-demand balance and benchmark oil prices, which affect consumers everywhere.
At the best of times, Chinese official data, ranging from gross domestic product numbers to inflation and manufacturing activity is taken with a pinch of salt. Doubts persist on account of the unreliability of reports from the provinces, as well as a lack of transparency.
The country's leaders also have a poor track record of adhering to pledges of data transparency. President Xi Jinping promised to make the country's strategic oil inventory levels public during a 2014 Group of 20 meeting. Shortly after, the National Bureau of Statistics released the first-ever official figures on the government-controlled emergency crude reserves since the start of the stockpiling at least seven years ago.
The ambitious program, involving the purchase of a few hundred million barrels of crude over more than a decade, creates sudden unforeseen demand. Predictably, the government's plan to release updates on the stock levels has fallen by the wayside.
The latest developments, in which disclosure of national data has been treated as if it were optional or even dispensable, has eroded Beijing's credibility further.
And yet, the world needs reliable Chinese economic data more than ever, amid the growing trade dispute with the U.S.
Beijing and Washington have now slapped three rounds of tit-for-tat import tariffs against each other since the start of July, increasing concerns about the Chinese economy and boosting the scrutiny of its oil consumption. As of Sept. 24, the U.S. will have imposed import duties on $250 billion worth of Chinese goods, while China will have tariffs on $110 billion worth of its imports from the U.S.
Given the U.S.'s big trade deficit, the tariff score is heavily weighted against China, not just in terms of the total value of its exports, but also their share of its GDP. Oil market players need to ascertain the impact on Chinese economic growth, manufacturing activity, and oil consumption. They need to keep an eye on U.S. oil demand too, but those figures are readily available down to the last detail, like clockwork, on a weekly basis.
India, the world's third-largest oil consumer after the U.S. and China, also releases official monthly refining, oil trade and sales data punctually. The statistics, from the government's Petroleum Planning and Analysis Cell, are not as detailed as those from the U.S. Energy Information Administration, but they are fairly reliable.
Member countries of the Organization for Economic Cooperation and Development have strong databanks on oil consumption, trade and inventory levels.
OPEC requires its producers to report their production figures every month, though not all members comply or are necessarily honest. However, credible monthly production numbers for each OPEC country as well as major non-OPEC producers are closely tracked by several independent information agencies.
The biggest gap in our knowledge of oil consumption and storage levels is due to the inability or unwillingness of governments in the emerging world across Latin America, Africa and Asia to gather and provide accurate data. However, none of that leaves as gaping a hole as China, given its share of nearly 30% of global oil demand growth.
The International Energy Agency has been exhorting China to do more and building rapport with its government institutions such as the National Bureau of Statistics to improve data quality.
Perhaps the soon-to-be-formed permanent alliance of OPEC and non-OPEC producers could push a concerted effort to make production and export data more transparent, and to work with the major consumer countries to do the same with their demand numbers.
In the meantime, if China is as committed to free and open trade as Xi has claimed, then it should not be closing down economic data flows, especially not in the oil market.
Vandana Hari is founder of Singapore-based Vanda Insights, which tracks energy markets. She has two decades of experience providing essential intelligence on the energy sector.