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From shock to resilience: China’s time-varying response to oil price uncertainty under the energy transition

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  • Du, Ningqiao
  • Feng, Ziyang

Abstract

Against the backdrop of rising green transition risks, oil price uncertainty (OPU) may affect China’s macroeconomy through cost, risk premium, and trade price channels. Using monthly Chinese macroeconomic data from January 2003 to December 2023, this paper estimates a time-varying parameter proxy SVAR identified with a high-frequency external instrument for oil price uncertainty shocks. Static analysis reveals that uncertainty suppresses exports and the stock market in the short run, exerts a significant negative effect on fixed asset investment in the medium term, and leads to downward pressure on inflation and output in the long run via demand contraction. The time-varying analysis shows that the negative effects are phase-dependent, with the strongest impacts observed around 2018. The findings highlight the amplifying role of energy uncertainty in exacerbating transition risks.

Suggested Citation

  • Du, Ningqiao & Feng, Ziyang, 2026. "From shock to resilience: China’s time-varying response to oil price uncertainty under the energy transition," Finance Research Letters, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:finlet:v:89:y:2026:i:c:s1544612325024638
    DOI: 10.1016/j.frl.2025.109214
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    References listed on IDEAS

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