Why is China Stockpiling So Much Stuff

For the past year or so, China has been quietly stockpiling tons of stuff, including oil, gas and a number of in-demand metals. Unsurprisingly, this has drawn the attention of Western policymakers, with at least some of them suggesting that these stockpiles are the CCP's way of planning for an invasion of Taiwan. So in this video, we're going to try our best to figure out why China is stockpiling so much stuff, and explain why it might not necessarily be about Taiwan. The next issue of Our Magazine Too Long is coming out soon, with this issue focusing on realignment in the Middle East, discussing how recent events fundamentally reshaped the region. Pre-order your copy or subscribe by clicking the link in the description. So let's get straight into it. Of all of China's stockpiles, the one that's drawn by far the most attention in the international press is China's ever-growing stockpile of crude oil. Now, for national security reasons, China doesn't actually publish data on its stockpiles for crude or any other commodity. But there's a pretty strong consensus among market observers, who've noticed that China is importing more than it's refining, that the CCP has been quietly building up its oil stockpiles since really late 2024. According to most estimates, China now has something like 1.3 billion barrels of crude oil in reserve, enough to last the Chinese economy roughly three months with zero further imports. This process really accelerated in the second quarter of this year, when China was adding something like a million barrels a day to its stockpiles, accounting for roughly 90% of global stockpiling. And at least some analysts think that stockpile-related demand from China has single-handedly kept global oil prices above the $60 a barrel mark. But it's not just oil. China has also been stockpiling a number of other commodities, including natural gas and certain metals. Again, no one knows exact figures, but a Bloomberg report from earlier this year citing unnamed officials claimed that the CCP had decided to build up fresh cobalt, copper, nickel and lithium stockpiles, and a recent Economist article claimed that, since the beginning of 2024, China had built up copper, zinc and nickel stockpiles sufficient to cover 20, 50 and 108% of annual demand, respectively. Unsurprisingly, this has provoked some anxiety amongst more hawkish commentators in the US, who point to China's stockpiling as evidence the CCP are preparing to invade Taiwan. To be fair, stockpiles are what you'd expect ahead of an invasion, given such an event would probably provoke a furious international backlash and massively disrupt China's trade with the rest of the world. Stockpiling would obviously help China cope with any post-invasion disruption and insulate the CCP against efforts to leverage China's trade dependencies. In this context, it's worth mentioning that China is more dependent on certain imports than you might think. China still imports many of its raw manufacturing inputs, including about 90% of its iron and a similar fraction of its copper. China also imports a lot of food. The country only became a net food importer in 2004, i.e. it imported more food than it But by 2021, it had become the world's largest food importer, surpassing the US. Perhaps most significantly though, China imports a lot of its energy. Despite recent efforts to develop a domestic oil industry, China, which is the world's largest crude oil importer and the second largest crude oil consumer after the US, still imports something like 70% of its crude oil, with most of this coming via maritime trade routes into South China. This dependence on energy imports has been a long-standing anxiety for Chinese policymakers, and in 2003, CCP General Secretary Hu Jintao coined the term Malacca Dilemma to refer to China's singular reliance on the Strait of Malacca, a maritime chokepoint connecting the Indian Ocean and the South China Sea that could easily be shut off, immediately depriving China of something like 80% of its crude imports. This is why the CCP has tried to diversify oil imports by building more overland pipelines to Russia and other Central Asian producers. So you get the idea. While more attention is often paid to the rest of the world's reliance on Chinese stuff, China also relies pretty heavily on the rest of the world for its own stuff. And more hawkish commentators in Washington have taken the CCP's newfound penchant for stockpiling as evidence that China is secretly prepping for an invasion of Taiwan, and the accompanying disruption to international trade. But while this might be one possible explanation, there are at least three other reasons China might want to build up its stockpiles. The first is to reduce Trump's leverage in the trade war. The more China stockpiles, the less they need to import in the short term, which reduces Trump's leverage in the ongoing trade negotiations. This would also explain why the stockpiling apparently began last year, when it became clear that Trump was returning for a second term and that he wanted to renegotiate the terms of the US-China relationship. It's also possible that China is rushing to import as much discounted oil as it can from Russia, Iran and Venezuela, which today account for something like 20% of all China's oil imports and are all under some form of US sanction, before the US either tightens sanctions as has happened recently with Russia or invades, as might happen with Venezuela. The second reason is reserve diversification. Every country has foreign exchange reserves, to provide a buffer against economic crises. Historically, US dollar and dollar-denominated assets accounted for a large percentage of all global reserves, including China's, but Trump's unorthodox policies have undermined their appeal as safe assets, which is why China and other countries have recently moved out of dollars and into more traditional safe assets, like gold. Again, no one knows exactly how big China's gold reserves are, but China has been importing a lot of gold recently, helping push prices to all-time highs. China's oil stockpiling could be another form of reserve diversification, helping China bolster its reserves with a commodity that it can easily sell or consume in times of crisis. Third, and finally, it could just be good for the Chinese economy. Stockpiling and then releasing stockpiles when prices get too high allows the CCP to essentially guarantee stable commodity prices within China, which helps Chinese manufacturers by reducing uncertainty, and can even help the CCP turn a tidy profit, if they get to buy low and sell high. China has form here. The CCP has a national pork reserve, for instance, to smooth out pork prices over holidays and other periods of high demand. To anyone that finds the idea of a government intervening in commodity markets offensive to their free market sensibilities, it's worth noting that the Biden administration did something similar with the US Strategic Petroleum Reserve in 2022 and 2023, which ultimately smoothed out global oil prices while allowing the treasury to turn a profit. All in all, even if China's stockpiles aren't necessarily proof that the CCP are about to invade Taiwan, they're still something to keep an eye on, if only for policy makers interested in unorthodox ways to boost domestic manufacturing. Now that's quite a lot of information we've thrown your way, and that's after we've simplified it down for you. So you can only imagine how overwhelming it is to sift through the hundreds of outlets reporting on it online to just find out what happened. Luckily for all of us, there's a website and app that collects all those articles and puts them all in one easy to access place. And that website is, you guessed it, Ground News. Not only does Ground News assemble all these articles, but it also offers a breakdown into bias distribution, factuality and ownership of each individual source, giving you the opportunity to dive deeper into the information that may have been hidden from you previously. For example, if we take this story on OPEC Plus's continued production hikes, we can see that there are 107 sources currently reporting on it, with most of the coverage coming from the right. If we use their handy bias comparison feature, we can see the left emphasising geopolitical factors like the Ukraine conflict, and the right highlighting fears of a supply glut. We can also filter and sort every story by their factuality level, helping you to easily grasp the reliability of each outlet. Or even take a more extensive look at who owns each of these outlets, keeping you fully informed on who's trying to feed you information online. Even if you want to stay close to home and explore what's being said in your area, Ground News can break down all of your local news, and even shows you stories you might have missed, introducing you to their blind spot feature. 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