Lower oil price is supposed to be a boost for China, since it is a net importer of oil. While this assumption holds true in theory, in reality might be acting as double edged sword for China.

December trade report shows, China imported about 7.85 million barrels/day, 6% higher than comparable record available for April last year. While biggest presumption is in response to lower oil price, China is filling its strategic petroleum reserve at faster pace.

While it might be true in some parts, may not be in entirety. According to report from British Petroleum, in 2014 China produced about 4.2 million barrels of oil per day, much higher than most of OPEC producers, including Iran, Iraq, and Oman and almost double that of Nigeria, Africa's largest producer.

It means, lower oil price is putting those domestic producers at peril with competition stemming from global low cost producers. As of now China is providing some relief to its domestic companies by setting a minimum floor in oil price at $40/barrel.

Two key points to note -

• Lower oil price would mean, domestically China would be paying higher.
• Some companies would fail to cope up even with $40/barrel threshold, shattering the dream of China becoming self-reliant on oil, which in turn means more Dollars flying out. China has about 1.1% of global proven reserve which is not large but significant.