Wellington’s macro strategist says China may come out as a winner from the oil shock

Global economies are adjusting to the oil shock from the Iran war, says Juhi Dhawan, macro strategist at Wellington Management, on the latest episode of the Credit Exchange podcast with Lisa Lee – and China has shown surprising resilience that may improve its competitiveness against Europe, Japan and some other Asian countries.Looking at the past performance of economies and markets to oil shocks, one of the surprises this time has been China, Dhawan says. It has held up better because it has reduced its reliance on oil due to its big push into renewables and coal. That’s good news in that China is a big driver of global growth, but less good in that China is already in a very competitive position from a manufacturing standpoint relative to Europe, Japan, and some other countries in south-east Asia.“One of the questions we are asking ourselves is, will China again gain competitiveness as Europe struggles with this energy shock; as Japan faces this energy shock,” Dhawan says. “[Will] China end up being relatively better off compared to what its past would have suggested?”Dhawan, who leads analysis of the US economy at Wellington, an asset manager with more than $1.3 trillion in AUM, says the United States came into 2026 with some of the most accommodative fiscal and monetary policy set-up in a few years. That creates some buffer room for the economy to withstand these higher energy prices.Besides energy prices, Dhawan also discusses productivity gains from AI, the labour market, trade flows and demographics. In addition, financial markets are reacting to the Iran war, resulting in adjustments. There could be boosts coming into AI-related areas, power, and energy, she says.