On the contrary, the oil market collapse has caused fresh anxiety in the world’s second largest economy. One major state-owned oil company said the low oil price had generated unprecedented risks, while one of China’s four major state-owned banks was under fire for not terminating oil futures contracts in a timely way to avoid huge losses for its customers.

China’s onshore oil futures exchange, designed to promote the use of the yuan rather than the US dollar in pricing crude purchase deals, was also frequently forced to cease trading under an existing daily price limit system.

Trading in oil futures at the Shanghai Futures Exchange, the venue launched two years ago to promote the use of “petro yuan”, was suspended on Wednesday shortly after opening as prices plunged by the 10 per cent daily limit. The daily limit aims to keep risks in check, but it also restricts trading in Shanghai as the value of contracts for Brent and West Texas Intermediate (WTI) – the international and US benchmarks – were gyrating by up to 300 per cent each day.

The Shanghai exchange extended the daily limit from 6 per cent to 10 per cent last month to help trading, but that move proved insufficient given recent sharp market moves, leaving traders in China frustrated as they woke up the next day with their contracts suddenly worth less.

“We must be alert to the risk that a volatile international oil price could trigger a financial crisis”, said Guan Tao, the chief global economist at BOC International (China), who previously worked for the State Administration of Foreign Exchange, the government’s regulator.

In a note published by The Beijing News, Guan explained that a sustained very low crude price level would wipe out profitability in the oil industry and cause the values of related stocks and bonds to evaporate.

In the last quarter of a century, a major portion of Beijing’s diplomacy has been focused on securing safe and stable energy supplies to meet the sharp rise in its domestic demand. The search for oil has underlined many of China’s costly overseas projects, such as supporting a wobbling regime in Venezuela. One major reason for the development of the ambitious China-Pakistan Economic Corridor is that it can greatly reduce the transport distance from the Middle East to China.

A low crude price will ring “an alarm bell” for many of China’s earlier investments in oil exploration, especially those with high production costs, which could lead to a scaling back of similar investments in the future, according to Bai Jun, a member of the economic committee at the China Petroleum Society, an association of Chinese energy researchers.

“It will lead to an adjustment process on the supply side,” Bai said. “But it won’t be done overnight”.

Cheap crude will hinder Beijing’s efforts to boost its domestic crude supply, a key part of China’s energy security strategy. Since China become a major crude importer in 1996, China’s reliance on imported crude for domestic consumption has risen steadily to 72 per cent of total consumption last year. This gives the Chinese government a strong incentive to boost domestic output through China National Petroleum Corporation (PetroChina), China Petroleum & Chemical Corporation (Sinopec) and China National Offshore Oil Corporation (Cnooc), the country’s top three oil companies.

A price of US$20 per barrel, however, would make China’s own domestic oil exploration deeply unprofitable given the average production cost is estimated to be around US$50 per barrel.

PetroChina said in a statement on Tuesday that the sharp drop in oil prices had exposed its weakness of “being big but not strong”, while Sinopec said this week that it was prepared to have to tighten its belt for a long period of time.

PetroChina’s stock price in Hong Kong has lost about a third of its value so far this year, while Cnooc stock is down 40 per cent. The stock price of Sinopec, which has a large refinery business that could benefit from low crude oil prices, also lost around 20 per cent of its value in the same period.

But for China’s 200 million car owners, a fall in international crude prices does not automatically translate into a smaller bill to fill their tanks due to a heavily regulated retail market.

In fact, China is currently pricing oil products like petrol and diesel with reference to a crude price of US$40 per barrel, so no matter how far international prices fall, consumers will pay the same.

The unprecedented swing in crude price is also a nightmare for some of China’s individual investors who bought investment products linked to foreign oil contracts. The Bank of China, one of the big four state-owned banks, was forced to suspend new investments in a product linked to US oil futures on Wednesday after a deep fall the previous night.

China Construction Bank and the Bank of Communications also cited price volatility and liquidity risks for the suspension of opening new positions on the products for individuals, according to statements sent out on Wednesday and Thursday.

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Warren Patterson, head of commodities strategy at ING Bank, said China still lacks market clout in the international oil industry even though it is the largest buyer of crude, and so it would take years, if not decades, for traders to seriously consider Shanghai, rather than Brent or WTI, as a realistic benchmark for global oil prices.

“It's very difficult to get market participants to move away from what they have been used to … WTI and Brent. It would be very difficult … to move to something like Chinese oil futures,” Patterson said.

At the same time, the Chinese government is making long-term plans to increase its influence in the global oil industry. At the end of March, China’s State Council granted approval to the coastal province of Zhejiang to set up a free-trade zone for oil.

According to the blueprint, China will attract exchanges from New York, London, Singapore, and Dubai to offer trading services in the new free-trade zone and will allow refiners to import crude, process it locally and then export finished products to overseas markets.