The Impact of LNG Shipping Cost Fluctuations on China’s Economy under Geopolitics

Shuyao Lv ()
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Shuyao Lv: College of Transportation Engineering, Dalian Maritime University

A chapter in Proceedings of the 2026 11th International Conference on Social Sciences and Economic Development (ICSSED 2026), 2026, pp 198-205 from Springer

Abstract: Abstract Geopolitical risks are reshaping global LNG shipping costs by disrupting energy supply and transit routes, posing significant challenges to China’s economy, which heavily relies on LNG imports. This study develops a unified quantitative framework linking geopolitical risks, LNG shipping costs, and macroeconomic impacts. By incorporating supply-side shocks and transit-route disruptions into a CGE model, the study evaluates how fluctuations in LNG shipping costs affect China’s macroeconomic performance and LNG import volumes under multiple scenarios. The results yield two main findings. First, Iran’s entry into the global LNG market generates only limited positive effects on China’s economy. By 2030, China’s real GDP increases by only 0.026%. However, when transportation through both the Strait of Hormuz and the Indonesian straits is disrupted simultaneously, China’s real GDP declines by 0.812%, indicating that the negative effects of transport disruptions outweigh the benefits of expanded supply. Second, global LNG trade patterns shift significantly. Iran gains the largest economic benefits, while traditional exporters such as Australia experience economic contraction. The United States and Russia, benefiting from geographic advantages, achieve positive economic growth under most maritime chokepoint disruption scenarios.

Keywords: LNG shipping costs; geopolitical risk; GTAP model; international trade; energy security (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6239-701-9_21

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DOI: 10.2991/978-94-6239-701-9_21

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