(EnergyAsia, February 18, 2017, Saturday) — Is China’s US$10.5-trillion economy becoming less dependent on oil and smokestack industries?
Taken at face value and if China’s official statistics are to be believed, the Organisation of Petroleum Exporting Countries (OPEC) suggests the country’s oil demand and economic growth will further decouple since the trend started at the turn of the decade.
According to OPEC’s latest monthly oil report, China’s GDP expanded by 6.7% last year while its oil consumption grew by 2.74%, yielding a GDP/oil growth ratio of 2.44. This is double the 2010 ratio of 1.22 when China needed an 8.44% rise in oil consumption to boost the GDP by 10.3%. The ratio increased to 1.88 in 2014 and to 2.19 in 2015.
For 2017, OPEC expects it to rise to a new high of 2.64, based on projections for China’s GDP to grow by 6.2% and oil consumption to rise by 2.35%.
The ratio has been rising rapidly since President Xi Jinping took office in 2013 with the promise to reform the economy by reducing dependence on heavy industries in favour of services.
|Year||GDP growth%||Oil demand growth %||Ratio: GDP % growth over Oil % growth|
Xi is also campaigning to clean up China’s notoriously polluted cities by increasing the use of cleaner burning fuels and improving energy-efficiency and conservation standards.
While oil consumption is expected to hit a new high of 11.64 million b/d in 2017, OPEC made a note of China’s “continuation of the fuel quality programs targeting fewer emissions, as well as ongoing fuel substitution with natural gas.”
As a sign that household and consumer spendings will have a bigger role in driving the Chinese economy, OPEC expects the country’s demand for gasoline and liquefied petroleum gas (LPG) to continue leading oil products consumption growth in 2017.
Some 24 million passenger cars were sold in China last year, up more than 15% from 2015. In total, China reported the sale of 28 million vehicles to underpin the future growth in demand for gasoline and diesel.
Adding to OPEC’s observation, the International Agency (IEA) said China’s move to lift its vehicle fuel standards in 2012 has had a “profound” impact on the coiuntry’s oil consumption.
“The efficiency of the Chinese fleet improved by an annual average of 2.3% from 2013-15, a marked increase over the 0.3% average annual improvement between 2005 and 2013,” it said.
“Mandatory fuel economy standards now cover more than 74% of global passenger vehicle sales and are having a significant impact on oil consumption.”