Country Analysis: China
· China is the second largest oil consumer behind the United States. China emerged from being a net oil exporter in the early 1990s and became the world’s third-largest net importer of oil in 2006. China’s oil consumption growth accounted for about a third of the world’s oil consumption growth in 2009. Natural gas usage in China has also increased rapidly in recent years, and China has looked to raise natural gas imports via pipeline and liquefied natural gas (LNG). China is also the world’s largest producer and consumer of coal, an important factor in world energy markets. China is the world's most populous country and has a rapidly growing economy. China’s real gross domestic product (GDP) grew at an estimated 8.7 percent in 2009, while the country registered average growth of 10 percent between 2000 and 2008. The recent global financial crisis caused China’s GDP to slow from highs of 13 percent in 2007, to 6.2 percent in the first quarter of 2009 (measured against Q1 2008), the lowest quarterly rate in 10 years. However, the second quarter 2009 saw GDP growth rebound somewhat and until Q1 2010, the rate has steadily risen to 11.9 percent, the fastest year over year growth in 3 years. Asia, particularly China and India, was the first area to see growth during the global recession. Most analysts predict China will grow around 10 percent in 2010.
· China’s recent 4-trillion yuan ($586 billion) economic stimulus package, launched in November 2008, is focused on boosting China’s domestic consumption (currently about a third of real GDP) and fixed asset investment, as well as improving industry value chains and energy conservation in order to decrease dependence on an export-driven economy. Using various measures such as tax eductions, rebates, fiscal subsidies, greater access to credit, and direct government expenditures, China is targeting almost all sectors of the economy: real estate/construction, transportation and power infrastructure, agriculture, social services, heavy and light industry, technology advancement, and rural development. In light of the government’s goals for energy security and energy efficiency, China is using its stimulus package through vehicles such as tax breaks, advantageous lending rates, and a foreign exchange fund to encourage state-owned oil companies to expand upstream investments abroad, increase downstream refining capacity, and augment crude and oil product stockpiles.
Overview:
· Full name: People's Republic of China
· Population: 1.35 billion (UN, 2010)
· Capital: Beijing
· Largest city: Shanghai
· Area: 9.6 million sq km (3.7 million sq miles)
· Major religions: Buddhism, Christianity, Islam, Taoism
· Life expectancy: 72 years (men), 76 years (women) (UN)
· Monetary unit: 1 Renminbi (yuan) (Y) = 10 jiao = 100 fen;
· Main exports: Manufactured goods, including textiles, garments, electronics, arms
· Location-Eastern Asia, bordering the East China Sea, Korea Bay, Yellow Sea, and South China Sea, between North Korea and Vietnam.
· Area–9,596,960 sq km
· Border countries: Afghanistan 76 km, Bhutan 470 km, Burma 2,185 km, India 3,380 km, Kazakhstan 1,533 km, North Korea 1,416 km, Kyrgyzstan 858 km, Laos 423 km, Mongolia 4,677 km, Nepal 1,236 km, Pakistan 523 km, Russia(northeast) 3,605 km, Russia (northwest) 40 km, Tajikistan 414 km, Vietnam 1,281 km.
· Regional borders: Hong Kong 30 km, Macau 0.34 km
· Natural resources-coal, iron ore, petroleum, natural gas, mercury, tin, tungsten, antimony, manganese, molybdenum, vanadium, magnetite, aluminum, lead, zinc, uranium, hydropower potential (world's largest).
· Useable Land: 15.4% permanent crops: 1.25% other: 83.35% (2001)
· Irrigated land -525,800 sq km (1998 est.)
· Age structure - 0-14 years: 21.4% (male 148,134,928/female 131,045,415) 15-64 years: 71% (male 477,182,072/female 450,664,933) 65 years and over: 7.6% (male 47,400,282/female 51,886,182) (2005 est.)
· GDP -Purchasing Power Parity $7.262 trillion (2004 est.)
· Population growth rate-0.58% (2005 est.)
· Ethnic groups-Han Chinese 91.9%, Zhuang, Uygur, Hui, Yi, Tibetan, Miao, Manchu, Mongol, Buyi, Korean, and other nationalities 8.1%
· Languages–Standard Chinese or Mandarin (Putonghua, based on the Beijing dialect), Yue (Cantonese), Wu (Shanghaiese), Minbei (Fuzhou), Minnan (Hokkien-Taiwanese), Xiang, Gan, Hakka
· Literacy–90.9%of total population
Major Trading Partners:
· Imports: Japan 16.8%, Taiwan 11.4%, South Korea 11.1%, US 8%, Germany 5.4% (2009).
· Exports: US 21.1%, Hong Kong 17%, Japan 12.4%, South Korea 4.7%, Germany 4% (2009)
Structure of Exports:
· Foods: 10%
· Other manufacturing goods: 50%
· Others: 7%
· Chemical Products Transport & equipment: 33%
Structure of Imports:
· Chemical Products: 13%
· Other manufacturing goods: 22%
· Others: 9%
· Combustibles: 9%
· Transport & equipment: 41%
· Minerals & Metals: 6%
GDP & Labor Force:
· Agriculture
o GDP: 15%
o Employment: 50%
· Industry
o GDP: 50%
o Employment: 20%
· Services
o GDP: 35%
o Employment: 30
Environmental Overview:
·
Total Energy Consumption (2000E): 36.7 quadrillion Btu (9.2% of world total energy consumption)
· Per Capita Energy Consumption (2000E): 28.8 million Btu (vs. U.S. value of 351.0 million Btu)
· Sectoral Share of Energy Consumption (1998E): Residential (28.3%), Industrial (59.9%), Transportation (7.4%), Commercial (4.4%)
· Fuel Share of Energy Consumption (2000E): Oil (26.8%), Natural Gas (3.0%), Coal (63.6%)
· Fuel Share of Carbon Emissions (2000E): Oil (22.0%), Natural Gas (2.1%), Coal (75.9%)
· Renewable Energy Consumption (1998E): 10,895 trillion Btu* (2% increase from 1997)
· Number of People per Motor Vehicle (1998): 125 (vs. U.S. value of 1.3)
Major Environmental Issues:
· Air pollution (greenhouse gases, sulfur dioxide particulates) from the overwhelming use of high-sulfur coal as a fuel, producing acid rain which is damaging forests; water shortages experienced throughout the country, particularly in urban areas and in the north; future growth in water usage threatens to outpace supplies; water pollution from industrial effluents; much of the population does not have access to potable water; less than 10% of sewage receives treatment; deforestation; estimated loss of one-fifth of agricultural land since 1949 to soil erosion and economic development; desertification; trade in endangered species.
Major International Environmental Agreements:
· A party to the Antarctic-Environmental Protocol, Antarctic Treaty, Biodiversity, Climate Change, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Marine Dumping, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94 and Wetlands. Has signed but not ratified: Nuclear Test Ban.
Oil:
· China is the world’s second-largest consumer of oil behind the United States , and for the first time the second- largest net importer of oil in 2009. The United States if first.
· China consumed an estimated 8.3 million barrels per day (bbl/d) of oil in 2009, up nearly 500 million bbl/d from year earlier levels. During that same year, China produced an estimated 4.0 million bbl/d of total oil liquids, of which 96 percent was crude oil. China’s net oil imports reached about 4.3 million bbl/d in 2009, making it the second-largest net oil importer in the world behind the United States and for the first time surpassing Japan’s imports. EIA forecasts that China’s oil consumption will continue to grow during 2010 and 2011, with oil demand reaching almost 9.6 million bbl/d in 2011. This anticipated growth of over 1.2 million bbl/d between 2009 and 2011 represents about 37 percent of projected world oil demand growth during the 2-year period according to the September 2010 Short-Term Energy Outlook. By contrast, China’s oil production is forecast to rise by about 150 thousand bbl/d to nearly 4.2 million bbl/d in 2011
Electricity:
· In 2008, China had an estimated total installed electricity generating capacity of 797 gigawatts (GW) and in 2009, net generation was 3,446 billion kilowatt-hours (Bkwh), 82 percent of which came from conventional thermal sources. Installed capacity increased over 10 percent between 2007 and 2008 and is expected to grow in the next decade to meet rising demand particularly from demand centers in the East and South of the country. FACTS Global Energy expects installed capacity will be 950 GW by the end of 2010, and some Chinese government officials forecast capacity may be 1,500 GW by 2020. Both electricity generation and consumption have increased by over 110 percent since 2000, and trade press reported that generation was up 20 percent in the first half of 2010 compared to a year earlier.
· China’s electricity generation continues to be dominated by fossil fuel sources, particularly coal. The Chinese government has made the expansion of natural gas-fired and renewable power plants as well as electricity transmission a priority.
Coal:
· China is the largest producer and consumer of coal in the world, and many of China ’s large coal reserves have yet to be developed.
· Coal makes up 71 percent of China's total primary energy consumption, and China is both the largest consumer and producer of coal in the world. According to the World Energy Council, as of 2009, China held an estimated 114.5 billion short tons of recoverable coal reserves, the third- largest in the world behind the United States and Russia and about 14 percent of the world’s total reserves. There are 27 provinces in China that produce coal. Northern China, especially the Shanxi and Inner Mongolia Provinces, contains most of China's easily accessible coal and virtually all of the large state-owned mines. Coal from southern mines tends to be higher in sulfur and ash, and therefore unsuitable for many applications. In 2009, China consumed an estimated 3.5 billion short tons of coal, representing over 46 percent of the world total and a 180 percent increase since 2000. Coal consumption has been on the rise in China over the last nine years, reversing the decline seen from 1996 to 2000. Coal production, also rising, was estimated at almost 3.4 billion short tons in 2009. China’s coal imports started growing after 2002 because imported coal prices including transportation became competitive with domestic production prices, and the coal industry began suffering from frequent bottlenecks in transmission to consumer markets. In 2009, China, typically a net coal exporter, became a net coal importer from countries such as Indonesia, Australia, Vietnam, and Russia. In September 2009, the China Coal Transportation and Distribution Association stated that China signed a $6 billion loan-for-coal agreement with Russia for 15 to 20 million tons of coal for 25 years.
Coal Reserves:
· Because of the large amount of reserves, coal will continue to dominate the fuel feedstock for the power capacity and generation even as other cleaner fuels increase market share. Coal consists of roughly 80 percent of the power generation feedstock, and the EIA forecasts the fuel will decline to 74 percent in market share by 2035. As with coal mining, the Chinese government is looking to shut down or modernize many small and inefficient power plants in favor of medium-sized (300 to 600 MW) and large (1000 MW and up) units. In its upcoming twelfth five-year plan, covering the period 2011-2015, China anticipates the country increasing the share of natural gas and other cleaner technologies in the country’s energy mix and close several smaller coal-fired plants that were less efficient and heavy polluters. following this trend, the NEA forecasts another 8 GW of coal generation will be removed in 2011.
Natural Gas:
· Natural gas currently plays a small role in the power generation mix (currently 5 percent of installed capacity and 2 percent in net generation); however, the government plans to invest in more gas-fired power plants as a growing marginal fuel source. Gas prices declined in 2010, and China is able to source the fuel from growing domestic sources as well as growing import alternatives, though coal still remains the less expensive feedstock.
Hydroelectric and Renewables:
· China commissioned the Three Gorges Dam hydroelectric facility, the largest hydroelectric project in the world, in 2009.
· China has a goal to generate at least 15 percent of total energy output by 2020 using renewable energy sources as the government aims to shift to a less-resource intense economy. According to the consultancy EC Harris, in 2010, China is the world's top investor in renewable energy projects, having invested around $120 billion to $160 billion between 2007 and 2010. In 2009, China was the world’s largest producer of hydroelectric power.
Nuclear:
· China is also actively promoting nuclear power as a clean and efficient source of electricity generation. Although nuclear capacity (around 9 GW) makes up only a small fraction of China’s installed generating capacity, many of the major developments taking place in the Chinese electricity sector recently involve nuclear power.
Natural Gas:
· Although natural gas use is increasing in China, it only comprised 3 percent of the country’s total energy consumption in 2008.
· Natural gas is not a major energy source in China, although its share in the country’s consumption mix is increasing. According to OGJ, as of January 2010, China had 107 trillion cubic feet (Tcf) of proven natural gas reserves. China’s production and demand of natural gas has risen substantially. In 2009, China produced 2,929 billion cubic feet (Bcf) of natural gas, up around 8 percent from 2008, while the country consumed 3,075 Bcf. In 2007, for the first time in almost 2 decades, the country became a net natural gas importer. Consumption for 2009 rose from 2008 levels by over 12 percent, and the country imported over 140 Bcf of liquefied natural gas (LNG) to fill the gap. Although, a majority of the gas consumption is dominated by industrial users (45 percent in 2007 according to the National Bureau of Statistics), the recent growth of gas consumption in the past few years stems from the power, utilities, and residential sectors. The Chinese government anticipates boosting the share of natural gas as part of total energy consumption to 10 percent by 2030 to alleviate high pollution from the country’s heavy coal use, and IHS indicates that gas demand from power generation could grow from the current 125 Bcf/y to between 530 Bcf and 1,400 Bcf by 2020. EIA projects gas demand to more than triple by 2035, growing about 5 percent per year according to the 2010 International Energy Outlook. To meet this anticipated shortfall, China is expected to continue importing natural gas in the future via LNG and is considering a number of potential import pipelines from neighboring countries.
