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... The growth rate is projected to fall from its current level of 8. ...
B) PRODUCTION TRENDS
ISSUE: DIVERSIFING ENERGY PRODUCTION
China’s biggest challenge during the Tenth 5-Year Plan ( and beyond) will be to diversify energy production from the current overwhelming dependence on coal. ... More transparent communication of key policies in the natural gas sector would aid both Chinese and foreign companies. ... The stage is set for a demonstration project in modern regulation for this component of the oil and gas sector. ... 1 Political and Policy making issues
The campaigns to obtain energy resources from the former Soviety republics of Central Asia has occurred in the context of Beijing’s diplomatic efforts to seucre and expand Chinese influence in this area, historically of vital national interest to China. ... 2 Political problems facing corporations with investments in Central Asia
CNPC’s friction with Kazakh authorities exists about the level of investment in the firms’ projects as well as other management issues. The senior CNPC representative for the Kazakh scheme, Zhang Chenwu, recently expressed reservations about the possibility of successfully completing the current pipeline project [75]. ...
C) CONSUMPTION TRENDS
ISSUE: RISING POLLUTION CAUSED BY BURNING OF FOSSIL FUELS
Particles And Sulfur dioxide (SO2) from households and small industries have the most impact on the urban population. ...
The challenge for both policy makers and corporations is to convince residents to switch to natural gas. ...
In Beijing, the government enacted new sulphur emission fees in 1999 after many residents refused to pay for the higher priced natural gas supplied from Shaanxi. Abolishing the emissions fee for natural gas, the government increased the fee on normal coal from $0. ... At the same time, the government erased the price differential between normal coal and low-sulphur coal, the market for which was also stagnant at that time owing to the higher price of the low sulphur coal .
I) GAS
ISSUE: PRICING GAS
Pricing is the key to a coherent gas policy. ... This is an approach that the Chinese government appears to prefer, but is costly both in time and money.
Pricing has three main components: inter-fuel competition, environmental policy and social policy. ...
To address the issue of high prices, the government proposed a multi-point plan to reform natural gas prices in 2000. ... As a first step of this plan the government doubled processing fees to $0. ... At current levels, natural gas prices are substantially higher than coal prices, inhibiting fuel switching as well. ... The potential for China to be the “number one car market in the world” contributed to the government establishing the National Clean Automobile taskforce in 1999, which recently announced a $120 million project to develop “environmentally friendlier motor vehicles by 2004”. ...
In fact, this sector of the energy economy has broader social and economic implications since Beijing reportedly is trying to “rectify the gas station market” by closing illegal stations and forcing others into semi-monopolies controlled by PetroChina and Sinopec, which currently operate about half of the national total. ... The government is urging these companies to form cooperative operations with Shell, Exxon, Mobila ndother multinational oil companies. ...
The second reason for concern is the possible lack of planning at national level to deconflict natural gas piped from the far west with that being imported from Indonesia, Papua New Guinea and Australia [92]
C) TRENDS IN TRADE
II) OIL
ISSUE: JAPAN’S RELIANCE ON CHINA AS SOURCE OF PETROLEUM
As a net crude oil importer, China’s petroleum industry is focused on meeting domestic demand but still exports significant amounts of crude. ...
The incident underline the tension inherent in having state-owned firms operating with substantial independence – they still have to take the government’s foreign policy concerns into account when making sales decisions.
ISSUE: DEALING WITH DOMESTIC SMALL SCALE REFINERIES
The petroleum refinery sector in China is overbuilt, although it suffers from a serious lack of adequate capacity suitable for heavier crude, which will have to be remedied as Chinese iport demand rises, especially for Middle Eastern crude. ... [98]
A Chinese government spokesman stated in February 2000 that all small refineries failing to meet the government’s product and quality standards would be shut down by end of March 2000. ... The government responded by acting to protect domestic production. ... Two factors are probably causing the government to hesitate: WTO membership, which may enhance the desirability of a futures market. ... ‘[216]
The government has ruled that foreign companies are not limited in the number of shares they can buy in businesses connected directly to the proposed West-East Pipeline. ... This policy represents China’s decision, at least in the energy sector, of allowing foreing control over major aparts of the energy infrastructure on which the nation depends.’ 207
The government also intends to continue controlling the import of refined petroleum products, trying to strike a balance between reliance on foreign sources and the heatlh of the domestic economy [218].
Approximate Word count = 3998
Approximate Pages = 16
(250 words per page double spaced)
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