An energy watchdog yesterday warned power producers that China's
possible economic slowdown due to a downturn in the US economy and
the nation's industrial restructuring may decrease energy
demand.
The official from the National Energy Leading Group forecast
that China's economic growth would hit "the highest point" of the
cycle in the second quarter of this year and slow down
thereafter.
"Chinese energy companies should keep a close watch on the
economic cycle and market demand to maintain stable supply," Zhou
Xi'an, from the National Energy Leading Group, told China
Daily yesterday. But he assured the companies that there was
still a "steady demand" for energy as the economy may grow at over
9 percent this year.
"Our understanding is that the US authorities have concluded
that the country has already slid into recession because of the
subprime crisis," said Zhou.
Studies have found that China usually follows the US growth
trend with a six-month time lag, Zhou said. "We should be well
prepared for the impact of a US recession."
Zhou's office has long been involved in a study on the
relationship between economic cycle and energy demand.
"The second quarter of this year should be a turning point. We
have taken the period between 2002 and that quarter as one of an
upward trend. From then on, growth will be downward or stable."
Zhou said China's economic slowdown during 1996-2001 brought
down energy demand. "In some years during that phase, the energy
demand decreased and even the pace of energy supply growth dropped
below zero. These are the lessons energy companies should keep in
mind."
Generally, China's energy consumption growth is slower than its
economic growth, said Zhou. Last year, the country's coal output
was estimated at 2.52 billion tons, up 5 percent from the previous
year. But the economy is forecast to have grown at about 11
percent.
An official report forecast China's oil demand will grow at an
average pace of 4.5 percent in 2006-15, much lower than the planned
average growth of around 8 percent.
The total oil consumption is projected to reach 515 million tons
in 2015 from 346 million tons in 2006. By 2015, the country's oil
dependence ratio is to reach 60 percent from the current 48
percent.
Zhou said economic slowdown may give China's energy sector a
chance to restructure itself. In an earlier report, the National
Development and Reform Commission said China will build six to
eight large-scale coal enterprises, each with a capacity of 100
million tons, and eight to 10 coal enterprises with a capacity of
50 million tons each.
These large enterprises are expected to contribute more than
half of China's coal output of 2.6 billion tons in 2010. China
produced 2.4 billion tons of coal in 2006 but its 80,000 coal
companies produced an average of just 30,000 tons.
Lin Yueqin, a researcher with the Chinese Academy of Social
Sciences, echoed Zhou's views, saying China's industrial
restructuring may also decrease energy demand.
Lin said the latest efforts are aimed at updating China's
investment guidelines and phasing out resource-intensive industries
in line with the nation's development policy.
The government is seeking public opinion on the revised 45-page
guidelines, which include about 1,000 items. Outdated and
small-scale coal mines, and power and iron and steel plants will be
prohibited under the new guidelines.
(China Daily January 16, 2008)
