| Submit your comments on this article |
| China-Japan-Koreas |
| Sudden and mysterious drop in China's oil consumption |
| 2005-07-14 |
| A sudden and mysterious drop in China's oil consumption helped to push down the International Energy Agency's estimate on Wednesday of global demand for this year. After growing 11 percent in 2003 and 15.4 percent last year, China's overall oil use declined 1 percent in the second quarter from the comparable quarter a year earlier, the agency said. The drop is the latest in a series of unclear and often conflicting indications about whether the Chinese economy is still growing strongly. Top officials of the agency said in interviews they believed that the decline was temporary and that they expected Chinese demand to rebound in the second half of the year, but added that world oil prices could take a heavy blow if Chinese use did not increase... I would suggest that the Chinese military has filled its new strategic petroleum reserves to nominal levels at "whatever" price, but now is willing to wait until prices drop to "top off". |
| Posted by:Anonymoose |
| #16 China's energy consumption doesn't conform to expected trends. The 15% increase in oil consumption last year was part of an overall increase in energy consumption of 15% while the economy grew by 9%. In a normal economy energy consumption grows by less than economic growth (about .6). Whilst there are number of explanation for this, none can explain the sheer scale of the phenomena. So forget about a strategic oil reserve. The same phenomena applies to coal. Its probably as simple as the Chinese economy has slowed sharply. The recent surge in Chinese steel exports supports this view. |
| Posted by: phil_b 2005-07-14 19:18 |
| #15 But will the Chinese people support a war over Taiwan? Lately there's been a lot of movement from the farms to the cities. Why? Because with a hot economy, come hot jobs. If a war puts these jobs at risk, suddenly you will have a lot of angry and unemployed people, and perhaps a tipping point. This is something the Chinese communists must take into account. Is it worth the risk? These are not the '50s and '60s. |
| Posted by: R 2005-07-14 18:38 |
| #14 China will attack Taiwan at a time of its choosing. It will not care the cost. As we've discussed before, here, China is willing to pay just about any price to have Taiwan. The Chinese believe the United States will not be able to prevent this. Why? Because it's preordained is the primary reason. Secondly, they believe they will be able to force a capitulation before we can react. Just a few short months ago we saw the KMT leadership in Peking, not returning to power but as supplicants. That, more than the investments on the mainland, suggest the Taiwanese readiness to roll over and play dead for the right "Hong Kong style" offer. Folks, there are a couple of things the Chinese leaders have to do, HAVE to do, to survive the next decade in power. Obtain resources and defend the homeland. Even then, it will probably not be possible. Taiwan represents both of these needs, and reunites the last major part of China to Peking's control. Remember, the world revolves around Peking. All who come there are supplicants to the Peacock Throne. |
| Posted by: Chuck Simmins 2005-07-14 16:44 |
| #13 Even desperate to distract internal dissention, would China really risk a war right now? It would be *easy* for the US to cut off China's oil at the source, and a tanking economy will go up in flames. The US wouldn't even have to lift a finger to actually stop ships, just threaten to unleash all our subs on a world-wide sink--anything-bound-for-china spree, and shipping companies on their own would cancel all service to China. Their state run fleet is small enough that they could be sunk or captured relatively quickly. Not having a world-wide blue water navy means that when war starts, you have no ocean trade. See Germany, World War I, World War II, for examples. |
| Posted by: Laurence of the Rats 2005-07-14 16:29 |
| #12 If this means those playing the oils futures market are going to get hammered, let the celebrations start! |
| Posted by: Pheng Glolung9905 2005-07-14 16:07 |
| #11 Damn this is crazy? Are you freepers implying that with an increase in price consumption dropped? That's olde think? It's a trick! The wiley Chinee have been forcing every household to keep 12 quarts of light sweet on their back stoop! We can't win. It's the end...... Okay suckers.... |
| Posted by: Shipman 2005-07-14 15:53 |
| #10 Before pursuing this further, is there any evidence that China has and has filled a strategic reserve? I know we have one, and it's certainly reasonable for other countries to have one, but does China have one? |
| Posted by: Steve White 2005-07-14 15:49 |
| #9 Interesting point, RJS! Could this be a beginning of the end. I've questioned (not asserted) that myself here several times. They've also had a couple of Naval accidents out at sea, potentially showing a lack of O&M of their subs/fleet. If they're not putting money into the military, where is it going? |
| Posted by: BA 2005-07-14 15:30 |
| #8 Internal enemies... I would think China would get medieval on the Turkeman people of Xinjiang province long before they went for Taiwan. The Turkeman are muslims and many trained in Afghanistan so any crackdown can be done under cover of the War on Terror without disrupting trade and crashing their economy; risking war with the US; and the destruction of the big dam. Logistically it'd also be a lot easier and provide training beyond the prying eyes of western observers (being in the middle of nowhere and still within China and all). I believe the Chinese neighbors butting up against Xinjiang have oil. By the way. I would think a pipeline would be cheaper for China than trying to build a navy to protect shipping lines. Another reason to secure Xinjiang. |
| Posted by: rjschwarz 2005-07-14 14:09 |
| #7 Green seems to be echoing what I have been writing here and on my blog for a couple of years. Moose's suggestion about the topping off of the reserve is possible. I would also point out that energy price in China were heavily subsidized by the government, and the prices were not permitted to rise until recently. One thing that you can be certain about is that in this centralized economy, the change has little to do with consumption and far more to do with government policy. |
| Posted by: Chuck Simmins 2005-07-14 13:06 |
| #6 I hope oil traders bid up the price even HIGHER, just so that thay can set themselves up for a nasty fall. |
| Posted by: Bomb-a-rama 2005-07-14 11:57 |
| #5 What leads to my suspicions is that first of all, all imports of oil are controlled by the government, not purely economic forces. Second, that *after* they slammed the brakes on the commercial increase in oil consumption, their *national* oil consumption still jumped. So, if oil isn't going to commercial or consumption, where is it going? That last bit is that a strategic petroleum reserve has a very fixed nominal level--once it is achieved, further consumption suddenly drops like a rock. Which seems to be the case here. |
| Posted by: Anonymoose 2005-07-14 11:35 |
| #4 Nothing stalls a manufacturing economy like high energy prices. As China is export driven and the Fed is containing inflation with interest rate hikes, the effects of the increases will have to be absorbed domesticly until China can raise prices to the US. But if they try to do domestic crackdowns to suppress the reaction, foreign purchasers start to fear supply interruptions and may look to another large country as an alternative/back up supplier. India, anyone? A tight time for Chinese leadership is approaching. |
| Posted by: Mrs. Davis 2005-07-14 11:34 |
| #3 Chinese automobile owners make less money and are much more price sensitive to the doubling of oil prices than in the advanced countries. They are driving less and using public transportation/bikes/feet. |
| Posted by: ed 2005-07-14 11:31 |
| #2 I had the same thought. |
| Posted by: Laurence of the Rats 2005-07-14 11:11 |
| #1 Steven Green over at Vodkapundit thinks it may be a sign the Chinese economy is tanking: But what happens if China's economy tanks? Well, they'd probably do what most dictatorships do: Send in the tanks. Usually, one of two groups gets attacked: 1) Some unpopular locals 2) Some unpopular neighbor country And in that order, too. Hitler went after Germany's Jews long before he struck out at Poland. The Soviets dealt with their kulaks before establishing hegemony over Eastern Europe. When things are bad at home, you persecute some minority to keep The People happy. When that fails, you wage some foreign war to keep them distracted. Now, here's a telling bit of trivia – China has been attacking their unpopular local people for months now. Attacks on Japanese merchants and businesses began in earnest back in April. If - if - China's economy really is stalling, today's oil figures reflect things as they were starting back in April. I'm no conspiracy theorist, but that's one hell of a coincidence. And when Beijing runs out of Japanese to run out of town? If history is any guide, then Taiwan will be the next target. |
| Posted by: Steve 2005-07-14 11:11 |