Posted on 04/29/2008 2:19:55 PM PDT by NRG1973
BEIJING, April 29 (Xinhua) -- Soaring oil prices have not slowed China's consumption of oil as statistics show that China's apparent consumption of crude oil and refined oil products both hit record highs in the first quarter of the year.
According to statistics released Tuesday by the China Petroleum and Chemical Industry Association (CPCIA), China's apparent consumption of oil products composed of gasoline, diesel and kerosene rose by 16.5 percent year on year to 52.73 million tonnes in the first three months, and crude oil, rose by eight percent to91.8 million tonnes.
The "apparent consumption" represents the sum of net imports and output and could be taken as an index for the real oil consumption excluding inventory.
The growth of oil products consumption was a record high and much higher than the same period of last year, which was only 3.6 percent, said Shu Zhaoxia, professor of the Economics and Development Research Institute of China Petrochemical Corporation (Sinopec Group). Sinopec Group is China's top oil refiner.
The growth of crude oil consumption was 2.5 percentage points higher than a year ago.
State ceilings on prices of domestic oil products was the major reason contributing to China's surging oil consumption in the first quarter.
Below-cost fuel prices did not restrain China's demand for oil but rather boosted it, said Shu.
China's gross domestic product (GDP) rose by 10.6 percent in the first quarter, 1.1 percentage points down from a year ago but still at a high level.
Deng Yusong, a researcher with the Development Research Center of the State Council, said that abnormal needs boosted by below-cost prices of refined oil products controlled by the central government over concerns of the country's rising CPI is another major reason contributing to the country's surging oil consumption.
State ceiling on domestic oil products prices has led to both smuggling and cornering of oil products, said Shu.
According to Shu, reconstruction of the country's snow-hit south also increased the real demand for oil products.
China's crude oil output rose by 2.2 percent to 46.85 million tonnes in the first quarter.
The output of gasoline went up 7.0 percent from a year ago to 15.7 million tonnes, diesel, up 11.2 percent to 32.4 million tonnes, and kerosene, up 17.5 percent to 3.03 million tonnes, according to the National Bureau of Statistics.
China processed 84.6 million tonnes of crude oil in the first quarter, up 7.6 percent from a year ago. The growth rate was two percentage points higher than the first three months of last year.
China's net imports of crude oil was 44.95 million tonnes in the first quarter, up 14.9 percent, and net imports of oil products rose by 31.8 percent from a year ago to 5.47 million tonnes, according to General Administration of Customs.
China's imports of diesel in the first quarter surged over 600 percent to 1.66 million tonnes and the imports of gasoline, rose by nearly twice to 76,654 tonnes.
Sooner or later though, their artificial prices will bite them in the arse.
Why??? They sell a lot of manufactured to the USA. If oil gets too expensive for them they will simply increase the price of the goods they sell us. It will hurt us a whole lot sooner and hurt us a whole lot more than it does them.
The government is subsidizing Chinese consumers to the tune of tens of billions of dollars per year. I gotta think this kind of thing is unsustainable over the long run. The Chinese economy isn't growing at a 16% annual rate.
Nope, matter of factly, as it said in the article, it’s growing at a 10.x% rate.
The Chinese sell us a lot of manufactured goods...they can simply increase the price of those goods to pay for the oil they need. We, on the other hand, do not have any factories to make our own products...and even if we did, we don't have the oil to run those industries. This is the downside of relying on China for so much of our manufactured goods.
In a world with just two countries, that would work. In reality, they compete with every other country in the world for low end assembly work. Chinese real estate has always been expensive compared to its competitors. Recently, wage inflation has made Chinese labor expensive as well. They can't just raise prices. We open plants there and buy from them because they're cheap. When costs go up or they raise prices, we'll get our stuff elsewhere. You may or may not recall that we used to see a lot of stuff that said Made in Taiwan, Korea, et al during the 80's and the 90's. China is just the latest cheap labor destination.
WHy is China allowed to drill 50 miles off the Gulf coast and not a US company?
Not to harp on it, but before we made stuff in China, we did it in Europe, then in East Asia (Korea, Taiwan, Malaysia, Thailand, Singapore, Hong Kong). And now we're moving on to South Asia (Bangladesh, Pakistan, Sri Lanka, India, Nepal). China looms large because it's a single country with 1.2b people, but if we added all the major East Asian countries' productive capacities together, it would come to twice China's, while accounting for only a quarter of China's population. And that's just East Asia. What you're missing is that we are a quarter of the world's productive capacity, and China accounts for just over 5%. It is growing rapidly, but nowhere near what you're making it out to be.
Bottom line, our companies design stuff and hire Chinese to assemble it. If the Chinese get too expensive, or decide to stick it to foreign investors, our companies will hire people from some other country to do this. That’s all there is to it. Americans will buy stuff regardless of whether the Chinese or somebody else makes it. Whether the Chinese get to make these things depends on whether they can cut it on price. Take it from me - our people aren’t sourcing from China because of Chinese design capabilities.
We never had to go further than our own gulf for infinite supply.
Why?
Clues also include the same word,. Gulf of Tonken (& other token end runs), didn't a U.S. warship blow up in Cuba(?), etc..
What we do in China - and in most low-labor cost countries - is mostly light manufacturing. As to fuel costs deterring plant construction, that's a head scratcher. How much of a factor do you think fuel costs are as a proportion of plant construction? Are they high enough to offset the difference between hiring 2000 workers at $30 a month (minimum wage in Vietnam) vs $100 a month (minimum wage in China)? Is putting up a new building going to cost an additional $140,000 a month in fuel costs? The deterioration in China's competitiveness is exactly why companies like Taiwan's Hon Hai - the largest outsourcing firm* in the world - are starting to train large numbers of Vietnamese and other nationals at their Chinese plants, in preparation for moves to locations outside of China.
* It assembles boxes for companies like Cisco, Dell, etc. It doesn't design the innards, but it does the packaging (box, materials, color, etc) according to customer specs.
That was average annual, BTW.
I have been told that the Chinese language is incredibly difficult to master.
Domestic is already near what the max would be. Two million more barrels a day would not have much impact when twelve million a day is needed.
*Anybody* can raise prices. I think the other commentator was saying that China could raise prices *and* still sell the same number of widgets. What I pointed out is that China has raised prices in the form of higher labor and land costs, as well as taxes, but the net result is that cost-sensitive manufacturers are preparing to cut Chinese production.
Cuba Postpones Drilling The Strip ‘Til 2009
http://www.freerepublic.com/focus/f-news/2002821/posts
Brazil, Cuba sign oil pact
http://www.freerepublic.com/focus/f-news/1955262/posts
Y'all need to ask Ms Pelosi and Mr Reed that question.
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