Prior to last summer’s Olympics, China was moving the oil markets by importing unprecedented quantities of oil and products to insure the games would be successful. After the Olympics, China’s demand for oil fell as its exports, GDP, and industrial activity declined. Their GDP, which had been running at a 10-11 percent annual increase in recent years, contracted to a claimed six percent.
To counter the economic slowdown, China embarked on a massive domestic stimulus program, spending at a rate approaching double that of the US. Although the government continues to report gains in industrial production, outside observers remain skeptical noting that electricity consumption, a good indicator of economic activity, has been falling.
While Chinese oil imports have been growing moderately this year, the amount that can be attributed to filling strategic storage tanks is unknown. These purchases are now on hold for a number of years until new storage facilities can be built. So the future on imports is uncertain.
While the US Congress debates cap and trade, the Chinese are moving ahead rapidly to create an economy that will survive on less fossil fuels. China is investing heavily in solar, wind, electric vehicle, and electric grid technologies. Approximately nine percent of China’s current $586 stimulus package is being devoted to renewable energy technologies. Another package on the order of $500 billion is being prepared that is said to be devoted to renewable and energy efficiency technologies. If these plans come to fruition China will be well on the way to establishing a post-carbon economy.
In absolute terms, Beijing’s carbon emissions and consumption of fossil fuels are likely to continue increasing for many years. The programs currently underway clearly indicate that the Chinese appreciate the threat to their national well-being posed by global warming and possibly peak oil.