Chapter Eight

Energy in the Ninth and Tenth 5-Year Plans

Beijing, as part of the Ninth 5-Year Plan, aimed to increase total energy output approximately 9 percent by 2000. This plan’s success involved the accomplishment of supporting programs. The first was to improve energy efficiency by 5 percent annually, a goal requiring significant technology improvements in 15 industries, including coal and electric power industries, and improving the efficiency of the iron and steel, nonferrous metal, chemical, building material, and transportation industries. The second major objective of the Ninth 5-Year Plan was to increase the conservation of resources, described as a “top priority” but qualified by the equal priority given to “development.”
The plan’s focus in power development was on coal, oil, and gas exploration but also emphasized developing new energy sources. Beijing discussed at length the availability of electric power as a final result of the plan. The goal in this vital sector was to increase capacity and generation by 7 percent annually, to reach 290 GW in generating capacity and generate 1.4 trillion kW-hours annually by 2000. This in turn included the simultaneous promotion of hydro and thermal sources; “appropriate” development of nuclear power; the development of power stations near coal mines with a high-parametric, high-efficiency capacity of at least 300 MW; and an emphasis on flue gas desulfurization and extra-high voltage transmission technologies.¹⁸⁵ Other new generation sources, including wind, marine, and geothermal power, were to be developed.
In the critical area of coal production and utilization, the Ninth 5-Year Plan aimed to increase total output to 1.4 billion tons by 2000, with the emphasis on stabilizing output in the east and developing mines in Shanxi, Shaanxi, and Inner Mongolia. Other steps included the accelerated development of technology for cleaning coal and using high-quality anthracite from Shanxi’s Jicheng as a base for chemical fertilizers.
For oil and natural gas, Beijing aimed by 2000 to boost proven reserves by 33 billion bbl of crude oil and 17.7 tcf of natural gas; to increase crude oil output to 3.1 million bbl per day and refinery output to 4.5 million bbl day; and to increase natural gas production to 833 bcf. These increases were to lead to the conversion of 70 percent of urban households to gas fuel.
The Ninth 5-Year Plan recognized that some output would have to continue to come from overseas resources. The plan emphasized the importance of geographic balance, the first element of which was called the onshore principle, which meant stabilizing production in the east while increasing production in the west. Oil and gas were to be exploited simultaneously and their scope of development expanded.
The second element of geographic balance was called the offshore principle, which meant continuing to open and expand the scope of operations to exploit offshore gas and oil. The hope was for steadily increased production, while also stepping up efforts to discover additional resources and increase proven reserves.
Beijing hoped to maximize the use of natural gas from Hainan Island and from Xinjiang Province, increase the use of oilfield products for large-scale nitrogenous fertilizer plants, and upgrade and expand refineries in Zhenhai, Maoming, and Fujian. Environmental concerns were addressed in the goals of ending production of leaded gasoline and adding and improving pipelines and storage facilities.
How successful was this plan? According to the U.S. Department of Energy, China’s energy situation in late 2000, based on annual consumption of 36 quadrillion btu (quads), included 887 billion kW of electricity generated (approximately 70 percent coal-fired); 0.7 tcf of natural gas produced (representing about 2 percent of energy utilized); 3.6 million bbl of oil consumed daily (an increase of more than 80 percent since 1986); and coal consumption of 1.5 billion tons (fulfilling 75 percent of the nation’s energy needs).
The oil sector has apparently led the field in identifying additional resources during the Ninth 5-Year Plan. In 2001, Chinese companies drilled more than 920 wells, with 48 percent located in the already-well-established Daqing and Shengli fields. Offshore production accounted for about 10 percent of China’s total output, with about 60 new wells drilled (60 percent by foreign oil firms).¹⁸⁶
The Ninth 5-Year Energy Plan, then, while failing to achieve all of its goals, marked a significant expansion of China’s energy sector, in terms of both domestic and foreign sectors. Beijing was able to support the continued economic growth it deems necessary to satisfy China’s people and maintain its hold on power.

The Tenth 5-Year Plan

China will be focusing on several areas in the Tenth 5-Year Energy Plan (2001–2005). Ensuring access to reliable energy resources that are plentiful enough to support continued economic growth is vital. This concern is being addressed by:

• nexpanding acquisition of energy resources around the world, as well as further developing sources in Chinese territory ashore and at sea. The policy is susceptible to changing international developments, including the downfall of tenuous governments. Even more problematic may be China’s dependence for over half of its imported oil on Southwest Asia and the Middle East, areas of doubtful long-term stability.
• taking advantage of foreign capital and technology to discover and exploit energy resources by adopting foreign policies amenable to securing the resources, such as those in Central Asia. This strategy is required for future expansion of the energy sector but also will constrain Beijing’s foreign policies in proportion to its reliance on foreign-controlled energy sources.¹⁸⁷
• conserving and reducing environmental pollution, which is inherently wasteful of energy resources. This program will have to be more carefully and constructively managed than it has been in the past if China is to reduce the pollution attendant upon economic growth.
• pushing Chinese industries to adopt energy-conserving technologies and urging development of high-tech industries that require relatively little energy. Here, Beijing will have to continue relying on technology of foreign origin to buttress indigenous efforts at privatization and modernization of the industrial sector. This dependence will influence China’s foreign policy choices.
• establishing a national strategic oil reserve equal to at least one month’s supply.¹⁸⁸

These broad goals are based on the assumption that China’s dependence on foreign energy sources will continue to increase. The last step is a product of concerns about a volatile world petroleum market, especially in view of current uncertainties in the Middle East and Southwest Asia.¹⁸⁹ The plan also includes an ambitious concept for upgrading China’s petroleum industry, namely to:

• complete a network operational system in 3 to 5 years
• raise the success rate of exploration by 3 percent
• shorten the cycle of oil well drilling by one-third
• raise the oil recovery rate by 2 to 3 percent
• raise the proportion of oil and gas in the primary energy to over 3 percent
• raise the contribution by science and technology to oil and gas exploration to 55 percent.¹⁹⁰

These objectives must be considered within the national political goal of better integrating China’s eastern and western regions. One facet of this rubric for the energy sector is the West Electricity for East Program, which was officially initiated in June 2002 when a 380-km, 500-kilovolt power cable from Chongqing to Shanghai began transmitting power.¹⁹¹
Beijing thus will have to resolve, both for reasons of continued economic well-being and domestic political tranquility, a national priority of working toward a stable international environment. This is especially true in East Asia, where the predominantly maritime character of trade will increasingly determine the reliability of the energy supply central to China’s continued economic health and societal satisfaction.
Another international issue is Japan’s reliance on China as a source of coal and petroleum. For 2001, this dependence will exceed 3 to 4 million tons of crude oil from China’s Daqing oilfield alone and more than 7.5 million tons of coal for each of the next 3 years.¹⁹²
U.S. Department of Energy projections based on a 4 to 5 percent annual growth in energy demand for China (compared to about 1 percent growth in the world’s industrialized countries) indicate that this dependence will continue increasing for at least the next 15 years.¹⁹³ This report describes three key facts about China’s ability to provide its citizenry with energy products: fully one-fifth of China’s population is still without electricity; energy production still suffers from very significant shortfalls in domestic transportation—crucial in view of the great distances of significant energy sources from population centers; and Beijing is still struggling to solve the problem of inadequate distribution of the energy already produced.
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. By 2015, the share of the non-coal sectors will certainly increase but not by enough to offset the overwhelming dependence on the essentially dirty energy produced from coal. This dependence is actually expected to grow slightly to 77 percent of China’s overall energy production by 2015.¹⁹⁴
China is expanding the infrastructure needed to support the steady, significant increase in energy resources required to sustain continued economic growth. Infrastructure shortcomings reflect energy resource problems not only with availability but also with distribution of available supplies. Hence, China is expanding rail, riverine, and ocean facilities for moving petroleum products.¹⁹⁵
Perhaps most telling for future efficient use of energy to support economic growth and popular satisfaction is Beijing’s announced plan to reorganize and expand China’s power distribution system, both to increase the efficiency of power utilization and to “create and safeguard a sound market environment for fair competition.”¹⁹⁶ Finally, Beijing is attempting to instill a sense of conservation in the exploitation and consumption of energy resources. This emphasis fits with policies to combat the environmental degradation that so seriously affects all sectors of Chinese industrial development. One government pronouncement declared “a lack of energy resources and the increasing environmental pollution have become important factors that reign in our economic and social development.” ¹⁹⁷

Future Oil Imports

China’s oil imports are increasing yearly, almost doubling during 2000 alone, with the majority coming from Middle Eastern countries and Southwest Asia.¹⁹⁸ During the first 9 months of 2001, for instance, Iran exported 63 million bbl of oil to China, more than any other nation. Saudi Arabia and Oman were the second-leading exporters to China, each providing 44.1 million bbl.¹⁹⁹ This trend will almost certainly continue, as China’s population continues its nascent migration from rural to urban areas, a classic factor in a great nation’s economic modernization.
China produced 50 percent more automobiles in 2002 than in 2001, but currently there are just 10 motor vehicles for every 1,000 Chinese citizens, while the comparable numbers are 30 for Egypt, 552 for Japan, and 770 for the United States. This disparity indicates how far China’s energy demands are likely to grow, as disposable income increases and World Trade Organization (WTO) membership results in lower automobile prices for the huge population.²⁰⁰ Indeed, one observer has noted that “per capita oil use in China is nearly 30 times less than that of the United States”²⁰¹ and “from 1978 to 1995, the number of passenger vehicles per thousand people increased nearly 1,000 percent.” Hence, he offers the “possibility of up to 250 million cars in China” by 2050, a particularly striking figure as an indicator of possible future energy demand in the nation in light of the fact that there were only 700 million cars worldwide in 1999.²⁰² The potential for China to become 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.”²⁰³
Chinese officials are concerned about this growing reliance on foreign sources of the energy crucial to China’s continued economic health, especially in view of the recent but prolonged increase in the price of crude oil.²⁰⁴ Nonetheless, China continues to rely on foreign capital, technology, and know-how to recover domestic energy resources, cooperating with more than 50 foreign companies to exploit just the offshore oil sector since 1979.²⁰⁵
The government apparently has decided on a multilevel approach to ensuring adequate fuel supplies. First is expanded domestic production, including both exploring for new energy fields ashore and at sea, and usually with foreign participation. CNOOC, for instance, has announced its consortium with U.S.-based Phillips Petroleum to invest in large-scale offshore oil exploration during the next 5 years.²⁰⁶
Second is a program for increasing the effectiveness of the process for turning the raw product to usable energy, including tight control of refineries.²⁰⁷ Third, Beijing is signing contracts with a wide range of countries that will export oil to China. Fourth is the drive to gain exploration rights and production control over energy fields in foreign nations.
Fifth, Beijing is creating an energy reserve to provide a ready source of emergency resources and also “to avoid massive economic losses resulting from fluctuations on the international market.” This last program includes steps to control the rate of increase in fuel consumption, specifically by “ensuring the stable growth of domestic crude oil production, accelerating the development and use of natural gas, and promoting the restructuring and technical upgrading of the petrochemical industry.”²⁰⁸ Instability in the Middle East²⁰⁹ in part drives the creation of a national energy stockpile, which may be as large as 4 million cubic meters valued at $10 billion.²¹⁰
The idea of a strategic petroleum reserve has gained urgency since the September 11 terrorist attacks in the United States: a senior State Council economist has noted that American military campaigns in Afghanistan and possible campaigns in Southwest Asia “will greatly affect China’s oil strategy in the Middle East and Central Asian countries.”²¹¹ This program aims to reduce possible energy shocks by establishing an oil stockpile equivalent to at least 3 months’ national supply.²¹²
In an August 2001 statement, the State Economic and Trade Commission announced that China would establish a “state strategic oil stockpile...by 2005” as a buffer against “the volatile oil market.” The plan reportedly calls for a 30-day supply of fuel oil and would cost more than $2.5 billion.²¹³ This program has also been endorsed by the State Development Planning Commission, PetroChina, and, interestingly, by the U.S. Department of Energy.²¹⁴
China is also considering reestablishing a market in oil futures open to public investors, although this will likely not occur until 2005. ²¹⁵ Two factors are probably causing the government to hesitate: WTO membership, which may enhance the desirability of a futures market, and the possibility that a futures exchange will require the government to change the way it currently manages and controls the oil 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. Beijing allows foreign companies to invest even to the point of purchasing controlling shares in pipelines. This policy represents China’s decision, at least in the energy sector, of allowing foreign control over major parts of the energy infrastructure on which the nation depends.²¹⁷
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 health of the domestic economy.²¹⁸ This balance will be difficult to achieve, given Beijing’s apparent decision to end the national oil monopoly by floating major companies, such as Sinopec. A further complication is that foreign oil companies can compete in the retail market, especially in refined oil products and the operation of automobile service stations.²¹⁹
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.²²⁰ The government is urging these companies to form cooperative operations with Shell, Exxon, Mobil, and other multinational oil companies. British Petroleum and PetroChina have already announced such an agreement.²²¹ The prospect of rural drivers buying fuel from foreign stations apparently is palatable to Beijing, although it would no doubt be anathema to earlier generations of CCP leaders.
Entry into the WTO also raises many concerns for Beijing. At a November 2001 International Symposium on the Fuel Oil Market in Guangzhou, government officials emphasized that WTO entry “would inevitably bring heavy blows to” China’s oil industry.²²² While Chinese energy industry analysts do not universally support this judgment, it has introduced an element of uncertainty into public and private sector attempts to develop the nation’s energy infrastructure. Further, Beijing will have to tread a fine line between meeting WTO requirements and fostering the expansion of the energy sector required for continued national economic growth.
One step being taken is a significant reduction of the tariff on imported refined oil from the current 69 percent to 6 percent.²²³ Import quotas for petroleum products have also been increased by 15 percent, in accordance with WTO conditions.²²⁴ According to one writer, foreign oil giants “are scrambling to get their foot in the door [with] visions of a gas station on every corner in a country with 1.2 billion potential consumers.”²²⁵ It also hopes that WTO membership will provide avenues for influencing the price of petroleum.²²⁶
Beijing seems determined to participate fully in the WTO regime to maximize benefits to the economy, including the energy sector. In other words, as China drives to optimize the availability and efficiency of the resources it needs to fuel its energy industry and hence its economy, it is casting its net of programs widely and imaginatively.
Beijing aims to exploit foreign petroleum sources while avoiding reliance on foreign production. Instead of merely importing crude or refined petroleum from other countries, Beijing is pursuing agreements to obtain exploration and production rights for likely petroleum fields located in foreign states.²²⁷
China’s desire to diversify its energy resources is indisputable. Beijing would like to expand significantly the role natural gas plays as an energy source and is investigating non-hydrocarbon energy sources, but it is having difficulty achieving a near-term, significant reduction coal consumption. Importantly, no clear sense of prioritization emerges from the plethora of initiatives, plans, and declarations emanating from Beijing. This apparent lack of prioritization applies across the board, with massive pipeline projects probably competing with other huge infrastructure projects, such as the Three Gorges Dam system or the plan to divert water from southwestern to northeastern China.

Endnotes

¹⁸⁵High-parametricrefers to a technology for increasing the efficiency of converting fuel to heat; desulfurization of coal allows it to be burned more efficiently and cleanly; extra-high voltage transmission technologies improve the efficiency of the power distribution system.“Energy at a Glance,” accessed at <www.eia.doe.gov/emeu/cabs/china/eglance.html>. [BACK]

¹⁸⁶“China Set to Remain Asia’s Hotspot for Oil and Gas Exploration,” Reuters, in Alexander’s 6, no. 20 (October 24, 2001). [BACK]

¹⁸⁷The World Bank classifies China as a “developing country” for the purposes of energy estimates. Foreign investment has played a critical role in financing the expansion of China’s electric power infrastructure and is expected to play an even more important role in the future. Cited in <www.eia.doe.gov/oiaf/archive/ieo00/boxtext.html>. [BACK]

¹⁸⁸Phar Kim Beng gives the 1-month figure in “Oil Needs Drive China West,” Asia Times,November 20, 2002, 2, accessed at <www.atimes.com/atimes/printN.html>. Liu Keyu of the Petroleum Economics and Information Center of CNPC projects stockpile goals of 20 days supply in 2005, 50 days in 2010, and 90 days in 2020 (VIC, “Asia Pacific Daily Summary,” September 16, 2002). [BACK]

¹⁸⁹Peng Kailei, “China to Increase Strategic Oil Reserve,” Wen Wei Po (Hong Kong), September 19, 2002, in FBIS-CPP200209190000043; “China Plans Oil Stockpile,” China Daily, accessed at <www.china.org.cn/english/2002/Sep/43358.htm>, cites a “government official from the State Council regarding concern about tension in the Middle East.” [BACK]

¹⁹⁰“China Sets Principal Tasks for Upgrading of Petroleum Industry,” Xinhua, September 27, 2002, in Alexander’s 7, no. 20 (October 15, 2002), also lists priority areas for applying new technologies and priorities for research and development. [BACK]

¹⁹¹“China’s ‘West Electricity for East’ Program Begins in Sichuan,” Xinhua, June 1, 2002, in FBIS-CPP20020601000004. [BACK]

¹⁹²“Japan, China Strike 5-Year Oil, Coal Trade Deal.” [BACK]

¹⁹³“China’s Energy Demand Now Exceeds Domestic Supply,” DOE–EIA, accessed at <www.eia.doe.gov/emeu/cabs/china/part2.html#ENERGY>. [BACK]

¹⁹⁴Ibid. [BACK]

¹⁹⁵“China Sets Up Oil Company for Inland River Shipping,” Xinhua, November 12, 2001, in FBIS-CPP20011112000176; “China to Construct Larger Oil Wharves to Meet Importation Demand,” Xinhua, January 24, 2002, in FBIS-CPP20020124000045. Also see “Oil Wharf Upgrading Begins at Zhanjiang Port in South China,” Xinhua, October 18, 2000, in FBIS-CPP20001018000203; “Two Companies Present LNG Carrier Designs to Chinese Shipyards,” Maritimepress, in Alexander’s 6, no. 20 (October 24, 2001). [BACK]

¹⁹⁶Liu Jipeng, “a power-reform expert” involved in drafting the national plan, quoted in Zhang Dong, “Power-Industry Reform Looms,” China Daily (Hong Kong), September 10, 2002, in FBIS-CPP20020910000067. [BACK]

¹⁹⁷“China’s Energy Conservation,” Xinhua, in Alexander’s 6, no. 24 (December 19, 2001), expresses Beijing’s concern; Fu Jing, “State Stresses Importance of Energy Education,” China Daily, December 17, 2001, in FBIS-CPP20011217000018, notes the government goal of “an annual 4 to 5 per cent energy-saving rate” and announces “massive publicity campaigns, education and training in this endeavor.” [BACK]

¹⁹⁸“China Imports of Crude Have Almost Doubled,” Alexander’s 5, no. 21 (November 16, 2000); “China Reports on Crude Oil Imports,” Xinhua, January 11, 2001, in Alexander’s 6, no. 1, reports that China crude oil imports for the first 11 months of 2000 were 97 percent more than during the same period in 1999. [BACK]

¹⁹⁹“Marked Increase in Oil Exports to China,” Iranian News Agency (Tehran), December 11, 2001, in FBIS-IAP20011211000038, also reported that Iran’s exports in 2001 represented a 60 percent increase over the same period in 1999. “China and Ukraine Trying to Set Their Foot Strongly in Oman,” Times (Oman), April 24, 2002, in Alexander’s 7, no. 10 (May 16, 2002), reported that Sinopec intended expanding its activities in the country. This data is in metric tons (2,204 pounds). [BACK]

²⁰⁰“Beijing Posts Sharp Increase in Auto Sales,” Xinhua, January 30, 2003, in FBIS-CPP20030130000071; “Fueling China’s Growth,” The New York Times, December 26, 2000. [BACK]

²⁰¹Manning, 104. [BACK]

²⁰²Ibid., 105. [BACK]

²⁰³“NPC Deputy Expects 150 Million Chinese Families to Buy Cars in Next 15 Years,” Xinhua, March 12, 2003, quotes Chen Hong, “vice-president of Shanghai Automotive Industry Corporation Group.” For environmental concerns, see “Beijing Encourages Use of Green Fuel,” Xinhua, in Alexander’s 7, no. 6 (March 21, 2002), which also reported that “the number of automobiles in Beijing has grown by more than 10 percent every year”; “China to Invest $120 mm in Developing Clean Motors,” Xinhua, November 13, 2002. [BACK]

²⁰⁴For instance, see “State Council Calls for Protection against Capricious Oil Market,” January 2, 2001, accessed at <www.chinaonline.com/topstories/010102/1/B100122933.Asia>. Also see “PRC Researcher Notes Effect of Rocketing Oil Prices,” China Internet Information Center, November 1, 2000, in FBIS-CPP20001102000026, which reports that the CNPC, Sinopec, and CNOOC all reported billions of dollars in losses for 1998 because of decreasing petroleum prices. [BACK]

²⁰⁵“China’s Largest Offshore Oilfield Found in Bohai Sea,” Xinhua, February 1, 2000, in FBIS-FTS20000201000037. [BACK]

²⁰⁶“China to Invest in Offshore Oil Exploration in Next Five Years,” Newspage, and “China’s Largest Offshore Oilfield to Start Producing in 2002,” accessed at <www.Chinadaily.com.cn>, both in Alexander’s 6, no. 1 (January 11, 2001): this report notes Phillips’ share as $14.5 billion, an obvious exaggeration. [BACK]

²⁰⁷“China to Close More Small Oil Refineries,” AFP, cited in Alexander’s 5, no. 7 (April 27, 2000), reports Beijing’s concern about the number of small refineries that have resulted in an approximately 30 percent surplus in refining capacity. [BACK]

²⁰⁸Chen Geng, director of the State Administration of Petroleum and Chemical Industries, quoted in “China to Take Measures to Control Petroleum Consumption,” Xinhua, January 11, 2001, in Alexander’s 6, no. 1 (January 11, 2001). [BACK]

²⁰⁹See, for instance, Mai Tian, “Oil Reserves Plan in Pipeline,” China Daily, January 20, 2003, in FBIS-CPP20030121000021; and “Chinese Government Builds Up Oil Stockpile,” Weweipo News, February 25, 2003, in VIC, “Asia-Pacific Daily News Summary.” [BACK]

²¹⁰“Chinese Government May Establish a 10-Billion Dollar Oil Fund,” China Daily, March 3, 2003; “China to Build Two 2-Million Cubic Meter Strategic Oil Reserves,” China Times, March 9, 2003. [BACK]

²¹¹Niu Li, quoted in Xu Dashan, “Oil Reserve System Urgently Needed,” China Daily, February 18, 2002, in FBIS-CPP20020218000024. See “China to Close More Small Oil Refineries” for a discussion of Beijing’s decision to establish a strategic oil reserve. Sinopec president Wu Ruilin, quoted in Associated Press report, March 9, 2000, in Alexander’s 5, no. 7 (April 27, 2000). [BACK]

²¹²Discussed in “Q & A on Oil Issues,” China Daily (Hong Kong), November 20, 2000, in FBIS-CPP20001120000031. “Market Survey on Natural Gas Import From Siberia,” Xinhua, November 25, 2002, in VIC, “Asia-Pacific Daily News Summary,” notes that a “market survey will start in the near future” to assess the profitability of importing Russian natural gas. [BACK]

²¹³Chen Shihai, quoted in “China Plans to Launch State Strategic Oil Stockpile,” People’s Daily Online, in Alexander’s 6, no. 15 (August 14, 2001). The 30-day estimate and cost figures are in Miccarelli, “China’s Energy Future,” 9. [BACK]

²¹⁴Song Wucheng, Ding Guosheng, and David Johnson, quoted in Gong Zhengzheng, “Analysts Urge State Oil Stockpile,” China Daily, October 25, 2001, in FBIS-CPP20011025000042. Also see “China to Set Up Mineral Resources Reserve, Supply System,” Xinhua, December 23, 2000, in FBIS-CPP20001223000056. [BACK]

²¹⁵“China Puts Off Fuel-Oil Futures Exchange Till 2003,” China Daily, accessed at <www1.china daily.com.cn/news/cb/2002-10-28/91373.html>, reported that the China Securities Regulatory Commission is evaluating a proposal for this activity before making a recommendation to the State Council. [BACK]

²¹⁶Xie Ye, “Oil Future Market Mooted,” China Daily, February 22, 2002, in FBIS-CPP20020222000030. [BACK]

²¹⁷“China Government Poised to Open Up Gas Market,” China Daily, December 10, 2002, noted that this was accompanied by the qualification that local governments along the pipeline had to agree. [BACK]

²¹⁸“China to Abolish System of Fuel Oil Import Quotas by 2004,” Reuters, cited in Alexander’s 6, no. 1 (January 11, 2001), reports that less fuel oil was imported in 2000 than in 1999, although crude oil imports increased—which probably reflects greater or more efficient refining capacity in China. See Liu Ming, “Oil Industry Needs Reform for WTO Entry,” China Daily, December 5, 2000, in FBIS-CPP20001205000013, for a discussion of how Beijing is addressing the question of import quotas because of pending entry into the World Trade Organization. [BACK]

²¹⁹“China Likely to Open Market for Refined Oil Products,” RiskCentre, June 5, 2002, in Alexander’s 7, no. 13 (June 27, 2002), discusses Sinopec joint ventures with Shell, ExxonMobil, and BP to operate gas stations in Jiangsu, Zhejiang, and Guangdong Provinces. Also see Xie Ye, “Sinopec Stock Issue Expected to Accelerate Breakup of State Oil Monopoly,” China Daily (Business Weekly Supplement), November 5, 2000, in FBIS-CPP20001105000005; “China’s Two Flagship Oil Companies Cast Oil Safety Line to Meet WTO Pledges,” Xinhua, March 29, 2002, in FBIS-CPP20020329000114. Also see “Chinese Oil Majors to Reform Energy Sector Through Overseas Listings,” Reuters, quoted in Alexander’s 5, no. 20 (November 1, 2000). [BACK]

²²⁰“China Shuts Down Illegal Gas Stations,” People’s Daily, in Alexander’s 8, no. 2 (January 24, 2003), reports that almost 5,000 gas stations were shut down in 2002. “PetroChina Calls for Law to Regulate Gas-Station Franchising,” People’s Daily, July 31, 2002, in Alexander’s 7, no. 16 (August 23, 2002), states that this company owns “about 2,000 franchised stations,” while rival Sinopec owns 4,000. [BACK]

²²¹“Sinopec and PetroChina Still Dominate China’s Gas Station Market,” SinoCast, in Alexander’s 8, no. 3 (February 6, 2003); “BP to Build 1,000 Petrol Stations in China,” Neftegaz.RU, in Alexander’s 8, no. 4 (February 20, 2003). [BACK]

²²²“Experts Discuss Prospects of China’s Oil Industry,” Xinhua, November 1, 2001, in FBIS-CPP20011101000215. A different point of view is offered in Xie Ye, “China’s Oil Imports Not to Shock Domestic Market After Ban Lifted,” China Daily, November 13, 2001, in FBIS-CPP20011114000017. [BACK]

²²³Xie Ye, “China to Open Oil Product Markets to Overseas Companies,” China Daily, December 15, 2001, in FBIS-CPP20001215000022; and “China’s Tightly-Controlled Refined Oil Market to Open Wider,” China Daily, June 3, 2002, in FBIS-CPP20020603000021. [BACK]

²²⁴“Import Quotas for Oil to Rise 15%,” China Daily, August 2, 2002, accessed at <www.china daily.com.cn>. [BACK]

²²⁵Peter Marber, “China’s Energy Sector: Cheap But Don’t Rush In,” quoted in Alexander’s 5, no. 21 (November 16, 2000), writing about the effects on China’s energy sector of joining the World Trade Organization. Phillips, Exxon, Mobil, BP Amoco, and Shell were all early bidders. [BACK]

²²⁶Chen Huai, “Active Role Needed in Oil,” China Daily, July 7, 2002, in FBIS-CPP20020707000018. Chen, deputy director of the Market Economy Institute of the Development and Research Center of the State Council, urges China to be active in the futures market for petroleum products and establish “a huge reserve of oil forward contracts” with foreign oilfields. [BACK]

²²⁷“China is Actively Exploring International Oil Markets,” Xinhua, in Alexander’s 4, no. 7 (July 19, 1999). Also see “Sudan: Chinese Electricity Firm Negotiating Projects with Energy Ministry,” Suna News Agency, May 15, 2001, in FBIS-AFP20010516000021. [BACK]