China's Energy Policy and Strategy

Acknowledgement 

Hereby we would like to express our great gratitude to our tutor in Competitive Intelligence, Professor PINTE, who imparted much technical and advice on our blog construction.

Furthermore, we are most grateful for the learning opportunities offered by the director of Master Global E-Business, Mr. Olivers SIRVEN, at Université des Sciences et Technologies de Lille.  

Team Presentation 

We are proud to present our team members, all of which are Master (2nd year) student on Global E-Business at Université des Sciences et Technologies de Lille (France).  

Job Designation

LUO Zhiqi: Team Lead and editor. 

XU Fan: Information researcher and web designer.

WU Ji:  in charge of information filtering, categorizing, and editing.

Justification of Selecting this Subject

This blog is dedicated to the China’s Energy Policy and Strategy.

We are from China, the largest developing country on the way of modernization and great renaissance.  

The goal of this blog is not only to create a catalogue or an inventory of the latest news, but also we will try to give you a general history and an analysis of the possible trend on China’s energy problems and solutions. The selected articles and synopses will illustrate a multiple angles of view on this subject.

This blog is worked on following one of our courses, Competitive Intelligence, coached by Professor Jean Paul PINTE. Mr. PINTE imparted us many useful methods, instruments and techniques in this area all along these three months. And it shall be finished before the end of April, with all the necessary information requested by Mr. PINTE.

Methodology: 

The method we have used to accomplish this job，

1. Definition of the key words

This is our first step to begin this blog, we seek for every single word of our name of blog to see their own and related meanings. This Brainstorming workshop offered us the first relative complete image of our subject! After this step, we finally got a list of key words in order to better continue the real “blog job”.

To find the related key word of our subject, we used Kartoo to see the definitions around our subject.

    2.   Software Tools using

 For all these different tools that were given by our teacher during the class, we choose some of them for our blog. For the Catalogue Tool we sit, we choose Gosheme and Kartoo; for the news all over the world, we choose Webdopresse to complete the information in the web modality; for the other blogs, we choose BlogDigger to add the information in the blog area; we also use search to see the invisible webs in order to offer a better work.

    3.    Information research  

           Using all those tools in the Competitive Intelligence List, we were very competent to seek the very “in” information for our blog.

What, When, Why, Who, Where and How Update

We have done a very complete job of choice and summarize; since information is not all good neither fitful so that we need to keep in mind that our exact subject to get the information pertinent neatly to it. Every week our group does a group meeting to discuss about our blog and the actual evaluation.

1. fuel of nuclear power which is reletively clean and safe to ecologic environment.
2. fuel of nuclear weapons

1. unceasingly deteriorated security situation: risks outweigh returns, large-scale investment seems to be infeasible.
2. deficiency of governmental support and long-term target.

The advantages of Chinese companies

URL: http://www.youtube.com/watch?v=A6wQcIGx5Ew

Mr Ma, the head of the National Development and Reform Commission, the chief economic planning agency, said such criticism was “unfair” and misrepresented China's use of resources. China, mainly through the use of coal, was able to meet about 90 per cent of its own energy needs – 20 per cent higher than the Organisation for Economic Co-operation and Development average and 30 per cent more than the US.

Although China remains a relatively small per capita energy consumer, a result of the relative poverty of its 1.3bn population, its greatest impact on global markets has been its increasing share of raw materials consumption.
 

Source: http://www.ftchinese.com/sc/story.jsp?id=001009934
Original article was published by Financial Times and written by Richard McGregor. The summary was edited by XU Fan

When the People’s Republic of China was founded in 1949, this country was well able to se provide the energy; even the first two “oil shocks” (1973-74 and 1979-80) had little impact on the Chinese energy sector. But since the early 1980s, China se developed economically in a super speed, which evidently makes China run short of energy. This sparsity situation will continuer and indeed exacerbate in the future.

The paradox between the limit of the local energy and the dilation of need obliges China adopt a multi-faced energy strategy.

?          Reform Of Energy Sector

China’s government agrees that they have to ameliorate the actual Energy Department to face for the future expanding the high economic growth. In fact since 1955, China keeps changing the form of national energy agency, on changing the name, the organization and even the function. These continuing changes suggest that China lacks a strong national mechanism to oversee its energy sector.

?          Vulnerability To Attacks

The country’s vulnerability to attacks by terrorists or pirates turn into a real problem in the case that China imports more and more foreign oil. Actually Chinese-own conveyance transports only very little part of the imports products; China begins to construct its own transport capacity in the subject to ship more imports by it self.

?          Diversification Of Energy Mix

As the first consumer of carbon, all these fossil fuels bring large numbers of problems such as serious environmental pollution, threatens the sustainable energy supply, etc. Nowadays the natural gas takes more places in the energy used, and China plans to decline the consumption of coal; but this tendency can’t be the real solution, the imports more important and the brand new strategy in future can be predict!

If we take a look outside of the country, certain politic is also being practiced to meet the needs of energy. The Middle East and Africa provide sequentially more than half of China’s oil needs, China has already diversify import sources; secondly Chinese companies have sought to establish a presence mostly in countries where US and European companies are absent.

 The dramatic political situations between China and some countries play an important role in the China’s energy strategy.

?          China and Russia

Geographically they really should make cooperation; they are both against “American hegemony”, they have commendably ameliorated their relationship since years; above all these, the most important are that, Russia is a big provider of energy and China is a big customer.

?          Central Asian & African and China

For them, China is a country who has the power to help them in UN; in other words China is viewed as a potential protector and ally on the international scene. They’re the ideal energy suppliers for China.

?          The Middle East

Middle Eastern oil producers share significant commercial and strategic interests with China; with the rupture of the relationship between USA and the Middle East, and the dramatic improvements between Beijing and Riyadh, China has secured and developed this side of its suppliers.

 We bring up the conclusion in the text:

Several conclusions can be drawn from this discussion of China’s energy outlook. First, China’s demand for oil will continue to grow in order to satisfy its high economic growth and the needs of its large population. Given the country’s stagnant domestic production, China’s dependence on imported oil will further deepen. Second, like other major energy consumers (ie, the EU and the US), China has sought to diversify its oil sources. Supplies from Russia, Central Asia, Latin America, and Canada are likely to contribute to Beijing’s energy security. However, Africa and the Middle East are likely to continue to be the main suppliers.

Third, a key challenge to China’s energy security is how to control and regulate the rising demand for energy and create the appropriate governing mechanism to achieve this goal. Fourth, China’s energy security is increasingly an international concern. The nation’s rising demand is pushing prices higher and is raising serious concerns regarding global pollution and other environmental issues. Fifth, securing energy supplies has become a major aim of China’s foreign policy. China is likely to play a stabilizing role in international policy to ensure the non-interruption of oil supplies. Finally, Beijing’s rising demand for energy should not be seen at the expense of the US or other major consumers. Today’s energy markets are well-integrated. The source of energy matters less than its availability.

Source: Written by  Gawdat Bahgat, who is Director of the Center for Middle Eastern Studies, Department of Political Science, Indiana University of Pennsylvania from   VOL. XLIX No 3 15-Jan-2007

The summary is edited by WU Ji

       As we consider the future energy, China and the US are tightly related. The coal, especially the cleaner-coal technology will affect these two countries’ effort to control climate change, maintain economic growth and ensure energy security.

      According to the International Energy Agency, China and the US together will need 1,500 gigawatts of new net electricity generation in the next 25 years – 1.5 times current US capacity.

      For these two countries, coal is surly the cheapest, most secure solution. China and the US have more than 30 per cent of the world's coal reserves respectively.

      In the face of climate change, they have an urgent need to develop and use cleaner-coal technology. In US, billions of dollars were invested into this new research. In China, SASOL spent 10billion dollars on two coal-to-liquid-fuel facilities.

      Some energy research experts have advised four following principles for the US and China.

 First, GE, Siemens and others should work with Chinese partners to build cleaner coal gasification facilities and other generation equipment in China for deployment there and in the US.

 Second, both countries should enact climate change policies to reduce the traditional way of using coal.

 Third, they should encourage cross-border investment and deployment of next-generation coal generation.

 Finally, both countries' governments, investors and generators should accelerate the deployment of carbon sequestration technologies.

 
Source: http://www.ftchinese.com/sc/story_english.jsp?id=001009791&loc=story
Original article was published by Financial Times and written by Todd Glass, partner at Heller Ehrman. The summary was edited by XU Fan

On the China’s newest version of the resource-rich countries list, Iran, Sudan and Nigeria has been eliminated. This is a list of countries that Chinese government will provide financial incentives to Chinese companies to invest in.

On the list, there are nine nations for further Chinese oil and gas investment—Kuwait, Qatar, Oman, Morocco, Libya, Niger, Norway, Ecuador and Bolivia.

It is believed that this decision is mainly because of the political reasons. The US and the European Union are giving China pressure to stay out of Iran and Sudan or to use its leverage to make these two countries to change the policies on nuclear issues and human rights.

Source: http://www.ftchinese.com/sc/story.jsp?id=001009821
(orignal source is in Chinese. The summary is translated by XU Fan)

http://news.bbc.co.uk/chinese/simp/hi/newsid_6030000/newsid_6038000/6038006.stm
Oct 10th 2006, GMT 15:31

Background

15 years ago, China was able to export oil. Today China represents 2nd largest petroleum consumption in the world. 50% of the base-oil demand relies on import.

Objectives:

Restrain the oil appreciation
Enhance the energy security
Construction of Oil Reserve Bases

In 2006 Beijing eventually launched its emergency provision project to countervail the impact of soaring oil price, which remained above $60 per bucket as OPEC dropped its output.

With 100 buckets of oil imported from Russia having been poured into the giant oil tank, the China National Strategic Oil Reserve Base, of which the construction was completed in August 2006, started to run in October 2006.

It was reported that the Chinese authority had instilled into the Reserve Storehouse 3 million buckets of oil, which is only 10% of the capacity of the Zhenhai Strategic Oil Reserve Base.

The planned strategic oil reserve bases including:

Zhenhai (Zhejiang Province)
Daishan (Zhenjiang Province),
Huangdao (Shandong Province)
Dalian (Liaoning Province).

It was projected that the 1st phrase of construction would provide the reserve capacity to power China for 14 days, up to 20~30 days (100 Million bucktets) after all bases completed.

Diversifying oil origins
Domestic oil corporations
Russia
Saudi Arabia
Other sources

Market strategy: “buy at low price, wait during high price”

China keeps watching the oil price and will stop reserving if only the oil price resumes rising.

Translated and summarized by LUO Zhiqi