TPT January 2014

Global Marketplace

world’s biggest net oil importer, driven by faster economic growth and strong auto sales.” Chinese oil consumption outstripped production by 6.3 million barrels per day, which indicates a necessity to import that much to fill the gap. The EIA said the comparable margin in the US was 6.1 million bbl/day over production. China’s imports are expected to rise to 9.2 million bbl/day by 2020. Joshua Keating, a writer on international affairs for the daily webzine Slate , pointed out “a couple of caveats on this story” (11 October). For one, while US imports are offset by its exports, the country does import more oil overall than China. The US also still dwarfs China – with three times the population – in per capita consumption of oil. In September, Americans used 18.6 million bbl/day of oil and other liquid fossil fuels, while China used 10.9 million, according to the EIA’s “Short-Term Energy Outlook.” US production was 12.5 million bbl/day, while that of China was 4.6 million. All the same, wrote Mr Keating, the reversal of positions is “a major symbolic shift” and one likely to have major geopolitical as well as environmental implications. In his view, the Middle East is likely to claim more of China’s attention. The need for secure oil exports has been an important factor in US foreign policy, particularly in that region. But, today, Saudi Arabia exports nearly as much oil to China as to the US – and China will soon be importing more oil from the Persian Gulf than the US did at its 2001 peak. “Compared to the US, China’s diplomatic and military footprint in the Middle East is still modest,” wrote Mr Keating. “But it may soon feel the need to make its presence a bit more felt.” As shale gas exploitation in the US alters the world’s energy trade flows, Russia works at cementing stronger ties with China “Moscow is increasingly looking to Asia for customers and funding to help develop its vast energy reserves, with demand in oil-and-gas-deficient China and parts of Asia soaring while it shrinks in other industrialised countries.” From Moscow, Lukas I Alpert of the Wall Street Journal was reporting on an important instance of Russia-China linkage: the agreements announced in the autumn by two of Russia’s top energy producers to deliver oil and gas to China. (“Russia and China Agree on Oil and Gas-Supply Deals”, 22 October) Rosneft, the world’s largest listed crude oil producer, is to supply Sinopec Group – China’s largest oil refiner – with 10mn metric tons of oil a year for ten years. Rosneft’s president, Igor Sechin, outlined the deal following a meeting of top energy and political officials in Beijing. According to Russian news agencies, Russia’s prime minister, Dmitry Medvedev, later told reporters that the Rosneft-Sinopec contract is valued at around $85bn.

Although Mr Chen did not say so explicitly, reducing China’s trade barriers now would make it harder for Western countries to impose reciprocal restrictions later on Chinese car exports. But, as noted by the Times , Mr Chen acknowledged this point indirectly when he noted that, unlike China, most countries do not require joint ventures with local partners to own any assembly plants built in their markets. “We are seeing this imbalance of policy,” he said in a panel discussion at the annual conference of auto-industry chief Jeffrey J Owens, chief technology officer and executive vice- president of Delphi, the largest auto parts company in the US, said in a separate interview that Chinese automakers were starting to order parts for delivery three years from now that meet American and European regulatory standards. The orders tend to be for parts for midsize cars and sport utility vehicles, Mr Owens said. This suggests that Chinese automakers plan to go after the most profitable parts of Western markets, instead of starting in the overcrowded markets for compact and subcompact cars. Mr Owens said auto parts designed to Western regulatory standards would also meet Chinese standards but would tend to be more expensive. Parts meeting international standards can be made in China. Delphi has opened three factories in China this year and is building six more. Jay K Kunkel, the president for Asia and the Pacific at Lear, another large American auto parts supplier, said his company was also starting to see more Chinese orders for parts that meet Western regulatory standards. › Recent public statements suggest that newer automakers in China and those with mostly private sector owners, like Geely and Great Wall, are the most interested in exporting to Western markets. Older, state-controlled manufacturers have been less enthusiastic, according to Mr Bradsher. Wang Xia, chairman of the automotive committee of the China Council for the Promotion of International Trade, a government-controlled group, said in a brief interview with the Times at Wuhan that he expected Chinese carmakers to enter the US market within five years. Oil and gas In ‘a major symbolic shift’, China pulls ahead of the US as the world’s largest oil importer The US recently overtook Russia to become the world’s largest oil and gas producer. The US Energy Information Administration (EIA) also marked another notable energy- market shift: “China passed the US in September as the executives from all over the world. emphasis on midsize , SUV s

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J anuary 2014