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'China Factor' Fades As Oil Price Tumbles
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The price of crude oil dropped to US$58 per barrel this week -- down from a record high of US$77.03 in the middle of July -- making a mockery of the so-called "China factor", a claim by some commentators in the west that China's ravenous oil needs were a key factor in driving up oil prices.


New York Mercantile Exchange (NYMEX) prices for December delivery of light, sweet crude oil stood at US$58.73 per barrel on Tuesday. The lowest price in recent weeks -- and the lowest price since Feb. 16 -- was US$56.82 per barrel on Oct. 20.


The drop in the oil price is good news for China's oil imports. In the first nine months, China's imports of crude oil rose 16.3 percent to 109 million tons. Refined oil products were up 25.5 percent to 29 million tons.


China has been fiercely criticized since the international crude oil price began rising in 2004. The country's oil consumption and surging imports were blamed as key factors in the soaring oil price.


In fact, when the average WTI price soared 36.8 percent in 2005 year-on-year to a record high of US$56.7 per barrel, both oil imports and domestic consumption fell in China.


According to China's National Bureau of Statistics, China consumed 0.5 percent less crude oil and oil products in 2005 than in 2004.


A separate report issued by the country's National Development and Reform Commission says that China's net oil imports in 2005 were 136.17 million tons, 7.56 million tons less than the 2004 figure, or a decrease of 5.3 percent.


As a result, China's oil import dependency dropped to 42.9 percent in 2005, 2.2 percentage points lower than in 2004.


If the international oil price had been driven up by Chinese demand, as some western analysts believed, the global oil price should have dropped in 2005 instead of continuing to surge.


Just as China's lower oil imports failed to halt last year's soaring oil price, its rising oil imports this year do not appear to be impacting the downward global trend in oil prices.


China's monthly oil imports hit a record high of 13.46 million tons in September, up 24 percent year-on-year, according to the latest customs statistics.


As worries about the impact on oil supplies of events like terrorist attacks or natural disasters recede, and speculative funds downgrade their activity in the futures market, world oil supplies have been rising and crude oil prices have begun to decline.


China accounts for only 6.7 percent of total world imports of crude oil.


According to the BP Statistical Review of World Energy 2006, the United States imported 500.7 million tons of crude oil in 2005, 26.6 percent of the world total, and Japan, the second largest oil importer, imported 210.4 million tons of crude oil or 11.2 percent of the total.


As for consumption volume, China consumed 327.3 million tons of crude oil last year, accounting for 8.5 percent of the world total and only one-third of the consumption of the United States, which is 24.6 percent.


Nevertheless, the Chinese government is alarmed by the country's soaring energy needs, triggered by more than two decades of rapid and sustained economic growth, and is taking steps to curb oil consumption and raise energy efficiency.


In the 11th Five-Year (2006-2010) development program, which will guide the country's economic and social development in the coming five years, China has set a goal of 20 percent less energy consumption by 2010 compared with the end of 2005.


According to the program, from 2006 to 2010, China will try to meet its energy demands mainly from domestic supplies, and will make coal the main source of energy. The country will also focus on energy efficiency and develop more new energy sources.


China produced 2.19 billion tons of coal and 180.8 million tons of oil in 2005, with domestic production meeting over 90 percent of its energy demands.


(Xinhua News Agency November 1, 2006)


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