Friday, August 25, 2006

[IWS] EIA: CHINA [Energy Overview & Profile] [24 August 2006]

IWS Documented News Service
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations
-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor
---------------------- Stuart Basefsky
New York, NY 10016
-------------------------------Director, IWS News Bureau

Energy Information Administration (EIA)

CHINA [Energy Overview & Profile] [24 August 2006]
[full-text, 17 pages]

China is the world's most populous country and has a rapidly growing economy. China�s real gross domestic product (GDP) is estimated to have grown at 9.9 percent in 2005, down slightly from the 2004 rate of 10.1 percent. Economic forecasts remain strong for China, with real GDP expected to increase 9.9 percent in 2006. Inflows of foreign direct investment (FDI) into China totaled $86.1 billion in 2005, a new record and roughly double the level of 2001. China�s merchandise trade surplus soared to $102 billion in 2005, its largest surplus ever and roughly three times larger than the 2004 figure.

Together with strong economic growth, China�s demand for energy is surging rapidly. EIA forecasts that China�s oil consumption will increase by almost half a million barrels per day in 2006, or 38 percent of the total growth in world oil demand. China is the world�s third-largest net importer of oil behind the United States and Japan, an important factor in world oil markets.

Economic development has proceeded unevenly in China, with urban coastal areas experiencing more rapid economic development than in other parts of the country. As strong growth continues unabated, the Chinese government has taken measures to cool the economy. In August 2006, the central bank raised interest rates by 0.27 percent to bring lending rates to 6.12 percent, the second rate increase in four months. The central bank also raised the reserve requirement for commercial banks by 0.5 percent in June and July 2006, bringing the requirement to 8.5 percent. These moves serve to take money out of the money supply to help ward off possible economic overheating.

Breaking with previous policy, China delinked its currency, the renmimbi, from the U.S. dollar in July 2005, resulting in an initial devaluation of 2.1 percent. The renminbi now floats within a very narrow 0.3 percent band against a basket of currencies from the country's major trading partners. Since the devaluation, the renminbi has remained well within the narrow band and has appreciated about 1.4 percent against the U.S. dollar as of mid-July 2006.

With China's entry into the World Trade Organization (WTO) in November 2001, the Chinese government made a number of specific commitments to trade and investment liberalization which, if fully implemented, will substantially open the Chinese economy to foreign firms.  In the energy sector, this will mean the lifting or sharp reduction of tariffs associated with imports of some classes of capital goods, and the eventual opening to foreign competition of some areas such as retail sales of petroleum products. 

This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.

Stuart Basefsky                   
Director, IWS News Bureau                
Institute for Workplace Studies 
Cornell/ILR School                        
16 E. 34th Street, 4th Floor             
New York, NY 10016                        
Telephone: (607) 255-2703                
Fax: (607) 255-9641                       

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