Economy strong on sound track
China's great energy demands to fuel its dramatic economic expansion
were in the spotlight at the Seventh China Daily CEO Roundtable
Conference themed "China: 2005 and beyond," which was
jointly organized by China Daily and the Asia News Network (ANN).
the conference held on Friday, keynote speaker David Li, chairman
and chief executive of the Bank of East Asia, said that energy,
together with currency, domestic interest rates and the cross-Straits
tension, were the four major factors that would have the greatest
bearing on the future development of the mainland.
representatives from various industries ranging from property,
information and technology and academics to financiers were bullish
about the economic prospects of China. They agreed that energy
security is a primary issue for China, given the country's soaring
energy consumption as well as its increased reliance on imported
energy demand rising in step with China's remarkable economic
growth, China now must deal with the hard truth it faces a widening
energy deficit," Li said in his opening remarks.
said China was still a net exporter of oil as recently as 1995,
but the country had surpassed Japan to become the world's second
largest oil importer in the past two years.
addition, China's growth in primary energy demand among the four
most energy intensive nations China, the United States, Japan
and Russia has doubled over the past 18 years. The Energy Information
Administration, a unit of the US Department of Energy, predicts
China's demand for energy will double again by 2020.
problem for China is not only the reality that demand for energy
is far greater than the country's domestic supply, Li said, but
also the fact that China is only a minor player in the international
oil and gas exploration and production industry.
China's own oil companies are unlikely to improve the country's
energy security through drilling alone, and buying proven oil
reserves is an expensive way to guarantee energy security.
the above disadvantages combined have put China in a very vulnerable
position as it relies on foreign sources for an ever greater share
of its energy needs, Li said.
address the problem of energy shortages and increase sources of
supply, Li said China has pursued a multi-pronged approach including
turning to natural gas imports and building pipeline projects
as well as developing other sources of energy such as hydro-electricity
and nuclear power.
example, China expects natural gas, an energy alternative superior
to coal from an environmental point of view, will account for
10 per cent of the country's energy demand in 2020, up from the
current 2.5 per cent.
government aims to accomplish growing demand of natural gas through
its own reserves and imports as well as building gas pipelines
with other countries.
case in point is the Guangdong LNG (liquefied natural gas) project,
China's first natural gas importing project, Li said. In addition,
China signed a preliminary agreement with Iran for a natural gas
deal three times the size of the Guangdong LNG project last month.
the country's capacity of hydro-electric power, which currently
contributes 5.5 per cent of total energy supply in 2003, is expected
to double by 2020, and nuclear power capacity is also projected
to triple during the same period.
can expect significantly more emphasis on non-conventional technologies
and energy conservation in the future. China has great incentive
to develop its own technologies for such processes as coal-to-fuel
conversion, for hybrid vehicles as well as for others," Li
has both the incentive and the capability to be a world leader
in such technologies and this is certainly an area to watch over
the next decade," he said.
another factor that will influence the country's economic prospect
into the discussion, David Li offered his analysis about the currency
growing overseas investments in everything from mining companies,
timber licenses to steel mills indicates that more of China's
foreign reserves will be re-circulated into productive investments
in the future, easing pressure on the renminbi, he said.
believes that China will not be pushed into revaluing its currency.
"Certainly, the economy is large enough and capital controls
effective enough to wait out speculators," he said, adding
that with the renminbi being part of a larger currency union in
Asia, China would be less open to political and speculative pressures.
for whether China will again raise its interest rates to rein
in the red-hot economy, Li said he believes China will continue
to apply administrative measures as necessary to cool specific
sectors. But it is unlikely there will be a series of interest
rate hikes along the US model.
said cross-Straits relations would have a key influence on the
country's overall development in the future.
said President Hu Jintao's recent trip to Latin America was of
great significance. China struck a chain of deals to be recognized
as a market economy with Brazil, Argentina, Peru and Chile during
the president's trip.
the growing status of China on the international stage, any intent
to provoke tension across the Taiwan Straits is against the interests
of its people as well as the international community, Li said.
Choate, director of Programme Development of the Asia Foundation,
and Stephen Mosely, president and managing director of L'Oreal
(Taiwan/Hong Kong/Viet Nam) echoed that cross-Straits tension
was by no means beneficial to anyone's interests. Taiwan's incumbent
leadership does not have a clear or correct understanding of the
reality, Choate said. They are making policies that are not in
favour of Taiwan people.
said the Taiwan authority is paying less and less attention to
the interests of its people.
in all, to understand China, we can no longer look at the country
in isolation, but must consider its role in the world as well,"
Chau, managing director (North Asia) of MTV Networks, agreed with
Li. "No global strategy of a multinational company can be
completed without a big chart of China," he said.
Lo, chairman of Shui On Holdings Ltd, said he was bullish about
China's economic prospect in the coming year. "Despite the
administrative measures, China's economy is still very strong,
with demand and prices of real estate continuing to rise."
Koo, president and chief operating officer of SOHU.com, said he
believes China's economic growth will be moderate next year. The
growth of the advertising market in China for instance, Koo said,
is estimated to be 50-60 per cent this year but will decrease
to 30-40 per cent next year. The growth rate will slow down but
still on a fast track, he said.
addition to the four major elements, Chen Pao-yin, regional executive
(Asia Pacific region) of AIG Consumer Finance Group, suggested
that China should make further investments in financial infrastructure.
For example, Chen said the government should encourage not only
State-owned banks but also private enterprises to join forces
to build credit data bases for financial institutions and consumers
other participants shared views on the development of China, Tim
Krause, senior manager of East Asia & Pacific department of
the International Finance Corporation, highlighted the importance
of environment to the country's sustainable development. Krause
said protecting the environment during the course of China's rapid
economic development is of equal importance as energy security
because it ensures a solid reserve for sustainable development
in the next decade and beyond. Ping Lee, president (North Asia)
of Atos Origin, and Vernon Moore, deputy managing director of
CITIC Pacific Ltd, as well as Kevin Rollenhagen, president of
the Swatch Group (Hong Kong) Ltd, expressed concerns that imbalanced
development and growing disparity between urban and rural areas
in China would add to instability in the country.