Andy Xie

Opinion | Why China’s economic reopening is not making oil prices jump

For now, China’s coal revival has capped energy imports and prices as it works towards energy self-sufficiency

But in the long run, for true energy security and a stable global energy market, China must boost its nuclear and solar power

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A worker makes solar energy parts and batteries at a factory in Suqian, Jiangsu province. How China meets its energy needs has massive global implications. Photo: EPA-EFE

Andy Xie

Published: 1:00am, 24 Feb 2023Updated: 1:54am, 24 Feb 2023

China’s reopening and economic recovery is driving an increase in energy demand. Most of this is likely to be covered by the rapid rise in domestic coal and renewable energy production. Demand for oil imports is likely to be limited, as China works towards achieving energy security.

China’s oil imports have fallen for two years in a row, just as the economy was hit by the pandemic. So, many expect the end of China’s zero-Covid policy to bring a return in oil demand, pushing up oil prices. But they are likely to be disappointed.

Coal has made a huge comeback in China. Production last year reached 4.5 billion tonnes, rising by 1 billion tonnes in just five years. Without this coal boost, global energy prices would have shot up into the stratosphere.

A decade ago, China’s coal production and use began to falter as smog and mining accidents grew. Total coal use peaked at 4.3 billion tonnes in 2012 and plunged to 3.8 billion tonnes in 2016, according to the National Bureau of Statistics.

But over the years, the government’s anti-pollution campaign has returned cleaner air to cities, sharply reducing public resistance to coal. And with the increasing use of automation in mining, accident rates have dropped off, paving the way for coal to return. Last year, coal consumption was back up at an estimated 4.7 billion tonnes.

The national campaign to electrify transport and manufacturing has also made it easier to substitute expensive imported oil with domestic coal. There is every reason for China to continue to meet its rising energy demand with domestic coal first, rather than imported oil.

Opinion | Why China’s economic reopening is not making oil prices jump

For now, China’s coal revival has capped energy imports and prices as it works towards energy self-sufficiency But in the long run, for true energy security and a stable global energy market, China must boost its nuclear and solar power

For now, China’s coal revival has capped energy imports and prices as it works towards energy self-sufficiency

But in the long run, for true energy security and a stable global energy market, China must boost its nuclear and solar power