Lu Jianhua, Director of Foreign Trade Department, Ministry of Commerce, recently described the oil price falling back to about 57 USD following record high as positive and rational and he believes there is still room for further decline of oil prices.

Lu said China imported 105 million tons of crude oil over the 10 month from Jan. to Oct. this year, a year-on-year increase of 5.7 percent, and 25.69 million tons of refined oil, down by 16 percent over the same period of last year. The crude oil imports for the whole year, he expects, will reach 130 million tons, rising some 6 percent which is 30 percentage points below the growth of the same period last year. Both the demand and growth of oil imports will be mild next year.

Lu refuted the allegation of the "threat of China's oil demand". "It is groundless to say China's oil imports pushed the world oil prices up", he said, stressing China's energy mainly relies on the domestic supply. It is true that China is a large energy consumer, but it is also true that China is a large energy producer. In 2004, China's primary energy production in 2004 is 1.846 billion tons of coal equivalent, accounting for 11 percent of the world's total. Its total energy dependence on foreign supply (including oil, coal and gas) is less 5 percent.

In 2004, China produced 175 million tons of crude oil and will pump 180 million tons in 2005. Its oil exploitable reserves are still in a growth cycle. In terms of primary energy consumption mix in 2004, oil accounted for 22.7 percent, coal 67.7 percent, natural gas 2.6 percent, hydropower and other energy 7 percent.

In terms of oil imports, China with a 1.3 billion population imported 168 million tons of oil, while 48-million-people South Korea imported 120 million tons of oil, 130-million-people Japan imported 260 million tons and the 280-million-people US imported 640 million tons. Given this, China's oil imports are not high.

Lu held that the staggering high oil price on the world market was the result of market manipulation and was irrational. He was concerned that the oil price distorted the normal demand-supply relationship and dragged down the world economy, but he expected to see further price drop.

By People's Daily Online