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6 White Paper on the Business Environment in China
this grid, an AC line linking Shanxi province to Jingmen city in [2011] No. 46), which is expected to both incentivize legiti-
Hubei province, was completed in 2009.29 mate biodiesel production while also preventing the illegal ‘re-
cycling’ of restaurant waste oil: in 2010 it was reported that two
A January 2011 Reuters report on the State Grid Corpora- to three million tons of swill-cooked dirty oil were returned to
tion’s plans for UHV transmission lines indicated that the com- dining tables every year in the PRC, seriously threatening the
pany was “alone earmarking more than 500 billion yuan ($76 country’s food safety and public health.34
billion) to build 40,000 km of lines by 2015;”30 the State Grid
Corporation itself reports that it plans to complete a total of Oil’s importance to China’s development and the inevitable
10 UHV projects by 2015 and 15 by 2020, with a budgeted in- increase in fuel consumption as more consumer purchase
vestment of approximately 1.6 trillion yuan (significantly more in automobiles remains a far more immediate concern than
than was earlier reported by Reuters).29 biofuels. According to Xinhua, the PRC ranked fifth among oil
producing nations as of 200835, and remains the world’s second-
“Green” generation technology is also receiving government largest oil consumer36.
support*, including the requirement that all electricity gener-
ated by renewable methods must be purchased by the (state- As of December 2008, the building of the second phase of
owned) grid companies, and that the purchase of the same is to China’s strategic oil reserves (rumored to hold up to approxi-
be supervised by the State Council Energy Department and the mately 170 million barrels, but still dwarfed by the U.S. Strate-
State Power Regulatory Agency, with the caveat that those par- gic Petroleum Reserve, with its capacity of 700 million barrels
ties, in addition to the State Council Finance Department, are of crude oil) was confirmed.37
to “determine the proportion of renewable energy power gen-
eration to the overall generating capacity for a certain period.”20 The importance of this strategic reserve is highlighted by the
PRC’s heavy reliance on imports for consumption: a January
Despite such regulatory benefits for renewable generation, 2010 article in China Daily noted that “Imported crude oil ac-
coal will likely continue to play the most important role in pow- counted for 52 percent of the country’s total oil consumption
er generation in the country: in 2009 Asian Development Bank last year,” and that “Importing more than 50 percent is a global-
official Ashok Bhargava noted that “no matter how much re- ly recognized energy security alert level.”38
newable or nuclear is in the mix, coal will remain the dominant
power source.”7 By May of that year, an article in the same publication more
casually reported Sinopec officials stating that “The country
Coal’s dominance will likely continue for the coming 40 to may have to rely on imports to meet as much as 70 percent of its
50 years, Ni Weidou of the Chinese Academy of Engineering crude oil needs in the next decade,” although no mention was
told China Daily a year later.31 Coal consumption, however, is made of energy security risks.39
expected to draw from 70 percent of total energy consumption
in 2009 to 63 percent in 2015, according to the National Ener- Over the course of 2010, the nation reportedly consumed
gy Administration.32 440 million tons of oil, 200 million tons of which were import-
ed.40
Despite international fashion, China’s use of biofuels can be
expected to be much more sparing than other nations, as Chi- “Some analysts expect China to overtake the United States
na’s arable land and food supply demands leave little surplus as the world’s biggest crude oil importer as soon as 2017.”41
to—literally—burn.
Similarly, it was reported that “China bought 42.5 billion
“Chinese agricultural products will continue to increase cubic meters (bcm) of gas from overseas [in 2012]. That was up
yields and efficiency, but the lack of water and arable land will more than 30 percent compared with 2011 and a nearly 10-fold
limit China’s future in grain output,” said Wang Xiaohui of the increase from 2007.”41
China Grains and Oils Information Center, a government think
tank. “With a rising population and increased standard of living As part of an effort to blunt that reliance on foreign sources
we must ask who will feed Chinese people in the future.”33 and increase domestic capacity, the government announced in
September 2013 that it was set to have invested “80 billion yuan
It is been noted that due to these pressures, China’s adoption ($13.07 billion) in oil and gas exploration [over the course of
of biofuels will be contingent on so-called “second generation” the year].”41
products which are derived from non-grain sources such as cel-
lulose.33 Accordingly, the Ministry of Finance and the State Ad- Historically, total investment in the sector was reported by
ministration of Taxation co-issued the “Circular to Clarify the Xinhua to have “risen from 19 billion yuan in 2002 to 67.3 bil-
Application Scope of Consumption Tax Exemption for Pure lion yuan in 2011.”41
Biodiesel Made from Waste Animal and Plant Oils” (Caishui
Li Shousheng, Vice-Chairman of the China Petroleum and
Chemical Industry Federation warns that “China’s strategic pe-
troleum reserve is a key to addressing the issues of the national
* Support from the government may be too much: In December, 2010, U.S. filed a complaint to WTO against the Chinese goverment’s subsidizing trade in so-called
environmentally friendly technology. This and other kinds of WTO disputes were discussed in Part I.
132
this grid, an AC line linking Shanxi province to Jingmen city in [2011] No. 46), which is expected to both incentivize legiti-
Hubei province, was completed in 2009.29 mate biodiesel production while also preventing the illegal ‘re-
cycling’ of restaurant waste oil: in 2010 it was reported that two
A January 2011 Reuters report on the State Grid Corpora- to three million tons of swill-cooked dirty oil were returned to
tion’s plans for UHV transmission lines indicated that the com- dining tables every year in the PRC, seriously threatening the
pany was “alone earmarking more than 500 billion yuan ($76 country’s food safety and public health.34
billion) to build 40,000 km of lines by 2015;”30 the State Grid
Corporation itself reports that it plans to complete a total of Oil’s importance to China’s development and the inevitable
10 UHV projects by 2015 and 15 by 2020, with a budgeted in- increase in fuel consumption as more consumer purchase
vestment of approximately 1.6 trillion yuan (significantly more in automobiles remains a far more immediate concern than
than was earlier reported by Reuters).29 biofuels. According to Xinhua, the PRC ranked fifth among oil
producing nations as of 200835, and remains the world’s second-
“Green” generation technology is also receiving government largest oil consumer36.
support*, including the requirement that all electricity gener-
ated by renewable methods must be purchased by the (state- As of December 2008, the building of the second phase of
owned) grid companies, and that the purchase of the same is to China’s strategic oil reserves (rumored to hold up to approxi-
be supervised by the State Council Energy Department and the mately 170 million barrels, but still dwarfed by the U.S. Strate-
State Power Regulatory Agency, with the caveat that those par- gic Petroleum Reserve, with its capacity of 700 million barrels
ties, in addition to the State Council Finance Department, are of crude oil) was confirmed.37
to “determine the proportion of renewable energy power gen-
eration to the overall generating capacity for a certain period.”20 The importance of this strategic reserve is highlighted by the
PRC’s heavy reliance on imports for consumption: a January
Despite such regulatory benefits for renewable generation, 2010 article in China Daily noted that “Imported crude oil ac-
coal will likely continue to play the most important role in pow- counted for 52 percent of the country’s total oil consumption
er generation in the country: in 2009 Asian Development Bank last year,” and that “Importing more than 50 percent is a global-
official Ashok Bhargava noted that “no matter how much re- ly recognized energy security alert level.”38
newable or nuclear is in the mix, coal will remain the dominant
power source.”7 By May of that year, an article in the same publication more
casually reported Sinopec officials stating that “The country
Coal’s dominance will likely continue for the coming 40 to may have to rely on imports to meet as much as 70 percent of its
50 years, Ni Weidou of the Chinese Academy of Engineering crude oil needs in the next decade,” although no mention was
told China Daily a year later.31 Coal consumption, however, is made of energy security risks.39
expected to draw from 70 percent of total energy consumption
in 2009 to 63 percent in 2015, according to the National Ener- Over the course of 2010, the nation reportedly consumed
gy Administration.32 440 million tons of oil, 200 million tons of which were import-
ed.40
Despite international fashion, China’s use of biofuels can be
expected to be much more sparing than other nations, as Chi- “Some analysts expect China to overtake the United States
na’s arable land and food supply demands leave little surplus as the world’s biggest crude oil importer as soon as 2017.”41
to—literally—burn.
Similarly, it was reported that “China bought 42.5 billion
“Chinese agricultural products will continue to increase cubic meters (bcm) of gas from overseas [in 2012]. That was up
yields and efficiency, but the lack of water and arable land will more than 30 percent compared with 2011 and a nearly 10-fold
limit China’s future in grain output,” said Wang Xiaohui of the increase from 2007.”41
China Grains and Oils Information Center, a government think
tank. “With a rising population and increased standard of living As part of an effort to blunt that reliance on foreign sources
we must ask who will feed Chinese people in the future.”33 and increase domestic capacity, the government announced in
September 2013 that it was set to have invested “80 billion yuan
It is been noted that due to these pressures, China’s adoption ($13.07 billion) in oil and gas exploration [over the course of
of biofuels will be contingent on so-called “second generation” the year].”41
products which are derived from non-grain sources such as cel-
lulose.33 Accordingly, the Ministry of Finance and the State Ad- Historically, total investment in the sector was reported by
ministration of Taxation co-issued the “Circular to Clarify the Xinhua to have “risen from 19 billion yuan in 2002 to 67.3 bil-
Application Scope of Consumption Tax Exemption for Pure lion yuan in 2011.”41
Biodiesel Made from Waste Animal and Plant Oils” (Caishui
Li Shousheng, Vice-Chairman of the China Petroleum and
Chemical Industry Federation warns that “China’s strategic pe-
troleum reserve is a key to addressing the issues of the national
* Support from the government may be too much: In December, 2010, U.S. filed a complaint to WTO against the Chinese goverment’s subsidizing trade in so-called
environmentally friendly technology. This and other kinds of WTO disputes were discussed in Part I.
132
