Page 212 - 2020 White Paper on the Business Environment in China
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0 White Paper on the Business Environment in China
an increase in investment between 13 and 27 been controlling its project outlay carefully, and had
percent to reach their goals. Pouring money into oil built cost control into subsidiaries and business
fields with low productivity has become a concern units’ management appraisal system (Ng).
for private investors who are skeptical about the
future ability of Chinese energy companies to pay The creation of the pipeline company was
a dividend. Although the firms are state-owned, mentioned in the National Development &
they are also listed on both Chinese and US Reform Commission’s work report in 2019 during
stock exchanges. As the potential rates of return the annual National People’s Congress meeting,
of the concerning oil fields are relatively low for alongside closely watched indicators including
international standards, the value of the shares economic growth targets and debt reduction goals.
has dropped significantly (Meliksetian). President Xi Jinping’s government has planned for
years to spin off into a new company some of the
PetroChina, the world’s largest oil refiner, 112,000 km (70,000 mi) of oil, gas and fuel pipelines
sought to diminish concerns that it was raising held by state energy giants, led by China National
domestic output ahead of profitability. “One of the Petroleum Corp. “Pipeline reform is a key step
central government’s requirements for economic toward liberalization of the oil and gas market,”
reforms is that market forces must play a decisive said Neil Beveridge at Sanford C. Bernstein & Co.
role when deciding resources allocation,” Chairman in Hong Kong, adding that the move is “the biggest
Dai Houliang said in March 2019. “Corporate reform in decades.” The formation of a new pipeline
investment must be based on this principle, and be company would help reform the energy sector by
economically efficient.” His comments came after separating transmission and sales businesses and
the company unveiled an oil and gas exploration removing impediments to oil and gas exploration,
budget of about 59.6 billion yuan (US$8.87 billion) according to the report. It included no further
for 2019, an increase of 41.2 percent over 2018. details of the company or timing of its creation
The Big Three have been ordered by President (Bloomberg News, China announces plan).
Xi Jinping to raise domestic output to enhance
China’s national energy security. 2018’s budget China is now in a situation not unlike that facing
itself represented a 35 percent increase over the US oil market just 10 years ago. An interruption
2017, and has yet to yield any apparent reportable in global oil supplies, such as cutting half of the oil
results. While the proven reserves of crude oil flowing through the Strait of Hormuz, would drive
increased 4.2 percent in 2018, proven gas reserves up the price of oil, in addition to reducing access to
dropped by 2.7 percent. “We are not convinced that oil. Reduced access to oil would be a major problem
Sinopec has the resources to economically justify for China. Strategically, China is concerned about
this level of additional upstream investment,” its ability to project a strong blue-water navy across
Jefferies’ analysts noted. “Surging 2019 upstream the globe without its own secure supplies of oil. An
[investment is] not matched by production interruption in global supplies would place added
guidance.” Sinopec president Ma Yongsheng said pressure on China to extend its military to protect
the company had made substantial new domestic trade routes around the world. Diverting domestic
resource discoveries in both oil and gas in 2018. He supplies to the military in a time of global shortages
blamed lagging production growth compared with would have serious, negative implications for the
investment to project commercialization delays Chinese economy. The value of oil to China goes
– lengthy procedures for getting environmental beyond the price on the global market, but instead
impact assessments and other local government considers what that oil allows China to accomplish
planning approvals. The petroleum giant claims to with its domestic economy and global influence.
have proved major new gas reserves in the past China’s government values domestic oil as a
few years, but these cannot be booked until their derivative of domestic GDP. Oil makes up barely 10
commercial sales potential can be established percent of China’s gross energy consumption while
according to disclosure rules. The company claims coal, the primary contributor to China’s smog and
this will be improved substantially before the end CO2 emissions, makes up more than 60 percent
of 2020 as related production and logistics matters of gross energy supply. Building domestic oil
are confirmed. He also stressed that Sinopec had supplies—and the supplies of natural gas, nuclear
212
an increase in investment between 13 and 27 been controlling its project outlay carefully, and had
percent to reach their goals. Pouring money into oil built cost control into subsidiaries and business
fields with low productivity has become a concern units’ management appraisal system (Ng).
for private investors who are skeptical about the
future ability of Chinese energy companies to pay The creation of the pipeline company was
a dividend. Although the firms are state-owned, mentioned in the National Development &
they are also listed on both Chinese and US Reform Commission’s work report in 2019 during
stock exchanges. As the potential rates of return the annual National People’s Congress meeting,
of the concerning oil fields are relatively low for alongside closely watched indicators including
international standards, the value of the shares economic growth targets and debt reduction goals.
has dropped significantly (Meliksetian). President Xi Jinping’s government has planned for
years to spin off into a new company some of the
PetroChina, the world’s largest oil refiner, 112,000 km (70,000 mi) of oil, gas and fuel pipelines
sought to diminish concerns that it was raising held by state energy giants, led by China National
domestic output ahead of profitability. “One of the Petroleum Corp. “Pipeline reform is a key step
central government’s requirements for economic toward liberalization of the oil and gas market,”
reforms is that market forces must play a decisive said Neil Beveridge at Sanford C. Bernstein & Co.
role when deciding resources allocation,” Chairman in Hong Kong, adding that the move is “the biggest
Dai Houliang said in March 2019. “Corporate reform in decades.” The formation of a new pipeline
investment must be based on this principle, and be company would help reform the energy sector by
economically efficient.” His comments came after separating transmission and sales businesses and
the company unveiled an oil and gas exploration removing impediments to oil and gas exploration,
budget of about 59.6 billion yuan (US$8.87 billion) according to the report. It included no further
for 2019, an increase of 41.2 percent over 2018. details of the company or timing of its creation
The Big Three have been ordered by President (Bloomberg News, China announces plan).
Xi Jinping to raise domestic output to enhance
China’s national energy security. 2018’s budget China is now in a situation not unlike that facing
itself represented a 35 percent increase over the US oil market just 10 years ago. An interruption
2017, and has yet to yield any apparent reportable in global oil supplies, such as cutting half of the oil
results. While the proven reserves of crude oil flowing through the Strait of Hormuz, would drive
increased 4.2 percent in 2018, proven gas reserves up the price of oil, in addition to reducing access to
dropped by 2.7 percent. “We are not convinced that oil. Reduced access to oil would be a major problem
Sinopec has the resources to economically justify for China. Strategically, China is concerned about
this level of additional upstream investment,” its ability to project a strong blue-water navy across
Jefferies’ analysts noted. “Surging 2019 upstream the globe without its own secure supplies of oil. An
[investment is] not matched by production interruption in global supplies would place added
guidance.” Sinopec president Ma Yongsheng said pressure on China to extend its military to protect
the company had made substantial new domestic trade routes around the world. Diverting domestic
resource discoveries in both oil and gas in 2018. He supplies to the military in a time of global shortages
blamed lagging production growth compared with would have serious, negative implications for the
investment to project commercialization delays Chinese economy. The value of oil to China goes
– lengthy procedures for getting environmental beyond the price on the global market, but instead
impact assessments and other local government considers what that oil allows China to accomplish
planning approvals. The petroleum giant claims to with its domestic economy and global influence.
have proved major new gas reserves in the past China’s government values domestic oil as a
few years, but these cannot be booked until their derivative of domestic GDP. Oil makes up barely 10
commercial sales potential can be established percent of China’s gross energy consumption while
according to disclosure rules. The company claims coal, the primary contributor to China’s smog and
this will be improved substantially before the end CO2 emissions, makes up more than 60 percent
of 2020 as related production and logistics matters of gross energy supply. Building domestic oil
are confirmed. He also stressed that Sinopec had supplies—and the supplies of natural gas, nuclear
212
