Page 214 - 2020 White Paper on the Business Environment in China
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0 White Paper on the Business Environment in China
and renewable energy—is necessary to accelerate total global LNG trade in 2017 was only about 320
the retirement of coal-fired power plants. Because million US tons. The Asia Pacific also hosts some
the main Chinese oil and gas companies—including of the world’s leading LNG exporters: Australia,
the China National Petroleum Corporation and Malaysia, the United States and Indonesia (the
the China National Offshore Oil Corporation— world second, third, fourth and seventh largest
are publicly listed on both Chinese and US stock exporters in 2018, respectively). The US’s potential
exchanges, the new capital investment initiative to be the world’s largest LNG exporter suggests
has caused share prices to fall. The potential rates that China will eventually purchase US LNG if
of return for the old oilfields are not expected to the two countries can reach a deal to conclude
be great. Public shareholders may have to weather the trade war — the only uncertainties are how
lower rates of return as the government essentially much and when. China may eventually buy US
uses investors’ funds for its own domestic initiatives. LNG at the expense of imports from Australia
The increased $15 billion in spending will be a and Qatar. US LNG, valued through an alternative
boon for all oil service companies doing business pricing mechanism, may also facilitate a change in
in China, assuming that the Chinese government broader LNG pricing mechanisms that could lead
maintains the initiative (Hirs). to a premature ending of Australia’s long-term
contracts. The Asia Pacific will undoubtedly be the
Natural Gas center of gravity in future gas and LNG markets.
While Asia Pacific countries are the major players,
Not only are Asia-Pacific markets the destination the entrance of Russia, the world’s largest gas
for most of global LNG trade, they also host some exporter, into the East China gas market (initially
of the world’s leading LNG exporters. In China, through LNG and later pipeline gas) adds further
the current leadership that assumed power in competition. The “Power of Siberia” pipeline that
2013 highly values ecological and environmental will pump 30 million US tons of LNG into the
protection, as promoted by President Xi Jinping’s region is expected to begin operations by the
slogan that “lucid waters and lush mountains beginning of 2020. Some consider this pipeline
are invaluable assets”. The change in ecological deal as poised to change energy geopolitics, which
values is compounded by rising concerns about is not good news for other LNG exporters (Shi).
pollution among the growing middle class. China
in particular is on the path to being the world’s Rare Earth Elements
largest liquefied natural gas (LNG) importer.
Despite challenges, China expanded its coal-to- Rare earths are a group of hard-to-pronounce
gas and coal-to-electricity projects to 35 cities in elements that end up in everything from consumer
2018 (from 12 cities the previous year) in order electronics, electric vehicles, solar panels,
to improve air quality. These projects sustain smartphones and ear buds to lasers, military
high growth in natural gas demand. China’s gas equipment, advanced weapon sensors, and stealth
consumption has recorded double-digit growth and jamming technologies. The principle of security
yearly since 2000, except in 2013 to 2015. Surging exception in WTO rules allows a country to make a
demand pushed China to overtake South Korea as list of non-trade liberalization products on the basis
the world’s second-biggest LNG importer in 2017 of security concerns to restrict and forbid their
and Japan as the largest gas importer in 2018. Asia exports and impose economic sanctions. China can
Pacific markets were the destination for almost 70 use this security exception principle to restrict the
percent of global LNG trade in 2018. China and export of strategic resources such as rare earths.
South Korea accounted for nearly 80 percent of
the increase in net global LNG trade in 2018. In The US risks losing the supply of materials that
January 2019, China announced plans to increase are vital to sustaining its technological strength
its LNG intake capacity four-fold over the next due to the current trade conflict. China produces
two decades, with ambitions to have 34 coastal a majority of the world’s rare earths, chemical
terminals with a combined annual import capacity elements that have magnetic and luminescent
of over 270 million US tons by 2035. As a reference, properties and are used in a range of consumer
214
and renewable energy—is necessary to accelerate total global LNG trade in 2017 was only about 320
the retirement of coal-fired power plants. Because million US tons. The Asia Pacific also hosts some
the main Chinese oil and gas companies—including of the world’s leading LNG exporters: Australia,
the China National Petroleum Corporation and Malaysia, the United States and Indonesia (the
the China National Offshore Oil Corporation— world second, third, fourth and seventh largest
are publicly listed on both Chinese and US stock exporters in 2018, respectively). The US’s potential
exchanges, the new capital investment initiative to be the world’s largest LNG exporter suggests
has caused share prices to fall. The potential rates that China will eventually purchase US LNG if
of return for the old oilfields are not expected to the two countries can reach a deal to conclude
be great. Public shareholders may have to weather the trade war — the only uncertainties are how
lower rates of return as the government essentially much and when. China may eventually buy US
uses investors’ funds for its own domestic initiatives. LNG at the expense of imports from Australia
The increased $15 billion in spending will be a and Qatar. US LNG, valued through an alternative
boon for all oil service companies doing business pricing mechanism, may also facilitate a change in
in China, assuming that the Chinese government broader LNG pricing mechanisms that could lead
maintains the initiative (Hirs). to a premature ending of Australia’s long-term
contracts. The Asia Pacific will undoubtedly be the
Natural Gas center of gravity in future gas and LNG markets.
While Asia Pacific countries are the major players,
Not only are Asia-Pacific markets the destination the entrance of Russia, the world’s largest gas
for most of global LNG trade, they also host some exporter, into the East China gas market (initially
of the world’s leading LNG exporters. In China, through LNG and later pipeline gas) adds further
the current leadership that assumed power in competition. The “Power of Siberia” pipeline that
2013 highly values ecological and environmental will pump 30 million US tons of LNG into the
protection, as promoted by President Xi Jinping’s region is expected to begin operations by the
slogan that “lucid waters and lush mountains beginning of 2020. Some consider this pipeline
are invaluable assets”. The change in ecological deal as poised to change energy geopolitics, which
values is compounded by rising concerns about is not good news for other LNG exporters (Shi).
pollution among the growing middle class. China
in particular is on the path to being the world’s Rare Earth Elements
largest liquefied natural gas (LNG) importer.
Despite challenges, China expanded its coal-to- Rare earths are a group of hard-to-pronounce
gas and coal-to-electricity projects to 35 cities in elements that end up in everything from consumer
2018 (from 12 cities the previous year) in order electronics, electric vehicles, solar panels,
to improve air quality. These projects sustain smartphones and ear buds to lasers, military
high growth in natural gas demand. China’s gas equipment, advanced weapon sensors, and stealth
consumption has recorded double-digit growth and jamming technologies. The principle of security
yearly since 2000, except in 2013 to 2015. Surging exception in WTO rules allows a country to make a
demand pushed China to overtake South Korea as list of non-trade liberalization products on the basis
the world’s second-biggest LNG importer in 2017 of security concerns to restrict and forbid their
and Japan as the largest gas importer in 2018. Asia exports and impose economic sanctions. China can
Pacific markets were the destination for almost 70 use this security exception principle to restrict the
percent of global LNG trade in 2018. China and export of strategic resources such as rare earths.
South Korea accounted for nearly 80 percent of
the increase in net global LNG trade in 2018. In The US risks losing the supply of materials that
January 2019, China announced plans to increase are vital to sustaining its technological strength
its LNG intake capacity four-fold over the next due to the current trade conflict. China produces
two decades, with ambitions to have 34 coastal a majority of the world’s rare earths, chemical
terminals with a combined annual import capacity elements that have magnetic and luminescent
of over 270 million US tons by 2035. As a reference, properties and are used in a range of consumer
214
