CHINA: ENERGY BALANCE PROJECTIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000500110016-9
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 36
• Document Creation Date: December 15, 2016
• Document Release Date: August 18, 2003
• Sequence Number: 16
• Publication Date: November 1, 1975
• Content Type: REPORT

STAT
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Research Aid
China: Energy Balance Projections
A (ER) 75-75
November 1975
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China: Energy Balance Projections
November 1975
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Page
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I
Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . I
Background . . . . . . . . . . . . . . . . . . . . . . 2
Energy Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Production . . . . . . . . . . . . . . . . . . . . . . . . . 3
Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Energy Consumption . . . . . . . . . . . . . . . 7
Energy and Economic Growth . . . . . . . . . . . . . . . . 9
Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Energy Supply Projections . . . . . . . . . . . . . . . . 11
Energy Demand Projections . . . . . . . . . . . . . . . . . . 13
Energy Balances in 1980 and 1985 . . . . . . . . . . . . . . . . . 15
Appendixes
A. Conversion Factors . . . . . . . . . . . . . . . . . . . . 21
B. Supply of Natural Gas . . . . . . . . . . . . . . . 23
C. Projections of Energy Supply ;n 1980 . . . . . . . . . . 27
D. Projections of Energy Demand in 1980 . . . . . . . . . . . . . . . 31
Tables
1. China: Production of Primary Energy . . . . . . . . . . . . . . . . . 4
2. China: Supply of Primary Energy . . . . . . . . . . . . . . . . . . . 6
3. China: Consumption of Primary Energy, by Sector . . . . . . . . . . . 7
4., China Output by Small-Scale Plants . . . . . . . . . . . . . . . . . . 9
5. Energy-GNP Elasticity Coefficients for Selected Countries,
1950-65 . . . . . . . . . . . . . . . . . . . . . . . 10
6. China: Projections of Energy Supply and Demand, 1980 . . . . . . . . 11
7. China: Impact of Exports on Energy Supply, 1980 . . . . . . . . . . 15
8. China: Production of Primary Energy . . . . . . . . . . . . . . . . 29
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Page
9. China: Consumption of Primary Energy, by Sector and Source . . . . . 33
Chart
Energy and GNP Growth . . . . . . . . . . . . . . . . . . . . . . . 18
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1. China's sudden emergence as a major oil producer, with small but rapidly
growing exports, has led to speculation that it may a few years hence become
a major oil-exporter. Peking clearly intends to export increasing volumes of oil
to help finance an ambitious program of capital imports, but it is by no means
clear that China will become an important force in the world petroleum market.
Domestic energy requirements place an important constraint on the level of energy
exports. The key findings of this publication are:
a. China produced 428 million metric tons of coal equivalent in 1974,
placing it fifth worldwide as a producer of energy - behind the United
States, the USSR, Saudi Arabia, and Iran. As a consumer of energy, China
ranks fourth behind the United States, the USSR, and Japan.
b. Energy production and consumption will continue to grow rapidly
during 1975-80, along with a push for agricultural mechanization and
stepped up industrial growth. Energy exports may run 40 to 50 million
tons in coal equivalent terms (540,000 to 660,000 barrels per day of
oil) in 1980; to export the I million barrels of oil per day that has
been discussed with the Japanese, China would have to curtail economic
growth.
c. The continued strong domestic demand for energy throughout
1981-85 will severely limit energy exports. By 1985, energy exports
would be unlikely to exceed 100 million tons of coal equivalent (1.3
million barrels per day of oil), unless China sharply alters investment
allocations favoring energy production, makes exports available at
considerable cost to domestic economic growth, and/or agrees to joint
ventures with foreign firms to exploit its energy resources. None of these
actions seems likely at this time.
2. Observers of the international oil scene, in their search for nor-OPEC
sources of oil, are becoming increasingly interested in China. Heartened by reports
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of the rapid growth of China's oil industry and its "vast" oil resources, they view
China as a potential source of sizable crude exports. Peking's actions have reinforced
this view; it has indicated a willingness to expand oil exports to Japan to 1 million
barrels per day (b/d) (50 million tons of oil annually) in 1980. Whether exports
of this magnitude are feasible is not solely a question of continued rapid growth
of oil output. Problems in the coal industry evident since 1973 - complicate
Peking's task of providing for domestic energy needs. If these problems continue,
they conceivably could lead to restrictions on oil exports. Conversely, a decision
to export large quantities of oil could, by restricting the growth of domestic energy
supplies, hamper domestic economic growth. Both possibilities have important
implications for China's economic development and foreign trade over the next
several years.
3. This publication seeks to answer several questions: (1) How much energy
does China produce and consume, and how rapidly have production and
consumption of energy grown? (2) What are the major sources of energy?
(3) Which sectors are the major energy consumers? (4) What are energy balances
likely to be in 1980 and 1985? (5) Finally, how are domestic energy requirements
likely to affect the availability of oil for export in 1980 and 1985?
Background
4. Temporary, local shortages of coal and electricity in China have been
common occurrences. Until recently, however, there was little evidence that these
shortages resulted from anything other than minor planning errors or transportation
problems, and their impact on the economy, while not inconsequential, was slight.
The coal shortages, which have prevailed since at least 1973 and which were
particularly evident during 1974, appear to be more serious; rather than simply
temporary and local in nature, they appear persistent and widespread.
5. In 1973 it was conceded that demand for anthracite and coking coal
could no longer be met. Nearly half of China's small nitrogenous fertilizer plants
were switched over to use lower quality, locally produced coal as supplies of coal
from state-operated mines tightened. And yearend announcements of industrial
achievements omitted any claims for coal despite its fundamental importance.
6. In 1974, it is clear that a worsening situation in coal production, coupled
with transportation problems and disruptions resulting from the campaign to
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criticize Lin Piao and Confucius, had a serious impact on coal supplies and on
economic activity. Central Document 21, issued by Peking at midyear in an attempt
to correct economic problems, complained that coal production for the first five
months had fallen below target by 8.35 million tons. Its importance as a fuel
for the railroads and the iron and steel industries compounded the problems faced
by those sectors; in some locales coal shortages caused chemical fertilizer production
to drop. Authorities in Shantung Province admitted that in order to provide needed
coal supplies to industry and agriculture, the quantity of coal destined for household
use had to be reduced. For the year, coal production grew by only 3.2%, compared
with 5.9% in 1973 and 6.3% in 1972. The picture that emerges is one of a coal
industry increasingly unable to meet the growing demand.
7. The situation in the petroleum industry is exactly the opposite. Since
1949, the average annual growth rate for crude oil output has exceeded 20%. Now,
growing quantities are being exported; 1 million tons of crude oil went to Japan
in 1973, followed by 4 million tons in 1974. An additional 1.5 million tons of
crude and products may have gone to North Korea and North Vietnam last year.
In 1975, Japanese importers have contracted for 7.8 million tons of crude oil.
With additional exports of crude and products to North Vietnam, North Korea,
Thailand, Laos, Hong Kong, and the Philippines, total Chinese oil exports should
exceed 10 million tons - out of a total production of perhaps 80 million tons.
8. Oil exports are important to China's current fourth five-year plan and
its upcor.;ng fifth five-year plan (1976-80). Earnings from oil are needed to pay
for imports of machinery and equipment, particularly whole plants (chemical
fertilizer plants, synthetic fiber plants, and steel plants are among those already
purchased). The importance of oil exports was demonstrated last year; when foreign
markets for traditional export items softened, accelerated oil exports picked up
some of the slack.
9. It is against this background that the adequacy of energy supplies and
their interaction with oil exports are examined.
Energy Supply
Production
10. In its first 25 years, the People's Republic of China has become a major
producer of energy. In coal production China ranks third in the world; in oil
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production, thirteenth, just behind Indonesia; and in natural gas production, sixth.'
Output series for coal, oil, natural gas, and hydroelectricity are shown in
Appendix C; in Table I below these series have been converted to coal equivalent.'
China: Production of Primary Energy'
Natural Hydro-
Total coal on Gast electric
Million Metric Tons
of Coal Equivalent
1952 49 48 1 N.A. Negl.
1952 100 98 2 N.A. Negl.
1974 100 67 23
1. Data are for coal, crude oil, natural gas, and hydroelectric power expressed in terms of coal
equivalents (calorific value of 7,000 kilocalories per kilogram) and exclude minor fuels such as peat and
fuelwood. For conversion factors, see Appendix A.
2. Production and consumption of natural gas are discussed in Appendix B.
of coal, oil, natural gas, and hydroelectric power. Nuclear power - nil or insignificant throughout the period
under discussion - is not considered. Coverage is limited to "commercial" energy sources - so-called because
1. The comparisons are based on 1974 data.
2. For the factors used in conversion, scu Appendix A. Energy as measured in this publication consists
activity. Such noncommercial energy sources as fuelwood, organic waste, wind, and waterpower other than
for electricity are excluded. The consequence of omitting noncommercial energy sources is to some extent
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It. Production of primary energy has grown remarkably, reaching 428 rnillion
tons of coal equivalent in 1974 - a total exceeded only by the United States,
the USSR, Saudi Arabia, and Iran. Only in recent years has average annual growth
slipped below 9%; during 1971-74 growth averaged 8.7% annually. This compares
with a 9.1% average rate for 1966-70, 9.3% during 1958-65, and 14.9% in 1953-57.
A look at the changing composition of energy production helps pinpoint the reason
for the slight secular decline in output growth in the past decade.
12. In 1957, coal accounted for 96% of the primary energy produced; by
1974, its share had fallen to 67%. This decline is explained by the more rapid
growth of oil and natural gas production and by a slowing in the growth of coal
output. During 1958-74, coal output in standard fuel equivalent grew by 6.9%
yearly; however, growth fell from an average of 7.7% for 1958-65 to 6.5% in
1966-70 and to 5.6% in 1971-74. In 1974, coal output grew by only 2.9%. Peking's
efforts to expand coal production through the development of small mines, rather
than large ones, have contributed to this slackening in growth. In. 1957, the share
of coal output produced at small mines was only 6%; this grew to 15% in 19,65,
25% in 1970, and 28% in 1974. The success of this effort, however, has been
limited by the fact that coal from the small mines generally is of lower calorific
content and contains larger quantities of rock and dirt. Taking these factors into
account and discounting coal produced at small mines reduces the energy content
of the coal produced and the growth of coal-source energy.' For example, during
1966-70 -'when small mine production grew from 15% to 25% of total output -
national production of raw coal grew by 7.1% annually; in terms of energy content,
however, growth was only 6.5% annually.
Supply
13. Adjustments for energy exports and imports - to derive domestic energy
availability - alter the above picture only slightly .4
14. Energy supplies grew at an average annual rate of 8.9% in 1.958-74, with
rates ranging from a high of 9.0% in 1958-65 to a low of 8.4%.-, 1971-74. The
declining growth of coal output was to a large extent offset by the continued
3. For details, see Appendix A.
4. China exported about I million tons of coal in 1957 and perhaps some 3 million tons in 1974 - that
is, less than 1% of total output, a relationship which p*.obably has been fairly constant since 1957. The
only other energy exports were those of crude oil and petroleum products. Petroleum exports were insignificant
prior to 1973, when some 2 million tons of crude oil were exported; in 1974, approximately 6 million tons
of crude oil were exported - 9% of production.
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'T'able 2
China: Supply of Primary Energy
Total
Ccal
on
Natural
Gas
Hydro-
electricity
Million Metric Tons
of Coal Equivalent
1952
50
48
2
N.A.
Negl.
1957
100
93
5
1
1
1965
198
168
17
12
1
1970
304
231
43
28
2
1974
419
287
91
38
3
Percent
1952
100
96
4
N.A.
Negl.
1957
100
93
5
1
1
1965
100
85
9
Negl.
1970
100
76
14
9
1
1974
100
68
22
9
1
rapid growth in oil. This was most apparent during 1971-74, when oil's share of
the energy supply grew from 14% in 1970 to 22% in 1974, as coal's share dipped
from 76% to 68% (see Table 2). Even so the average annual rate of growth of overall
energy supplies fell by 0.5% during that period.
15. One can see the substitution of oil for coal more clearly from their
respective contributions to increments in total energy supplies. During 1958-65,-
total energy supplies grew by 99 million tons - coal provided 76%, while oil
provided 12%. During 1971-74, energy supplies grew by 116 million tons - coal
provided 48%, while oil provided 41%.1
5. Of the increment in coal supplies in 1971-74, 34% came from small mines, compared with 19% in 1958-65
and 42% in 1966-70.
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16. The substitution of oil for coal has not been without its costs. Converting
industrial facilities from coal-burning to oil-burning, particularly over such a short
period, has required investment that could have been used elsewhere.6 Presumably
having made the decision during the early 1960s to expand oil production, Peking
paid this premium with the understanding that it was the least costly of the
alternatives available. An examination of energy consumption by consuming sector
and by source shows where this conversion has taken place.
Energy Consumption
17. Primary energy consumption grew from 97 million tons of coal equivalent
in 1957 to 380 million tons in 1974 - an 8.4% annual rate of increase (see
Table 3). By far the most rapidly growing consumer of energy has been agriculture,
China: Consumption of Primary Energy, by Sector
Industry
and Agri. Transpor- Residential/
Total Construction culture tation Commercial
Million Metric Tons
of Coal Equivalent
1952
42
11
Negl.
5
26
1957
97
36
1
9
1965
185
89
6
14
1970
278
159
12
16
1974
380
235
24
i'ercent
19
1952
100
26
Nct1.
12
62
1957
100
37
1
9
1965
100
48
3
8
1970
1 00
57
4
6
1974
100
62
6
5
6. Obviously some newly added capacity was designed to be oil-burning. However, the magnitude and rapidity
of the conversion from coal to oil suggest that the conversion of existing facilities accounts for a large portion
of total conversion.
7
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where energy use grew at an average annual rate of 26% in 1958-747 ; consumption
in industry grew 11.6% per year over the same period. The growth rates for energy
consumption by the transportation and residential/commercial sectors were only
4.7% and 4.2%, respectively.
18. As a result of differential growth, the share of energy consumed by
agriculture grew from 0.5% in 1957 to 6% in 1974, and industry's share grew
from 37% to 62%. Transportation in 1974 used only 5% of the energy consumed,
versus 9% in 1957; for residential/commercial use the share declined from 53%
in 1957 to 27% in 1974.
19. Substitution of oil for coal has occurred most heavily in industry. In
industry, coal accounted for 93% of the fuel consumed in 1957 (see Table 8 in
Appendix D) and 68% in 1974, while oil's share grew from 5% to 22%. By contrast,
90% of the fuel consumed in agriculture in 1957 was petroleuni, with coal providing
only 10%; by 1974, coal accounted for 17%, with oil supplying 82%. Most of
this coal was consumed indirectly as electricity. Of the increment in energy
consumption since 1957 - 283 million tons - industry and agriculture consumed
78%.
20. The remaining two sectors also derive larger shares of their energy needs
from oil. While highway and inland waterway transportation together consame more
than 80% of the oil used in the transportation sector, dieselization of the railroad
system beginning in the late 1960s added to petroleum requirements for the
transport sector. As of 1974, however, railroads used less than 1% of total ril
supplies and less than 20% of the oil used in tramsportation. Little petroleum is
used by the residential/commercial sector. Kerosine was once a major fuel source
for lighting. It no longer is rat+.oned as it was until the late 1960s; households
and commercial establishments now rely on electricity, only part of which is
produced in oil-burning powerplants.
21. Behind rapidly growing energy use in industry and agriculture is the push
for the development of heavy industry' and agricultural mechanization. Iron and
steel, chemical fertilizer, petrochemicals, and electric power generation are all heavy
consumers of primary energy. In agriculture, the increased use of diesel and electric
motors for a variety of farm tasks - for irrigation and pumping in particular and
for the initial processing of agricultural commodities - has greatly increased
consumption of oil and electricity. Much of the electricity is provided by large
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numbers of small hydroelectric stations which have been erected throughout the
rural areas during the past 10 years.
22. Finally, the importance assigned in the late 1960s to rural small-scale
industry 'ias contributed to increased energy requirements. Small-scale plants -
producing iron and steel, cement, fertilizer, electric power, and a variety of simple
machines for agriculture - are less efficient users of primary energy than are larger
plants, which benefit from economies of scale, more modern technology, and more
efficient man. ment. Consequently, as output from small-scale plants has grown
in importance (see Table 4), incremental energy requirements per unit of output
have risen.
China: Output by Small-Scale Plants
Percent of Total
Hydroelectileityt
Negl.
1
2
5
Nitrogen fertilizer
Negl.
43
50
Cement
N.A.
26
30
52
Crude steel'
N.A.
4
10
13
1. Percent of total hydroelectric capacity.
2. Percent produced in medium-size and small plants.
Energy and Economic Growth
23. The relationship between energy consumption and economic growth is
summarized as an energy-GNP elasticity coefficient - a ratio which indicates the
percentage change in energy consumption for a 1% change in GNP. Energy-GNP
elasticities rarely are lower than 1 or higher than 2; however, they vary widely
from country to country and over time, as shown in Table 5.
24. In China for the 1958-74 period, the energy-GNP elasticity coefficient
was 1.62 - that is, for a 1% increase in GNP, energy consumption grew by 1.62%
on the average. This relationship has changed considerably over the years. It was
2.57 during 1953-57; 1.87 during 1958-65; 1.42 during 1966-76; and 1.42 during
1974-74. The apparent leveling off of the elasticity coefficient since 1965 - at
what is a moderate level when compared with other countries - reveals a certain
maturity of energy use, despite the very low per capita energy consumption in
China.
9
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Energy-GNP Elasticity Coefficients for Selected Countries'
1950.65
Per Capita Energy-GNP
GNP Range Elasticity
in 1965 Country2 Coefficient
Over $1,800
$1,000 to $1,800
$700 to $1,000
United States 0.81
Canada 1.13
Sweden 1.59
Denmark 1.38
Switzerland 1.64
West Germany 0.76
France 1.00
Norway 1.24
United Kingdom 0.62
Belgium-Luxembourg 0.94
Australia 1.21
Netherlands 1.17
Bast Germany 0.88
Czechoslovakia 1.47
Austria 0.83
USSR 1.25
Israel '.13
Italy 2.16
Japan 1.00
Hungary 1.62
Puerto Rico 1.93
Venezuela 1.61
Bulgaria 2.14
Romania 1.63
Greece 1.41
Yugoslavia 1.18
Argentina 1.81
Spain 0.84
South Africa 1.09
Chile 1.53
Mexico 1.13
Costa Rica 1.25
China 2.183
1. With the exception of the coefficient for China, the data in this table were taken from Joel
Darmstadter, et al., Energy In the World Economy, Baltimore, The Johns Hopkins University Press, 1971,
p. 37.
2. Countries are listed according to their 1965 per capita GNP ranking.
3. Pertains to 1953-65.
10,
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25. The elasticity coefficients calculated here are . ieful in projecting future
energy demand, which is discussed in the following section.
Prospects
26. This section addresses two questions: (1) will energy supplies be
sufficient for the economic growth envisioned by China's planners for 1975-80;
and (2) what impact will energy balances have on potential oil exports? To answer
these questions requires projecting, and comparing, the supply of and demand for
energy in 1975-80.
Energy Supply Projections
27. Supplies of coal, oil, natural gas, and hydroelectricity have been projected
to 1980. Three projections have been made: high, medium, and low (see Table 6).11
China: Projections of Energy Supply and Demand
1980
Demand'
Million
Million
Metric Tons
of Coal
Annual Growth
1975.80
Metric Tons
of Coal
Annual Growth
1975.80
Projection
Equivalent
(Percent)
Equivalent
(Percent)
High
777
12.7
725
11.4
Medium
682
10.3
670
9.9
Low
602
8.0
616
8.4
1. Production minus handling losses and additions to inventory. The projections assume a slight decline
in the ratio of energy inventory to final output.
2. For a discussion of the derivation of these projections, see Appendix D.
In the high growth case, the supply of energy9 increases by 12.7% annually to
reach 777 million tons of coal equivalent in 1980. In the medium growth case,
8. For details on methodology and data, see Appendix C.
9. In the following discussion, supply is defined as production minus handling losses and additions to
inventory. Tho projections rssume a slight decline in the energy inventory-fnal output ratio. The definition
of supply used here differs from that used in the earlier section headed "Supply." There, supply is defined
as production minus no; exports.
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the supply of energy grows by 10.3% per year and reaches 682 million tons in
1980. Finally, under conditions of low energy growth, the supply grows by 8.0%
annually and reaches 602 million tons in 1980. Any of these rates appear feasible
when compared with the growth rates of energy production' ? in past periods.
The growth of the high projection (12.7%) is below the 14.9% for 1953-57, but
it exceeds the rate of growth for any of the three periods since 11157; that of
the low projection (8.0%) falls below the 8.7% in 1971-74. Our medium projection
(10.3%) grows slightly more rapidly than did energy production in 1958-65.''
28. All three projections assume further substitution of oil for coal, as shown
in the following tabulation:
Percent of Total Energy Production
1974
1980
High
Medium
Low
Coal
on
Gas
Hydroelectric
67
23
9
1
51
35
13
1
57
30
12
1
63
26
10
1
29. Regardless of the projection used, energy production in 1980 will depend
heavily on the performance of the coal and petroleum industries. Of the increment
in energy output between 1974 and 1980, coal and oil will account for 82% to
87%. The question that arises is: How likely are these sectors to achieve the growth
envisioned? The medium projection is used for this discussion.
30. The difficulties encountered by the coal industry in 1973-74 - difficulties
which have continued in 1975 have been detailed above. Labor problems are
responsible for part of the coal shortages in 1974 and 1975, but a longer standing
problem is that of inadequate equipment. Ch.;na possesses .huge coal resources but
lacks the modern equipment to exploit them fully. In recent years, Peking has
begun to move away from a policy that stressed labor-intensive methods of
increasing coal output and is importing some new capital equipment. The 6.5%
annual growth for coal used in the medium supply projection' 2 assumes that the
10. Because we are interested in the amount of energy that could ba supplied, and regard exports as a
residt!al, the comparison to growth rates of energy output is the propel one.
U. We assume a o .cline in handling losses and in the ratio nt energy inventory to final output. Without
this assumption, the growth rate for the. medium projection would be 10%; those for the high and low
projections would be 12.4% and 7.7%, respectively.
C.
12. For past growth rates rf coal output, see the discussion of the supply, projections contained in Appendix
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coal industry will continue to experience troubles in the early years of the fifth
five-year plan but will achieve higher growth in the latter years of the period as
increasing amounts of modern equipment are installed in old and new mines.
31. In contrast to the coal industry, the petroleum industry has had no
trouble maintaining a growth rate in excess of 20% annually. It is doubtful, however,
that an annual rate of growth of 20% or higher can be sustained for the period
1975-80; an average annual growth rate of 15% seems more realistic. To maintain
high rates of investment in agriculture and in certain branches of industry (including
the petroleum industry), Peking during the past several years has been forced to
neglect investment in other sectors (e.g., coal, steel, and transportation). Now,
planning authorities are faced with the necessity of stepping up investment in the
neglected sectors - while maintaining (or even increasing) investment in
agriculture - and the petroleum industry can no longer be assured the sharply
rising rates of investment needed to maintain 20% growth. Other factors which
threaten to reduce the rate of growth of crude output also come into play:
increments to crude oil output can be expected to become more costly as Peking
uses up its cheaper sources of oil, and the volume of new oil production required
to offset depletion of existing wells will grow. Both phenomena can be expected
to reduce the effectiveness of new investment and, on top of constant or only
slightly growing investment in the petroleum industry, lead to a declining rate of
output growth. Judging from recent 8-month claims (25.5% increase over 1974),
crude oil production this year will grow by about 15 million tons above the level
of 1974. Annual increases of this absolute amount - 15 million tons - seem most
likely under the constraints noted above. If so, the growth rats for the period
1975-80 would be about 15%.
Energy Demand Projections
32. Demand for energy is projected, using two methods (see Table 6):
(1) assuming high, medium, and low rates of GNP growth, the energy-GNP elasticity
coefficient is used to calculate a required growth rate for energy supply; and
(2) high, medium, and low projections are made for each of the four sectors of
the economy. For each projection, demand by sector is summed to obtain a
projection for total energy demand.
33. GNP grew by 6% annually during 1966-70; growth during 1958-65 and
1971-74 was 4.5% and 5.6%, respectively. Peking, faced with problems the solution
of which is made easier by more rapid economic growth, would likely be dissatisfied
with GNP growth much lower than 6%. If the 6% rate were adopted as the target
13
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for 1975-80, and assuming an energy-GNP elasticity of 1.42 (as calculated for
1966-74), energy supplies would need to grow at an 8.5% annual rate during
1975-80.' 3 Higher and lower rates of GNP growth would require higher and lower
rates of growth for energy supply, as the tabulation below indicates:
The problem, of course, is specifying the rate of growth Percent
which Peking is likely to shoot for. Looking at the economy
sector by sector, observing past sectoral growth rates, and Required
projecting sectoral energy demand on the basis of continued GNP Energy
heavy support to agriculture and additional support to those Growth Growth
sectors encountering difficulties helps us to specify more 4 5.7
likely growth rates, both for energy demand and for GNP 6 8.5
growth targets. 8 11.4
34. Sectoral projections show energy demand growl.ig by between 8.4% and
11.4% annually and reaching between 616 and 725 million tons of coal equivalent
in 1980 (see Table 6).' 4 These projections imply that GNP growth of 6% per
year would represent the lower limit of the range of growth rates preferred by
Peking. Implicit in the 9.9% and 11.4% annual growth of energy demand shown
for the medium and high projections are average annual GNP growth rates of 7%
and 8% - rates which exceed the highest growth obtained in any of the three
periods used in this publication (6% in 1966-70).
35. Before projections of energy demand are compared with the projections
for energy supplies, a brief discussion of Chinese thoughts regarding future energy
exports is in order.
36. Peking has indicated a desire to expand oil exports to Japan to a rate
of 50 million tons annually by 1980, and future coal exports to Japan have been
discussed. Exports of 50 million tons of crude oil would mean that the domestic
energy supply in 1980 would be 75 million tons (standard fuel equivalent) less
than calculated above.' 5 The consequent reduced domestic energy suplies for 1980
and the lower rates of supply growth for 1975-80 would be as shown in Table 7.
Annual exports of 75 million tons of coal equivalent by 1980 - between l0%
and 12% of projected energy supplies - would reduce the average annual rate of
growth of the energy supply by 1.9 to 2.4 percentage points. The significance
of energy exports of this magnitude becomes obvious when projected supplies,
gross and net of exports, are compared with projections for demand.
13. To the extent that supplies in 1974 were inadequate, the rate would need to be slightly higher than 8.5%.
14. Details on methodology can be found in Appendix D.
15. One ton of crude oil is the energy equivalent of 1.5 tons of coal.
14
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Table 7
China: Impact of Exports on Energy Supply
1980
No Exports
Exports of 75 Mil-
lion Metric Tons
Supply
Supply
(Million
(Million
Metric Tons
of Coal
Annua; Growth
1975-80
Metric Tons
of Coal
Annual Growth
1975.80
Projection
Equivalent)
(Percent)
Equivalent)
(Percent)
High
777
12.7
702
10.8
Medium
682
10.3
607
8.1
602
8.0
527
5.6
Energy Balances in 1980 and 1985
37. Table 6 shows projections of the demand for and supply of energy in
1980. The tabulation below of the exportable surplus in 1980, which summarizes
Table 6, serves two purposes: (1) a positive number indicates that supply exceeds
demand and hence the existence of an exportable surplus; and (2) a negative
number indicates that demand exceeds supply and that the particular
supply-demand combination is inconsistent.
Supply 1
Demand
High Medium
Million Tons of Coal Equivalent
Low
High
52 -43
-123
Medium
107 12
-68
Low
161 66
-14
1. Projected supply minus projected demand.
38. A comparison of the numbers in the above tabulation shows that, with
high supply growth, China would have a substantial exportable surplus whatever
the demand projection a surplus ranging from 52 ;trillion tons to 161 million
tons. But if high supply growth is ruled out, as the most unlikely of the three
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projections, export prospects are much more moderate. Medium supply growth
will accommodate both medium and low demand growth and leave an exportable
surplus: with medium growth in demand the surplus would be 12 million tons;
with lcw growth in demand the surplus would be 66 million tons.
39. Low growth of demand (implicit GNP growth of 5.9% annually) would
imply continued or prolonged economic problems such as have bothered Peking
for the past few years. GNP growth during 1971-74, a period marked by growing
imbalances and shortages, averaged 5.6%.' 6 Medium growth of demand (implicit
7% GNP growth), on the other hand, implies a rate of growth that may be slightly
above the rate Peking can realistically hope to attain. A rate of 6% to 6.5% GNP
growth, implying low to medium growth in demand and a degree of success in
resolving current imbalances and shortages, may be reasonable. Under these
circumstances ?- medium growth of supply and low to medium growth of demand -
China's energy supply will grow about 10% annually, GNP growth will average
between 6% and 6.5%, and between 12 and 66 million tons of standard coal
equivalent will be available for export.
40. While the available data do not permit a reliable assessment of trends
in efficiency of energy use, it seems likely that any improvement in efficiency
will be more than offset by the rapid expansion of industries which consume large
amounts of energy per unit final output. The rapid growth of these industries
(the chemical fertilizer and petrochemical industries, for example) might result in
a slight increase in the energy-GNP elasticity coefficient used here (1.42). An
increase in the coefficient, coupled with GNP growth of between 6% and 6.5%,
could mean that the exportable surplus would not exceed 40 to 50 million tons
of coal equivalent in 1980" - the equivalent of 27 to 33 million tons (540,000
to 660,000 b/d) of oil.
41. How do we reconcile these conclusions - that the exportable surplus
in 1980 could be no more than 40 to 50 million tons of coal equivalent - with
the indicated Chinese willingness to export 75 million tons of coal equivalent (50
million tons of oil equivalent) to Japan in 1980? Any numbers mentioned publicly,
before actual negotiations, should be considered no more than order of magnitude
figures. Aside from this, there are reasons why the Chinese might want to exaggerate
their energy export capacity in 1980. (1) A desire to counter Soviet attempts to
16. From an estimated $179 billion in 1970 to $223 billion In 1974.
17. With (.l) an average annual GNP growth of 6.3% In 1975-80; (2) a slight rise in the energy-GNP elasticity
coefficient from 1.42 to 1.45; and (3) medium supply growth; the exportable surplus would decline to
cpproxlmately 45 million tons in 1980.
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involve Japan in the development of Siberian resources; China's offer to the
Japanese was first made at a time when the Soviets were courting the Japanese
very intensely, holding out the vast benefits that would accrue io Japan as a result
of its participation in the development of Siberian resources. (2) A domestic
political situation encouraging inflation of the potential political and economic
benefits of policies advocated; sharply rising oil exports were essential to large
purchases of foreign capital goods and thus to the internatic-al goodwill which
would be generated by an expanding foreign trade. Either of '_ use reasons would
provide China's leadership sufficient rationale for giving a rosy picture of oil export
capabilities in 1980, a year which after all was more than five years distant. These
reasons existed in addition to the normal tendency of central planners to
overestimate the future ability of the economy to produce. Collectively, these
elements probably are sufficient reason to argue that any announced export capacity
for 1980 is likely to be somewhat exaggerated.
42. In the discussion above, energy exports have been treated as a residual,
determined by domestic energy production and the domestic demand for energy.
However, Peking probably sees some minimal quantity of energy exports as
absolutely essential to future import plans. Thus, it may be willing to temporarily
sacrifice some growth in certain sectors in order to accelerate future growth in
other sectors (by importing capital equipment and plant).' 9 The chart illustrates
the relationship between energy consumption and GNP growth and shoves the
trade-off between GNP growth and energy exports, an important element in the
calculus of planning energy exports. As shown in the graph, a 7% rate of growth
in the energy supply would permit GNP to grow at a rate of 4.9%;' 9 a 6% growth
rate for the energy supply would restrain GNP growth to 4.2%. The chart also
shows the impact on GNP growth of extorting 50 million tons and 75 million
tons, assuming medium growth in the supply of energy (10.3%). With no exports,
a 10.3% growth rate in the energy supply permits a 7.3% rate of growth in GNP.
Exports totaling 50 million tons reduce GNP growth to 6.3%; exports of 75 million
tons reduce GNP growth to 5.8%. At lower rates of growth of energy supply,
the impact of a given level of exports is even greater.
43. The data presented above suggest that China may have to curtail economic
growth if more than 50 million tons of coal equivalent are to be exported in
18. Energy exports do not necessarily mean that GNP growth is being sacrificed. A situation could exist
whereby energy is not the effective constraint to growth (it crud be steel, for example), in which case
no growth would be forgone by exporting some given amount of energy.
19. Note that the GNP rate shown is a maximum rate, under the implicit assumption that energy growth
alone is the effective constraint on GNP growth.
17
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China: Annual Percentage Growth of Energy Supply and GNP
6.3
5.8
EXPOR
MILLION METRIC
TONS
TS OF 50
EXPORTS OF ' o
MILLION METRIC
TONS
6.0 7.0 10.3
Energy Supply
1980. An alternative solution for Peking is to accelerate investment and output
in the energy producing industries, something that could be done most easily in
the petroleum and natural gas industries.' ? To achieve an exportable surplus of
75 million tons of coal equivalent in 1980,,, assuming medium growth of demand
and growth rates of 6.5% and 8% in coal and hydroelectric production, would
require average annual growth of at least 18% for oil and gas production during
1975-80 - compared with the 15% rate used in the medium projection.'' Such
a growth rate would appear to require a sharp increase in the rate of investment
in these industries, to a level that may be beyond Peking's current capacity.
20. Describing t-ds as an alternative solution implies an increase in overall investment, not simply in the
investment made in the petroleum and gas industries. Otherwise, with investment held constant (that is, shifted
among sectors), the two "alternatives" become two possible outcomes of a single decision, and the decision
to step up oil and gas production, for -.Kample, implies a curtailment of growth in other sectors.
21. Actually the 18% growth rate would produce an export surplus of only 60 million tons; we assume
that Peking could make an additional 15 million tons available through increased efficiency and by shaving
growth.
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44. Putting aside the question of whether or not China can accelerate oil
and gas production while at the same time tending to other problems, it is
interesting to examine the outcome in 1985 of a continuation of 18% average
annual growth in oil and gas production. By 1985, an 18% rate of growth for
oil and gas could lead to an exportable surplus of just under 200 million tons
of standard coal equivalent, or the equivalent of 2.6 million b/d of oil (131 million
tons annually ).2 2 Thus under what appear to be extremely favorable assumptions,
China would be in a position to export in 1985 only one-tenth of the oil exported
by OPEC in 1974.2 3 This is hardly in keeping with the image of a country whose
potential oil resources have been compared with those of the entire Middle East.
In fact, it underscores just how inapt these comparisons really are.
45. China, for all its success in expanding energy production, remains a
country with a population of more than 900 million people, some 80% of whom
are employed in agriculture. Unlike other major LDC oil producers, China's
domestic demand for energy is large and growing rapidly. Peking's commitment
to modernization and expansion in industry, agriculture, and transportation means
that only a limited portion of energy output will become available for export.
How much energy, then, can Peking realistically be expected to export in 1985?
Just how optimistic is the 2.6 million b/d of oil mentioned above?
46. To begin with, it is highly unlikely that China could achieve a rate of
growth of 18% annually in oil and gas production even for the 1975-80 period.
It is simply that the investment requirements are so large. A 15% rate of growth
is more realistic, but it too may be somewhat optimistic. Beyond 1980, with oil
output above 200 million tons annually (4 million b/d), average annual growth
of 10% would be a remarkable achievement.24 On the demand side, beyond 1980
there is a good chance that Peking will attempt to accelerate industrial growth.
This would raise domestic energy consumption and tend to reduce any exportable
energy surplus. In fact, one can find what appear to be reasonable sets of numbers
for supply and demand growth which imply that the exportable surplus in 1985
may well be no more than 100 million tons (1.3 million b/d of oil).
his assumes that eman continues to grow at the rates used in the medium projection for 1975-80
and that coal and hydroelectric output grow at 6.5% (on top of 6.5% in 1975-80) and 6% (on top of 8%
in 1975-80), respectively.
23. OPEC exported 29.2 million b/d of oil in 1974. This may fall to 26.2 million b/d of on in 1980.
24. An examination of oil production by geographic area (North America, Latin America, the Middle East,
and Africa) reveals that, after production reached 4 million b/d, growth rates rarely reached 10%. Only in
the case of the Middle East did it go as high as 10%, and there it was only 10.2%, rs output grow from
3.2 million b/d in 1955 to 5.2 million b/d in 1960. Between 1960 and 1965, the rate fell to just under 10%.
The record of output growth in individual countries also shows growth rates that rarely exceed 10% a year,
once the 4 million b/d rate has been reached. Rates for the United States (3.8%, 1940-50), the USSR (6.5%,
1965-73), and Venezuela (1.3%, 1965-70) bear this out. On the other hand, in Iran and Saudi Arabia, growth
exceeded 20% annually (21% and 29%, respectively, for 1970-73). Clearly, Iran and Saudi Arabia are special
cases, and we should refrain from comparing China's oil industry with either of those countries'. See
International Petroleum Encyclopedia, Tulsa, The Petroleum Publishing Co., 1974,. pp. 306-308.
19
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Raw coal has been converted into coal equivalent at the rate of 0.8 ton of
energy per ton of raw coal produced at large mines and 0.6 ton of energy per
ton of raw coal produced at small mines. Thus the overall conversion rate is an
average which varies with the large mine-small mine output mix. China's coal would
warrant higher conversion rates - perhaps 0.90-0.95 for coal produced at large
nines and perhaps 0.8 for that produced at small mines - were it not for the
fact that coal output is reported at the mine head - that is, before dirt and rocks
are removed and before the coal is washed.
The average rates used here are in line with those used by Wu Yuan-li for
the 1950s. Implicit is the assumption that, had the 1957 output mix from large
and small mines prevailed, the average conversion rate would have been 0.79
throughout the post-1957 period - that is, that progress in cleaning, etc., would
have raised the conversion factor by more than 10% above that of the 1950s.
Instead, the rising share of output from small mines, where inpurities are greater
and the average calorific content lower, has resulted in conversion factors of 0.77
for 1965; 0.75 for 1970; and 0.744 for 1974. The conversion rate used for 1952
and 1957 - 0.715 - was taken from Wu Yuan-li, Economic Development and the
Use of Energy Resources in Communist China, New York, Frederick A. Praeger,
1963, p. 107.
Crude oil has been converted into coal equivalent at the rate of 1.5 tons
of energy per ton of crude oil. This factor, rather than the usual 1.3, is used
because the Chinese consume some of their crude oil directly in powerplants and
also because the 1.5 conversion factor more accurately reflects the energy content
of crude oil. The 1.3 rate assumes that all crude oil is consumed indirectly as
petroleum products, with part of its energy content lost in refinery processing
(see Joel Darmstadter, Energy in the World Economy, Baltimore, The Johns
Hopkins Press, 1971. p. 829).
21
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Natural gas has been converted into coal equivalent at the rate of 1.332 tons
of energy per 1,000 cubic meters.
Hydroelectricity
Hydroelectricity has been converted into coal equivalent at the rate of 0.125
tons of energy per 1,000 kilowatt hours.
22
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In estimating the supply of natural gas, one immediately encounters a problem:
the official claims for natural gas production in Szechwan Province - which
accounts for some 90% of total production - imply implausibly high levels of
energy consumption in that province. Since there are no pipelines extending to
other provinces, transportation and handling losses and/or a peculiar definition of
production clearly must account for the large discrepancy between production and
any plausible estimate of consumption.
Since natural gas production doubtlessly is measured at the wellhead, the
situation is akin to that of electric power where, after subtracting electricity used
by power stations and transmission losses, electricity actually reaching the consumer
is diminished by 15%. Because natural gas is superabundant in Szechwan (and thus
probably priced very low), efforts to reduce handling losses and wasteful use have
probably received only minor attention.
The problem has been resolved by making estimates of the economically
significant quantity - the natural gas reaching final consumers. This has b. en done
in the following manner: (1) It is assumed, in the absence of evidence to the
contrary, that the per capita energy supply in Szechwan is the same as that outside
Szechwan. (2) The per capita energy supply was then calculated for Szechwan
(excluding energy from natural gas) and for the rest of the country (where energy
from nz"ural gas is a very small portion of total energy supply). The resulting
difference, wh,n multiplied by the population of Szechwan, is a measure of energy
from natural gas and, wilc.n converted, of raw natural gas supply in Szechwan.
Objections to this me hod can be made on several grounds. However, in the
absence of further avidence, it has the vit lue of being straightforward and involving
only one assumption which, although open to challenge, is within reason. The data
used and the calculations made are as follows:
23
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Energy Production
in Szechwan,
Coal
Per Capita
1973
Actual
Equivalent'
Energy Supply'
Totcl
11.2
0.116 tons
Coal
141
10.4
Oil
0.21
0.3
Hydroelectric
43
0.5
1. Million tons. Raw coal is converted into coal equivalent at the rate of 0.746 ton of coal
equivalent per ton o.t raw coal.
2. Szechwan's population is estimated at 96.7 million. Energy exports are assumed to be
insignificant.
3. Billion kilowatt hours.
Energy Production
Outside Szechwan,
Coal
Per Capita
1973
Actual
Equivalent'
Energy Supply2
Total
354.7
0.442 tons
Coal3
360'
269
0114
52'
78
Gas
45
5.3
Hydroelectric
196
2.4
1. Million tons.
2. Population outside Szechwan is estimated at 802 Million.
3. Minus 3 million tons of exports. The conversion rate used is 0.746 ton of coal
equivalent per ton of raw coal.
4. Minus 2 million tons of exports and some production from coal.
5. Billion cubic motors.
6. Billion kilowatt hours.
The difference between the two per capita eneiigy supply figures is 0.326 ton,
which when multiplied by the population of Szechwan gives a figure of 31.5 million
tons of coal equivalent, or 23.6 billion, cubic meters of natural gas.
The supply of natural gas calculated in ? this manner is approximately half
of natural gas production in Szechwan. One would prefer to go through this same
procedure for each year to establish estimates for natural gas supply; however,
energy data for Szechwan are not readily available. Consequently, natural gas supply
24
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in Szechwan has been taken as one-half of tha estimate of natural gas production.
Outside Szechwan, it is assumed that waste is ncglible (since natural gas is much
more expensive elsewhere). Total natural gas output is derived by adding supply
in Szechwan to production outside Szechwan.
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APPENDIX C
PROJECTIONS OF ENERGY SUPPLY IN 1980
Past rates of growth in energy production are the basic desiderata in projecting
energy supplies in 1980. The tabulation below, showing the annual growth rates
of energy production by source and the time period, is presented for reference.
Coal
on
Natural
Gas
Hydro-
electricity
Total
1958.65
7.7
28
36
8.4
9.3
1966-70
6.5
21
18
9.2
9.1
1971-74
5.6
23
8.6
14
8.7
1958-74
6.9
25
26
10.1
9.1
1. The rates are for output measured in coal equivalent. Rates higher than 11%o have been rounded.
Three projections were made,: high, medium, and low. Under each, a growth
rate for 1975-8G was selected for each energy source (coal, oil, natural gas, and
hydroo.lectricitv), output of each source was projected to 1980, and the individual
projections were then summed to obtain total energy supply in 1980. For the
high projection we have at>;crn-t d to select growth rates that reflect a realistic
maximal output performance in 1975-80, keeping in mind current economic
problems and the capital shortage that probably will constrain growth over the
next several years. The high rates thus do not necessarily equal or exceed the
highest growth rates obtained in the past. Growth rates for the medium and low
projections are. chosen on the basis of the growth rate selected for the high
projection and variations in past growth rates. For example, in the case of coal
(where a 7% growth rate was selected for the high projection) growth has ranged
between 5.6% and 7.7%; hence the difference between the high and the low rates
should not be too large. We therefore selected a 6.5% rate for the medium projection
and a 6% rate for the low projection. With the other energy sources, where variations
in growth rates have been larger, the difference between the rates selected for
the high and low projections is larger. Tha growth rates used in the projections
are shown in the following tabulation. The comments shown there give some of
the.;,asoning behind the selection of particular growth rates.
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Annual Rates of Growth for Supply
Projections, 1>^15-80 (Percent)
High Medium Low Comment
Coal 7 6.5 6 High: Coal output is projected to grow by 7% annually,
1975.80. This is below the highest rate shown above
(7.7%, 1958.65) but is higher than the growth achieved
since 1965. It compares to a 5.9% rate for 1958-74.
With the sharp decline in growth that has occurred
since 1970, 7% annual growth during 1975.80 should
tax production capabilities in the coal industry.
Medium: Coal output is projected to grow by 6.5%
annually, faster than In 1966-74 (6.1%).
Low: Projected at 6% annually.
Oil 20 15 10 High: Oil output is projected to grow by 20% annual-
ly. This is comparable to the rate of growth achieved
in 1966-70 but is lower than the rates for the other
periods, including that for the entire period 1958.74.
However, even the 20% rate implies very heavy invest-
ment in the petroleum industry. Given the demands
on investment resources implied by 7% growth in
coal output, plus the normal fall in growth rates
which can be expected as output rises, 20% growth
must be considered high.
Medium: Projected at 15% annually.
Low: Projected at 10% annually.
Natural 20 15 10 High: Natural gas production is also projected to grow
gas by 20% annually. After very rapid growth in 1958-65,
natural gas production has grown at healthy, though
declining, rates. The projected 20% rate is close to
that for 1966-70; it reflects greater concern on the
part of central authorities about energy waste. With
the large investments required in pipelines, treatment
facilities, and gas field equipment, production growth
of 20% annually is high.
Medium: Projected at 15% annually.
Low: Projected at 10% annually.
Hyde.,- 10 8 6 High: Hydroelectric production is projected to grow
electric at 10% annually, the 1958 74 average. Most of the
growth will occur in small hydroelectric plants serv-
ing agriculture; but, following the rapid expansion
of these rural facilities since the Cultural Revolution,
growth will be more measured than the 14% annual
growth of 1971-i 1.
Medium: Projected at 8% annually.
Low: Projected at 6% annually.
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1974
1980
High
Medium
Low
Coal
Oil
Gas
Hydro-
electric
Totai
Production
Supply'
289
98
38
3
4281
34301
434
293
113
5
845
777
422
226
88
5
741
682
410
173
67
4
654
602
1. Supply in 1980 is calculated as 92% of total production. The difference between supply and total
production consists of handling losses, additions to inventory, and a small amount of petroleum consumed by
the military. It Is assumed that lower handling losses and more efficient use of the energy inventory will increase
the ratio of supply to total production from 90.7% in 1974 to 92% in 1980.
2. The apparent inconsistency between the explanation given in footnote I and the data for 1974 is explained
by exports of 9 million tons of standard fuel equivalent in 1974.
Table 8
China: Production of Primary Energy
1952
Coal
(Million
Metric Tons)
66.5
Crude Oil
(Million
Metric Tons)
0.44
Natural Gas
(Billion Cubic
Meters)
N.A.
1957
130.7
1965
220.'0
1971
335.0
36.7
23.6
1972
356.0
43.0
27.0
1973
377.0
54.5
27.6
1974
389.0
.65.3
28.8
29
Hydroelectricity
(Billion Kilo-
watt Hours)
1.3
4.7
15.0
20.0
23.0
24.0
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 Approved For Release 2003/09/29 : CIA-RDP86T00608R000500110016-9
APPENDIX D
PROJECTIONS OF ENERGY DEMAND IN 1980
The tabulation below, which shows average annual rates of growth of energy
consumption by sector of consumption and time period, is presented for reference.
1958.65
1966-70
1971-74
1958.74
Ini aistry
Agri-
culture
Trans-
portation
Residential/
Commercial
Total
12
36
5.6
5.1
8.4
12
15
3.2
3.7
8.5
10.2
20
4.6
2.8
8.1
12
26
4.7
4.2
9.4
Three projections were made: high, medium, and low. Under each, a growth
rate for 1975-80 was selected for energy consumption in each sector, consumption
in each sector was projected to 1980, and the individual projections were then
summed to obtain total energy consumption (demand) in 1980.
As in the supply projections, for the high projection we have attempted to
select growth rates which reflect a realistic maximal growth performance in 1975-80,
keeping in mind the problems that have cropped up in the various sectors and
also any evidence of Peking's plans.
In the 1975-80 period, Peking will continue to stress rapid growth in industry
and agriculture (apparent in the above tabulation). However, some concessions must
be made to the transportation sector, where bottlenecks have .appeared in 1974
and 1975. The residential/commercial sector will continue in its state of neglect.
The growth rates used in the projections are shown in the following tabulation.
The comments shown there give the reader some of the reasoning behind the
selection of particular growth rates.
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 Approved For Release 2003/09/29 : CIA-RDP86T00608R000500110016-9
Annual Rates of Growth for Demand
Projections, 1975-80 (Percent)
Industry
Agricul-
ture
Transport-
ation
Residential/
commercial
High Medium huw Comment
13 11.5 10 Ifigb: Energy consumption in industry is projected
to grow by 13% annually, roughly consistent with
10%-11% annual growth In industrial production.
A 13% rate of growth exceeds the previous high
rate shown in the above tabulation (12%).
Medium: Projected at 11.5% annually, slightly above
the rate for 1971-74.
Low: ?'rojected at 10% annually.
20 17.5 15 Ifigh: Energy consumption in agriculture is projected
to grow by 20% annually. This is a continuation of
the rate observed in 1971-74 and reflects Peking's
determination to promote agricultural mechani-
zation.
Medium: Projected at 17.5% innually.
Low: Projected at 15% annually.
5 4 High: Energy consumption in transportation is pro-
jected to grow by 6% annually. This is above the
4.6% rate for 1971.74 and slightly above the 5.6%
recorded in 1958-65. The transport problems that
turned up in 1974 and 1975 make it clear that this
sector will receive additional attention in 1975-80.
Medium: Projected at 5% annually.
Low: Projected at 4% annually.
4 3 High: Energy consumption in the residential/com-
mercial sector is projected to gro'i by 5% annual-
ly. This compares to growth rates of 3.7% and 2.8%
in 1966-70 and 1971-74 and is clearly a high rate.
Although complaints about wages and incomes have
been voiced, because of the demands of the other
sectors little can be done for residential/commer-
cial.
Medium: Projected at 4% annually.
Low: Projected at 3% annually.
32
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Million Tons of Coal Equivalent
Industry
Agri-
culture
Trans-
portation
Residential/
Commercial
Total
Energy
Demand
1974
235
24
19
102
380
1980
high
489
72
27
137
725
Medium
452
63
25
130
670
Low
416
55
24
121
616
Table 9
China: Consumption of Primary Energy, by Sector and Source'
Million Metric Tons of Coal Equivalent
1952
1957
1965
1970
1974
Total consumption
42.3
96.6
184.3
277.6
379.7
Coal
41.3
91.2
156.3
210.4
260.7
Oil
0.8
4.0
14.5
37.8
77.6
Gas
....
0.8
12.3
27.6
38.4
Hydroelectric
0.2
0.6
1.1
1.8
3.0
Industry and construction
11.2
36.4
89.1
159.0
234.8
Coal
10.8
33.8
74.5
119.0
160.8
Oil
0.2
1.7
7.5
24.7
52.3
Gas
....
0.4
6.2
13.8
19.2
Hydroelectric
0.1
0.5
0.9
1.5
2.5
Agriculture
0.1
0.5
5.8
11.6
24.0
Coal
Negl.
Negl.
1.2
2.1
4.0
Oil
0.1
0.5
4.5
9.3
19.6
Gas
....
....
....
....
Hydroelectric
Negl.
Negl.
0.1
0.2
0.4
Transportation
5.3
8.9
13.8
16.2
19.4
Coal
5.0
7.8
12.1
13.5
14.9
oil
0.2
1.1
1.7
2.7
4.5
Gas
....
....
....
....
....
Hydroelectric
Negl.
Negl.
Negi.
Negl.
Negl.
Residential/commerciA
25.7
50.8
75.6
90.8
101.5
Coal
25.4
49.6
68.5
75.8
81.0
Oil
0.3
0.7
0.8
1.1
1.2
Gas
...
0.4
6.2
13.8
19.2
Hydroelectric
Negl.
0.1
0.1
0.1
0.1
1. Because of rounding, components may not add to the totals shown.
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