China explains energy-growth data mismatch

Business Times - 02 Jun 2009

(BEIJING) China defended its economic data yesterday after the International Energy Agency (IEA) questioned the consistency between the nation's growth rate and its falling energy demand.

Critics have said the country's growth does not match up with its weakening oil and electricity demand.

But Zhang Guobao, head of the National Energy Administration, said this was due to a change in the nation's industrial mix.

'High energy-consuming industry is on the decline, and low energy-consuming industry is on the rise, so this has impacted electricity consumption,' he told reporters.

Overall electricity consumption in China from January to April dropped 4 per cent compared to the same period in 2008, according to a statement released by the Energy Administration.

In the same period, China imported 57 million tonnes of crude oil, a 4.5 per cent drop from a year earlier, Mr Zhang said.

But China's first-quarter GDP grew by 6.1 per cent.

Historically, demand for oil and electricity products is used as a proxy for gross domestic product growth.

The IEA in its May report on the oil market questioned the figures.

'Oddly enough, (first quarter of 2009) reported GDP growth does not tally with oil demand data (nor with electricity demand, which was also inordinately weak),' it said.

But Mr Zhang pointed to slowing growth in heavy industry, which traditionally accounts for around 80 per cent of industrial electricity consumption.

He said the oil-processing and coking industries had dropped by 5.4 per cent in the first quarter, whereas communications - a low energy-consuming sector - had increased 15.5 per cent.

Mr Zhang also said part of the demand for steel and non-ferrous metals had recently been met by existing inventories instead of new production, which would have increased electricity consumption.