An analyst at the administration said that the country now depends one-third of its oil consumption on import. According to the administration, China imported 91.12 million tons of crude oil (US$19.81 billion) and 28.24 million tons of refined oil products (US$5.86 billion) in 2003. Taking into account China's export of 8.13 million tons of crude oil and 13.82 million tons of refined oil, the total import of crude and refined oil was more than 100 million tons.

As the import volume keeps climbing up, more foreign currency has been used in petroleum trade than in any other trades. Last year, the annual trade deficit for crude and refined oil was US$20.29 billion. But the deficit of the first quarter this year reached US$7.925 billion, accounting for 94 percent of the national trade deficit of US$8.43 billion. If the trade keeps moving forward this way, China will likely register US$30 billion trade deficit for oil in 2004. Rocketing petroleum trade deficit now is a severe challenge for the country to maintain a favorable trade balance.

Furthermore, in the first quarter of 2004, the unit price for refined oil import came down a little bit though, that of crude oil has kept surging. Industrial users such as transportation and petrochemical companies had to pay more to deal with the increased operation cost. Automobile customers also suffered from surging gasoline price which reached a record high.

Chen Haoran, chairman of the China Chamber of Commerce of Metals, Minerals & Chemicals Import & Export, who has years of experience in international petroleum tradeoff, said that China must reform its production structure to cut off energy waste.

Energy waste is severe nationwide, despite the country's short energy supply, Chen said. China's average production efficiency is far lower than developed countries. It is estimated that China uses three to four times more energy than the world average to create a GDP unit, and up to 11.5 times of Japan.

The global energy reserve will not be enough to feed China alone if China keeps expanding its production scale at the cost of high-energy consumption with loose management, warned Chen.

Energy-saving lifestyle should be adopted in order to achieve an affluent society for China's huge population, said Chen. He suggests more energy-saving products, such as energy-saving construction materials and automobiles, be developed. When private cars are becoming increasingly popular, the state should hammer out preventive measures to limit the production of high energy-consumption automobiles. Furthermore, in crowded cities like Beijing, rail transport should be given first priority.

Chen suggests that Chinese petroleum companies step in international petroleum future market strategically and make full use of the hedging tools to protect corporate interest. Some domestic state-owned petroleum enterprises used to refrain themselves from entering international petroleum future market, believing it's a kind of speculation. Foreign petroleum companies usually authorize their future operators some credit and allowance of loss and establish reserve fund to offset impact of price fluctuations.

(China.org.cn by Xu Zhiquan, May 24, 2004)