China’s electricity demand has not met its needs this year, the country’s National Energy Administration reported Aug. 20.
The countries has cut power to a number of factories, including Dow Chemical’s AGU styrene plant in Changshu, Jiangsu Province, at the same time that exports of crude oil from China are falling.
The power cuts could be the result of the curbs in the petroleum industry, to restrict energy export to reduce the trade surplus with the U.S.
“New energy, including gas and coal, would have helped China meet its energy needs, but the slowdown in investment and production may have more to do with the oil industry as well,” Nicolas Berggruen, founder of Berggruen Holdings and chairman of Berggruen Institute Europe, told Fox News.
China has to reverse its import of oil in 2019 and cuts oil imports to reduce its trade surplus with the U.S.
“When China cuts oil imports, you can see the impact,” Berggruen said. “The price of oil dropped by $15 a barrel [today] as a result.”
After decades of meteoric growth, China’s economy cooled in 2018, but continued to register more than 11 percent growth, prompting the Chinese government to impose trade tariffs on U.S. goods to protect its interests.
Beijing has imposed the tariffs to “fight against the war on trade,” Chinese President Xi Jinping said in April.
A decrease in Chinese crude oil shipments has caused Chinese crude inventories to increase seven-fold in the last year, the New York Times reported.
“Chinese crude oil imports have been declining for over a year, increasing the prospect of future shortages,” Berggruen said.
China is unlikely to seek U.S. approval for the sale of strategic oil products, Reuters reported this week.
“Refining capacity is not the best indicator of what’s happening in the economy,” Berggruen said. “The real economy is what’s happening in the Chinese environment. Chinese economic growth is sustainable and real, without stimulus.”