Greater en­ergy ef­fi­ciency fu­eled by up­grad­ing

China Daily (Hong Kong) - - COMMENT -

Over­seas me­dia are mis­taken in say­ing the Chi­nese econ­omy has “sud­denly gone on a tear.” In fact, as re­ported on Thurs­day, the coun­try’s man­u­fac­tur­ing con­tin­ued to ex­pand for the fourth con­sec­u­tive month in Novem­ber. For im­prove­ment in China’s eco­nomic per­for­mance is not some­thing that comes all of a sud­den. The man­u­fac­tur­ing Pur­chas­ing Man­agers’ In­dex, a mea­sure­ment for busi­ness ac­tiv­ity based on a 50-point bust-boom line, was 51.7 in Novem­ber, up from 51.2 in Oc­to­ber.

The last time man­u­fac­tur­ing ex­panded at this pace was in July 2014, ac­cord­ing to govern­ment data.

One has rea­son to be­lieve that on the cor­po­rate level, China’s tran­si­tion over the four years, painful as it has been, is be­gin­ning to yield some re­sults. Those tran­si­tion pains have helped the na­tion to gather the mo­men­tum it needs for a dif­fer­ent kind of growth from that of the past.

More than ever be­fore, in­dus­trial growth is led by more so­phis­ti­cated op­er­a­tions, based on the in­creas­ing use of tech­nol­ogy rather than an ever greater use of re­sources.

This be­ing the case, the lat­est round of price rises in crude oil, fol­low­ing the agree­ment be­tween OPEC and Rus­sia to cut out­put is un­likely to pose much of a new prob­lem — even though China’s de­pen­dency on en­ergy im­ports, crude oil in par­tic­u­lar, re­mains high.

The deal, in which OPEC mem­bers have agreed to cut their out­put by 1.2 mil­lion bar­rels per day and non-OPEC coun­tries, pri­mar­ily Rus­sia, by 0.6 mil­lion bar­rels per day, rep­re­sents OPEC’s first co­or­di­nated ac­tion with Rus­sia in 15 years.

Since, OPEC pro­duces one-third of the world’s crude oil sup­ply, around 33.6 mil­lion bar­rels per day, its de­ci­sion sent crude oil prices soar­ing by more than 10 per­cent overnight.

Although fur­ther out­put cuts are un­likely, the ef­fects of the deal will con­tinue to be felt for some time.

But on China’s part, it is not de­pen­dent on oil im­ports from OPEC and Rus­sia. It has its own oil and nat­u­ral gas re­sources and strate­gic re­serves. It also im­ports some from the United States.

At the same time, the na­tion is also try­ing hard to raise its en­ergy ef­fi­ciency. It no longer sees any ad­van­tage in di­rect­ing mas­sive la­bor to low value-added ex­port op­er­a­tions. Its lat­est man­u­fac­tur­ing growth has been achieved par­al­lel to a tremen­dous ef­fort to shut down or re­lo­cate op­er­a­tions that are un­com­pet­i­tive.

This has re­duced China’s de­pen­dence on en­ergy on the per out­put unit ba­sis. And with en­ergy in­no­va­tions and ex­pand­ing use of the re­new­able, China’s econ­omy will con­tinue to grow.

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