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China, India and the billion carAsian market
Vanessa RossiDirector International Economics, Oxford Economics and
Associate Fellow, Chatham House, LondonDecember 2006
Energy trends
Dominated by 2 sectors – transport andpower generation
These demands are driven largely bypopulation trends and “catch up” in thedeveloping world
Energy outcomes also depend onefficiency and technology available andthe time it takes to implement
The car itself is not the devil here
2000 2003 2006 2009 2012 2015 2018 2021 20240
500
1000
1500
2000
2500
3000
0
500
1000
1500
2000
2500
3000
China's fossil fuel use (all mtoe)
COAL
OIL
GAS
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 20250
500
1000
1500
2000
2500
0
500
1000
1500
2000
2500
GW installed power plant
COAL
HYDRO
TOTAL
1990 1994 1998 2002 2006 2010 2014 2018 20220
5000
10000
15000
20000
0
5000
10000
15000
20000
Electricity per capita (kwh pa)
United States
CHINA
INDIA
KOREA
2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 20240
50
100
150
200
250
300
5
10
15
20
25
China: oil and cars Cars m OIL mbd
CAR REGISTRATIONS (LHS)
OIL CONSUMPTION (RHS)
Changing views on China …
The late 1990s view: nowhere to driveand few people would want to buy cars
And about 3 years ago I was told thatpeople in China didn’t have enoughmoney to buy so many cars
Whatever the latest arguments are, thesafer conclusion must be that the carstock will keep rising at double digitrates for some years yet
1995 1997 1999 2001 2003 2005 2007 2009
0
10
20
30
40
50
0
10
20
30
40
50
Growth in car stocks
CHINA
GLOBAL TOTAL OECD 1-2% ONLY
… but keep China in perspective
Someone recently told me – horrified! - thatChina was adding 2000 cars per day to themarket, when the number is more like 3mcars per year and 8000-9,000 per day
But the stock of private cars in China isonly about 13-14m (double for totalvehicles), so there are still around 100people per car, the same in India
The US has around 135-140m cars and sellsaround 15m per annum
1995 1998 2001 2004 2007 2010 2013 2016 2019 2022 20250
500
1000
1500
2000
0
500
1000
1500
2000
World
Car pool - up 1 billion by 2025
GLOBAL CAR STOCK (million)
OECD
DEVELOPING WORLD
2004 2007 2010 2013 2016 2019 2022 20250
2000
4000
6000
8000
0
2000
4000
6000
8000
Population (m)
GLOBAL POPULATION
OECD
EMERGING MARKETS
1995 2003 2011 2019 2027 2035 2043 20510
10000
20000
30000
40000
50000
60000
0
10000
20000
30000
40000
50000
60000
World
Electricity generation
GLOBAL POPULATION
GLOBAL ELECTRICITY OUTPUT
GDP/CAPITA AVERAGE (const dollars)
1990 1994 1998 2002 2006 2010 2014 2018 20220
5000
10000
15000
20000
0
5000
10000
15000
20000
Electricity per capita (kwh pa)
United States
CHINA
INDIA
KOREA
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 20250
20
40
60
80
100
120
0
20
40
60
80
100
120
People/car ratios
CHINA
and United States
KOREA
Chinese demand as a % of world output
1996 2000 2004 2005
Cars 1 2 6 7
Steel 13 16 30 33
Iron ore 17 27 39 42
Aluminum 12 17 28 28
Copper 7 16 22 22
Cotton 22 23 32 41
Oil 5 6 8 8
GDP (MER) 3.0 3.7 4.8 5.1
GDP (PPP) 11.6 13.6 16.5 17.3
0.0
5.0
10.0
15.0
20.0
25.0
30.0
0 5000 10000 15000 20000 25000 30000 35000 40000
annual barrels / capita
Source: OEF
Per capita oil demand & incomes
annual income / cap (US$ PPP)
India
Indonesia
China
Iran
BrazilThailand
S. Africa
Argentina
S. Arabia
Taiwan
Korea
US
-5
0
5
10
15
20
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
-5
0
5
10
15
20
Source: OEF
% yr% yrImpact of China on oil demand
WorldOECD
Forecast
Non-OECD
China oil
demand: large
and volatile
-10
0
10
20
30
40
50
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
-10
0
10
20
30
40
50
Source: OEF
% yrChina car pool and oil growth
Oil demand
Growth in
car stock
Forecast
% yr
0
1
2
3
4
5
6
7
8
9
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0
1
2
3
4
5
6
7
8
9
% year % year
Source: OEF / OPEC
11 Emergers: Composite demand indicator,
GDP & oil demand growth
Oil demand growth
Composite demand indicator *
* based on growth in vehicle
stocks, chemicals output and GDP
GDP growth
(2000 weights)
1990 1994 1998 2002 2006 2010 2014 2018 20220.3000
0.3500
0.4000
0.4500
0.5000
0.5500
0.3000
0.3500
0.4000
0.4500
0.5000
0.5500
Declining oil/GDP ratio
GLOBAL OIL/GDP RATIO
2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024600
800
1000
1200
1400
1600
1800
80
90
100
110
120
130
Global oil and carsCars m OIL mbd
CAR POOL (m)
OIL CONSUMPTION mbd
1995 1998 2001 2004 2007 2010 2013 2016 2019 2022 20251
2
3
4
1
2
3
4
Oil per car ratio
TREND
SCENARIO
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 202580
90
100
110
120
130
80
90
100
110
120
130
Global oil demand (mbd)
TREND FORECAST
ALTERNATIVE BASED ON CAR TECHNOLOGY
Conclusions and predictions?
Don’t expect population and developmentto change – car demand and stocks will risein the developing world
Better to base assessments for oil demandon cars not GDP
And a radical change in oil/car use wouldrapidly transform the global outcome
Pollution is and will remain more about coalfired power plants than cars and oil
-40
0
40
80
120
160
200
2000 2001 2002 2003 2004 2005 2006
-40
0
40
80
120
160
200
$ bn
ChinaJapan
Source: Oxford Economics
Asia: Current account$ bn
4 quarter totalsIndia
Korea
END
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