China’s Oil Prospects

R ECENT COMMENTARY on the development of the petroleum industry in the People's Republic of China reflects an enormous diversity of opinion concerning petroleum production, reserves, facilities, and the relationship of oil to China's general economic development. The purpose of this article is to place some of the key issues relating to the Chinese petroleum industry in perspective. My main conclusion is that despite rapid strides in recent years, China over the foreseeable future will remain a limited exporter of petroleum products. Nor will China's oil serve as a panacea for the main problems of economic modernization, in large part because of the enormity of the industrialization task, the sheer size of the population, and the vastness of the country itself. Much of the data for an assessment of China's petroleum potential must be extracted from Chinese Communist sources. I believe that published data predating 1971 provide more reliable information than more recent reports, largely because the Chinese Communist leadership was making only modest claims of self-sufficiency in the early years. Over the past few years, however, the Chinese have been asserting exaggerated production and reserve figures, probably in order to project the image of a militarily strong China and thereby indirectly to induce foreign governments and banks to grant long-term export credits.1

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