The fluctuating international oil market caused by the mounting conflict in the Middle East has prompted the Chinese authorities to consider reopening the local oil futures market.
The Shanghai Futures Exchange recently completed a study on the trading of fuel oil and handed over an application for resuming the business to the China Securities Regulatory Commission, according to Jiang Yang, general manager of the exchange.
In recent years, especially since the September 11 terror attacks in the United States, oil prices have been one of the most sensitive commercial signals to reflect events that are of great importance to the world economic situation.
China, the world's fifth last largest oil producer, with an annual output of 160 million tons in 2000, has become a net importer of oil since 1993, as required by its fast economic growth, at seven percent and higher every year.
According to official figures, in 2000, China spent almost US$20 billion to import 60-70 million tons of oil, and by 2005, it is expected to top 100 million tons.
Jin Dehuan, dean of the Securities and Futures Institute of the Shanghai Financial University, predicted that the gap between supply and demand of oil was likely to increase to eight percent by 2010 and 24 percent by 2020, which meant that China's dependence on oil imports was expected to reach 30 percent by 2010 and 50 percent by 2020, compared with 6.6 percent in 1996 and 25 percent in 2000.
According to estimates by the international oil experts, in the next 10 years, Asia's total oil imports were likely to exceed 30 million barrels, while China's daily oil imports may more than double from the present 1.4 million barrels.
The government has included the establishment of a strategic oil reserve system in its 10th five-year plan.
However, Jiang pointed out that China still lacked an inflation proof mechanism to help local oil companies find shelters on the international oil futures market, though a so-called "risky purchase screen" has been set up.
The general manager recalled that in 1993, China began conducting experimental futures trading at the Shanghai Oil Exchange with only three categories of oil products involved, but it was closed down by the authorities due to severe irregularities by local traders.
(Xinhua News Agency April 15, 2002)
