THE GLOBAL IMPACT OF CHINA'S ENERGY QUANDARY

The world's energy industries are now coming to terms with China's emergence-not merely as a new player, but increasingly one of the most decisive factors in their markets. From 2000 through 2003, China accounted for nearly 40 percent of the entire growth in world oil demand. Meanwhile, a sense of "energy crisis" is deepening in Beijing, as concerns about rising imports, chronic shortages, and the consequences of global integration become ever more acute. World markets will face the following implications:

- China's growing weight in world consumption virtually assures a heavy long-term impact on energy prices, trade, and investment.
- Yet, beware straight-line projections: the pace and direction of China's energy demand growth could prove to be far more volatile than most observers now anticipate.
- A critical factor for world energy markets in 2004-05 is Chinese industrial policy, and whether Beijing can achieve a macroeconomic soft landing-despite growing concerns that the alternative may be a hard one.

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