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Chinese Oil Supply and Demand: Status Quo,Prospects and Relevant Counter-Measures

2010-06-08

Han Jun, Xie Yang & Zhang Yunhua

I. Status Quo and Prospects of Oil Supply and Demand in China

1. A huge potential for the increase in oil crop production

Oil crops are important staple agricultural products of China. In 2007, the national output of the vegetable oil products (which were produced with Chinese domestic raw material and processed by Chinese enterprises) amounted to 9.23 million tons, of which the output of edible oil produced with herbal oil crops amounted to 6.79 million tons (accounting for 73.5% of total China-made vegetable oil), the output of edible oil produced with other types of dual-purpose crops came to 2.174 million tons (making up 23.5%) and the output of edible oil produced with woody oil plants totaled nearly 300,000 tons (constituting 3%).

Herbal oil crops are currently the main source of China-made vegetable oil. Herbal oil crops are annual special-purpose oil crops, including rapeseed plant, soybean, groundnut, sesame, sunflower and linseed, etc. The output of edible oil produced with rapeseed plant, groundnut and soybean registers the maximum, accounting for 70% of the total output of China-made vegetable oil. Rapeseed plant is one of the most efficient oil producers, with its sown area reaching 5.642 million hectares and its total output hitting 10.572 million tons in 2007, ranking top in the world. The annual output of colza oil hit 3.701 million tons (making up over 40% of the total output of China-made vegetable oil) and colza oil production is mainly scattered in the Yangtze River valley. The sown area of groundnut totaled 3.945 million hectares in 2007 and its total output reached 13.027 million tons, with both the output and export volume ranking first in the world. The annual output of groundnut oil amounted approximately to 2.097 million tons (accounting for 22.7% of the total output of China-made vegetable oil) and the groundnut oil production is mainly scattered in Yellow Sea, Huaihai and Yangtze River valleys. The sown area of soybean reached 8.754 million hectares in 2007 and its total output hit 12.727 million tons, with both the area and output ranking fourth in the world. The China-made soybean is mainly for edible use and the proportion of soybean used to make oil accounts approximately for 1/3. The annual output of soybean oil comes roughly to 608,000 tons (making up 6.6% of the total output of China-made vegetable oil) and the soybean oil production is mainly scattered on the Songnen Plain of Northeast China, in North China and the Yangtze River valley. The sown area of other special oil crops, such as sunflower, sesame and linseed, totaled 1.533 million hectares, and the output of those oil crops added up to 2 million tons, production of which is mainly scattered in the Yellow Sea and Huaihai areas and in West China, with the oil production reaching 380,000 tons, accounting for 4% or so of the total output of China-made vegetable oil.

Woody oil plants are important potential resources for China's vegetable oil. Perennial woody plants including sasanqua and olive, which are characterized by strong adaptability, high output and superior quality, mainly scatter on hilly land of the Yangtze River valley. These plants are mostly grown in barren mountains and on barren slopes. The present scale and distribution of sasanqua production are seen the largest, with its countrywide sown area reaching 3.027 million hectares, but the yield per unit area has been low. Therefore, the output only totaled 1.06 million tons, and the amount of annual processed tea-seed oil came to 277,000 tons. Other woody oil plants such as olive are starting to develop on the whole and are away from becoming large-scaled. As the area of barren mountains is big in China, the woody oil plants will become important sources of China's vegetable oil in the future.

Other sources of dual-purpose oil are an important integral part of China's vegetable oil. The dual-purpose oil comes from the by-products of such grain and cotton crops as cotton, paddy and maize, including cottonseeds, maize embryo and rice bran, which can be used to produce cottonseed oil, maize oil and rice bran oil. China saw its output of cottonseeds reaching 7.624 million tons and its cottonseed oil output hitting 1.524 million tons in 2007, making up over 16% of the total output of China-made vegetable oil, and the production of cottonseeds and the seed oil is mainly scattered in the main cotton-producing provinces and areas, such as the Yellow Sea and Huaihai areas, Xinjiang and the middle and lower reaches of the Yangtze River. Production of maize oil and rice bran oil is mainly scattered in the main grain-producing areas in Northeast China, North China and the Yangtze River valley, with the annual output totaling 550,000 tons or so (making up 6% or so of the total output of China-made vegetable oil).

The huge potential for the increase in China's oil crop production is manifested as follows:

Firstly, potential for the increase in the yield per unit area and for the quality improvement. In recent years, China has mounted up its input in the enhancement and innovation on oil technologies and has accumulated abundant reserves for selection of high yield varieties, exploration of high oil content resource, and cultivation techniques featuring high yield, efficiency, cost saving and simplicity. A good foundation has been laid for tapping the potential of increasing unit yield, improving quality, and enlarging utilization of the marginal land in the future.

Secondly, potential for restoring and expanding the area. By adhering to the principle of giving priority to land for grain production and making full use of the wintertime idle land, abandoned land, flood land and idle land bits, China still has a huge potential for restoring and expanding the area of its oil crop fields. According to calculations, by making use of such marginal land as the wintertime idle land, saline-alkali land, barren land and barren hilly land and slopes in the Yangtze River valley, China can still expand the area of its oil crop production fields by 6.39 million hectares to increase the total area of its oil crop production fields to 29.3 million hectares.

Thirdly, potential for increasing the productivity. The productivity can be improved and the output can be increased considerably by adopting advanced production technologies and cultivation models. On these bases available at present, the cultivation techniques can be integrated, with the cost being saved and the efficiency being improved.

Fourthly, a huge potential for exploration of other dual-purpose oil sources. China is a big agricultural country, with its paddy, maize and cotton output all being in the front rank in the world. The annual paddy output of China comes to over 180 million tons and China produces over 10 million tons or so of rice bran each year (6%); China's yearly maize output surpasses 1.5 tons, with its cotton output hitting 670 million tons and its cottonseed output exceeding 10 million tons. As a result, the output of China's edible oil can be increased exponentially with the full use of the by-products of paddy, maize and cotton.

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