Last year, China’s crude oil imports fell 1.9%, or 240,000 barrels a day, to just over 11mn b/d, marking the first annual decline in two decades barring the disruption caused by the Covid pandemic. According to China National Petroleum Corp, sales of both road fuels peaked in 2023, with sales predicted to fall by 25-40 per cent over the next decade. In other words, the famous Chinese oil boom that helped drive global oil demand growth has finally come to an end.
There are a myriad of factors at play here. Over the past couple of decades, China has carried the lion’s share of global oil demand growth thanks to the country’s remarkable economic boom. Over the past three decades, China has accounted for half of all growth in the world’s oil demand–some 600,000 b/d. However, that is quickly changing. The factors that helped sustain China’s rapid growth since the global financial crisis are unlikely to be replicated in the next decade, particularly in sectors of property construction and local government investment. Indeed, China’s economic slowdown has mainly manifested in the property sector’s decline, hardly surprising considering that the industry represented 20 to 25 percent of GDP at its peak.
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Whereas the country’s stuttering economy is partly to blame for falling oil demand, China’s EV boom has also played a big part in displacing oil demand. China’s 10 millionth EV rolled off the production line in November 2024, beating the 2023 production seven weeks before the year’s end. Chinese EV makers delivered 9.75 million units to mainland buyers between January and October, good for a robust 34% Y/Y increase. Helped by government subsidies of up to $2,800 apiece for trading in older cars for EVs as well as more fuel-efficient cars, China Passenger Car Association (CPCA) secretary-general Cui Dongshu has predicted that China’s EV revolution will continue undeterred by a faltering economy. Sales of new energy vehicles (NEVs) in China overtook conventional auto sales for the first time ever in July, and now account for more than half of all units sold during the month.
“As EVs outsell conventional petrol cars, more existing production facilities and workers will become redundant. Demand for petrol cars will weaken in the coming years,” Phate Zhang, founder of Shanghai-based EV data provider CnEVPost, told South China Morning Post
China is now poised to lose its prominence in global oil markets. India’s oil demand growth is estimated to have exceeded China’s for the first time in 2024, and is expected to do so again in 2025. According to Kang Wu, global head of macro and oil demand research at SPGCI, India’s oil demand grew by 180,000 barrels per day in 2024, surpassing China’s growth at 148,000 bpd. India’s oil demand is expected to increase by 3.2% Y/Y in 2025 compared to a 1.7% clip by China. “China’s role as a global oil demand growth engine is fading fast,’’ Emma Richards, senior analyst at London-based Fitch Solutions Ltd, has told The Times of India. According to the analyst, over the next decade, China’s share of emerging market oil demand growth will decline from nearly 50% to just 15% while India’s share will double to 24%.