China's Environment Versus Growth Problem

Resource pressure is a constant. As we continue to track the nearly delusional energy “debate” in the United States about whether we will continue to burn coal and whether natural gas is a panacea, China continues to struggle with the sufficient acquisition and deployment of resources to support economic growth.


China has an environment versus growth problem. Already China is the #1 importer of oil in the world. That‘s right. China imports more oil than the United States. By itself that comment is meaningless because it reflects greater US oil production, substitution by natural gas, and significant and increasing energy efficiency gains.

The United States can hold energy consumption growth below GDP growth with efficiency gains and because of the greater percentage of service relative to the economy. China cannot.

Chinese oil consumption will continue to rise. China, however, has an emerging and growing middle class that wants to buy a car, as is typical when annual GDP per capital hits $10,000-20,000 per year. We don’t need to see U.S. ownership rates – the population is 4X so even getting to half the ownership rate over time means twice as many cars.

Besides trail, buses, domestic aviation and trucks China is putting over 1 million cars every month onto its expanding road and highway network.

Which strains other sources of energy supply and water!
We find our best opportunities when we identify a huge gap between public perception and underlying reality.

Even by conservative estimates, the upside potential for this trend is 400%. There is literally a $21 billion opportunity here. And the three specific companies I’ve outlined in a report The 400% Energy Opportunity Wall Street Won’t Tell You could all show gains between 500%-800% or even more.