China's Energy Consumption and High Energy Intensity

Key Insight

China is a major global energy consumer, utilizing 22 billion barrels of oil equivalent in 2014, which constitutes 23 percent of the world's total. While its per capita energy use of 16 barrels is slightly above the global average, it is significantly less than, for example, the 53 barrels consumed by the average American. However, China's economy exhibits exceptionally high energy intensity, requiring 2103 barrels of oil equivalent to generate one million US dollars of economic output. This figure is more than double that of the United States (967 barrels) and over three times that of the European Union (640 barrels), establishing China as the world's most energy-intensive major economy.

This high energy intensity is attributed to three primary factors. First, China's economic structure relies heavily on manufacturing and industry, which until recently contributed nearly half of its economic output, compared to less than a quarter in the United States. A significant portion of this is heavy industry—such as steel, aluminum, petrochemicals, cement, and glass—which are inherently energy-intensive. Second, the structure of China's energy supply is heavily dependent on coal, which fuels nearly three-quarters of its electric power generation and 66 percent of its total primary energy demand. Coal is approximately 25 percent less efficient in electricity production than natural gas, though its abundance domestically (13 percent of global coal reserves) makes it economically attractive compared to largely imported natural gas.

Third, despite some areas of efficiency, such as its newer coal-fired power plants being about 10 percent more efficient than US counterparts and its vehicle fuel standards being stricter than most, China experiences significant inefficiencies. Key areas include poor sealing and insulation in buildings constructed during a rapid boom, and industrial practices which account for about three-quarters of national electricity consumption. Local governments exacerbate this by setting artificially low prices for inputs like coal and electricity to support unprofitable industries, leading to substantial energy use for limited economic value. Moreover, China's reliance on imported energy is growing; it became a net oil importer in 1993, with import reliance exceeding 60 percent by 2013 (7 million barrels per day), and natural gas imports reached approximately 30 percent of demand by 2014, raising strategic concerns over supply security from volatile regions and vulnerable shipping routes like the Strait of Malacca.