Speakers
Mark Hutchinson Senior Director IHS CERA (Chair)	Britta Gross Director, Global Energy Systems & Infrastructure Commercialization General Motors
Ke Feng Yan Senior Director IHS CERA	Jörg Wuttke Chief Representative China BASF (China) Company Ltd.
Jiaxiang Mao Vice President Sinopec Economics & Development Research

At Tuesday's Strategic Session China's Oil Demand: Where Is It Going?, IHS CERA Senior Director Mark Hutchinson asked the panelists to address two broad questions: How fast will China's oil demand grow, and what will be the main drivers for future growth?

K. F. Yan, IHS CERA Director, said that transportation and petrochemicals will drive China's future demand. Mr. Yan cited 2009's soaring automobile sales resulting from government tax incentives, which enabled China to overtake the United States as the world's largest auto market. Auto sector growth will follow the rise in income levels rise as residents from China's inland, second-tier cities join their urban counterparts in private car ownership. The oil sector is challenged in supplying the fuel required to support this growth, and fuel substitution--including electricity, natural gas, and biofuels, among others--will be crucial. Petrochemicals will also grow significantly as demand for ethylene and other petroleum-derived chemicals increases--another direct consequence of China's anticipated continuing rise in income and in standard of living.

Britta Gross, Director of Global Energy Systems and Infrastructure Commercialization at General Motors (GM), pointed out that China's per-capita automobile ownership is still very low compared with that of developed markets; therefore the growing middle class will continue to drive robust automobiles sales. She discussed the supply challenge in fueling China's growing auto fleet and GM's aim to deploy various technologies in different parts of the world. GM's overall technology strategy focuses on efficiency, substitution, and electrification and includes improving the internal combustion engine to increase fuel economy and using alternative fuels such as ethanol, biodiesel, compressed natural gas, and liquefied petroleum gases, as well as electricity and hydrogen. Ms. Gross foresees a near-term transition period when multiple vehicle technologies will coexist, necessitating companies like GM to maintain a broad portfolio. She concluded by highlighting the need for governments, the energy and auto industries, and the public to collaborate to improve mobility sustainably.

Jörg Wuttke, Chief China Representative of BASF, said that "China sets the pace." He presented BASF's view on Asian economic growth, noting that China will lead the way. He expects Chinese demand for petrochemicals to account for a fifth of the world's total by 2020, and he highlighted the opportunities for sector players. Mr. Wuttke cited urbanization as the most significant driver of petrochemicals growth. By 2025 there will be more than 220 Chinese cities with more than a million inhabitants, meaning that China's urban population will constitute 15 percent of mankind. The urbanization trend will also drive demand for infrastructure and all goods and services. Mr. Wuttke discussed BASF's 130-year history in China and its major projects in the country. In conclusion he highlighted BASF's strategy to move inland to capture the vast potential of emerging provinces and emphasized BASF's intention to stay and grow in China.

Mao Jiaxiang, Vice President, Economics & Development Research Institute, Sinopec, noted China's contribution to the global manufacturing market with its low-cost labor and energy as well as low cost of capital. China's rapid manufacturing growth has driven tremendous demand for petroleum products. Its soaring economic growth and the associated expansion of the ethylene derivatives market have supported the rapid development of its ethylene industry. Owing to the growing auto population, the ethylene sector has also started to produce more diesel. Mr. Mao mentioned the rapid growth of China's para-xylene industry, which expanded on average by 27.3 percent annually in the past five years. Sinopec expects ethylene capacity to increase significantly in China to meet growing demand, with 7.5 million metric tons (mt) per year in capacity additions from 2010 to 2015 and another 4.9 mt per year in additions from 2015 to 2020. However, even that expansion will not prevent a shortfall in supply.

The panelists answered questions from the audience on the drivers of China's future oil demand and infrastructure for the growing vehicle fleet.