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Abstract
International embargos and the withdrawal of Soviet technical expertise had by the early 1960s effectively engrained China’s approach to energy and technical self-sufficiency. Chinese officials cited reasons similar to those advanced by Edith Penrose in her critique of the international oil companies’ (IOC’s) investments. Drawing on Penrose’s approach, this article shows that although self-sufficiency led to significant progress in primary capacity, self-sufficiency had to be reconciled with increasing demand for more complex petrochemicals. Modernisation increased China’s reliance on the IOC’s technology and reduced pricing independence, confirming a historical regularity in the market imperfections underpinning the power of the IOCs.
Notes
1. Nolan, Global Business Revolution; Odell, Petroleum Exploration Strategies.
2. Penrose, Large International Firm.
3. Kim, Refining the Prize.
4. Downs, Chinese Energy Security; China’s National Development and Reform Commission (NDRC) was quoted as saying that when market prices go too low, it increases China’s international dependence, China Daily, 13 January 2016; State Council, Deepening Reform.
5. BP, Statistical Review.
6. Penrose, Large International Firm.
7. Langlois, Vanishing Hand.
8. Chandler, Visible Hand.
9. IEA, Asia Energy Outlook.
10. Shao, China Britain Businessmen, 74–76.
11. Correspondence relating to the withdrawal of the IOCs from China and the displeasure of the Chinese authorities towards their trading activities are described in FO 371/175950 (1964) Activities of Shell and BP.
12. (Peking Domestic Service, 29 October 1977)
13. Chiang, Taching Oilfield. In a speech to the UN in 1974, Deng Xiaoping cited Peking’s support for the Arab oil producers as evidence that China had joined other developing economies in their claims for control over their own economic resources. See: Foreign and Common Wealth Office (FCO) Diplomatic Report No. 48/75 (21/1376) ‘China: Annual Review For 1974’.
14. Nolan, Global Business Revolution, 452.
15. Wu, Capacity Complexity Expansions.
16. Kim, Refining the Prize, 362.
17. Zhang, China’s Petroleum Industry.
18. Wu, Capacity Complexity Expansions; BP, Statistical Review.
19. (Oil and Gas Journal, January 2013)
20. Pitelis, Edith Penrose.
21. Lazonick, Chandlarian Corporation.
22. Pitelis, Edith Penrose; Chandler, Visible Hand.
23. Penrose, Large International Firm, 150.
24. Chandler, Visible Hand.
25. Penrose, Large International Firm.
26. Hartshorn, Oil Companies.
27. Hartshorn, Oil Companies, 68.
28. Hartshorn, Oil Companies.
29. Penrose, Large International Firm, 224–229.
30. Penrose, Large International Firm, 230.
31. Odell, Petroleum Exploration Strategies.
32. Heal and Chichilnsiky, Oil and International Economy.
33. Odell, Petroleum Exploration Strategies.
34. Fattouh and El-Katiri, Energy Subsidies.
35. World Bank, Modernizing China’s Oil.
36. World Bank, China Engaged.
37. (NCNA, 16 March 2015)
38. (NCNA, 15 October 2015)
39. State Council, Deepening Reform [in Chinese].
40. Meidan, China’s Oil Industry, 5.
41. Chen, China Petroleum.
42. Chang, Chinese Petroleum Bibliography, 24.
43. Chen, China Petroleum, 16.
44. Chang, Petroleum Resources Production, 24.
45. Chang, Petroleum Resources Production, 10.
46. (China Reconstructs, 8 November 1959)
47. China’s Refining Industry [in Chinese], 73.
48. Ho, Peking’s Petroleum Industry.
49. Uchida, Technology in China.
50. Sato, Technological Trends.
51. Kambara and Howe, China Energy Crisis, 14.
52. (China Reconstructs, December 1968)
53. China Refining Industry [in Chinese], 88, 94.
54. (China Reconstructs, August 1966; Peking Review, 9 December 1966)
55. Hao, Chinese Petroleum Industry, 22–23.
56. Williams, Chinese Petroleum Industry, 245.
57. Bartke, Oil People’s Republic, 30.
58. Ho, Peking’s Petroleum Industry, 31.
59. (Peking Review, 26 September 1969)
60. Sato, Technological Trends.
61. Lim, Oil in China, 11.
62. Chang, Chinese Petroleum Bibliography, 49.
63. Heymann, Technology in China.
64. (US China Business Review 1974:10)
65. Lim, Oil in China, 132.
66. Lim, Oil in China, 110.
67. Smil, China Energy Prospects, 232–233.
68. Uchida, Technology in China.
69. Williams, Chinese Petroleum Industry.
70. (NCNA [Xinhua], 15 February 1975)
71. Oil and Gas Journal, June 1997; Chinese Petrochemical Quarterly, Third Quarter, 2001.
72. (Kyodo, 7 January 1981)
73. Zhao, Prisoner of State, 107.
74. Chandler, Visible Hand.
75. Zhang, China’s Petroleum Industry.
76. (Nikkei Sangyo Shimbun, 26 February 1974)
77. China’s Refining Industry, 214–215.
78. Zhang, China’s Petroleum Industry.
79. Shanghai Petrochemical Company (SPC), IPO Prospectus 1993, 36.
80. (China Daily, 11 September 2001)
81. China Energy Statistical Yearbook, Tables 1.8; and 4.8–4.11.
82. Zhang, China’s Petroleum Industry.
83. These issues were pointed out to the author during a discussion with Sinopec management in August 2004.
84. ‘Update on China’s Petroleum and Petrochemical Industry’ December 2001 Hong Kong Trade Development Council.
85. Jiang, CNPC.
86. Penrose, Large International Firm, 145.
87. Chandler, Visible Hand.
88. Bartke, Oil Peolpes Republic, 31.
89. EIA, Refinery Capacity Report.
90. ‘93 Grade Gasoline back to 6 Yuan Era [93 Hao qiyou chong hui 6 shidai]’ NDRC 11 July 2012.
91. (NCNA, 10 September 2012)
92. ABB Lummus Global – China.
93. SPC, Annual Report 2010
94. (NCNA, 25 June 1979)
95. SPC, Annual Report 1994, 29.
96. USTR, China’s WTO Compliance, 117.
97. (SCMP, 18 October 2001)
98. The two rules were the ‘Administrative Rules for Crude Oil Market’ and the ‘Administrative Rules for Refined Petroleum Products Market’ (see Sinopec From 20-F, 2012).
99. Sinopec Shanghai Petrochemical Company, Annual Report, 1996, page 21.
100. Between January 2009 and January 2015, the tax on a litre of gasoline was raised from RMB1.0 to RMB 1.52. See Notice on Continuing to Raise the Refined Oil Consumption Tax, Cai Shui 2015 No. 11.
101. Kambara and Howe, China Energy Crisis.
102. Zhang, China’s Petroleum Industry.
103. Penrose, Foreign Investment, 234.
104. Pitelis in Growth of the Firm, xiv.
105. Nolan, Zhang and Liu, Global Business Revolution.
106. Fitzgerald and Rowley, Japanese Multinationals.
107. IEA, Asia Energy Outlook.