Singapore — China's economy grew at 6.5% in the fourth quarter, bringing the world's second largest economy's GDP growth to 2.3% in 2020, National Bureau of Statistics data showed Jan. 18.
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This paves a way for robust economic growth of about 8% in 2021, which will help the Asia's biggest energy consumer propel domestic oil demand in top gear, with analysts S&P Global Platts spoke to expecting a consumption growth of 3.5%-4.5% year on year.
China's economy has recovered steady from the GDP decline of 6.8% in the first quarter due to COVID-19 outbreak, flipping into a year-on-year growth of 3.2% in the second quarter and 4.9% in the third quarter.
In line with the growth, the country's crude throughput in Q4 hit record high of 14.2 million b/d, despite the year-on-year increase in the quarter slowing to 2.6% from the jump of 7.5% seen in Q3 due to the relatively higher base in Q4 2019, NBS data showed Jan. 18.
As a result, its throughput rose 2.7% year on year to 13.51 million b/d in 2020, although the volume fell 4.6% to 12.02 million b/d on the year in Q1.
With financial institutions forecasting a GDP growth of around 8% in 2021, compared with 2% in 2020, the outlook for oil in the world's biggest consumer has become brighter, bringing relief to the global energy market that depends on China's insatiable appetite for volumes.
The International Monetary Fund's GDP growth projection for China is at 8.2%, while Nomura's forecast stands at 9%. S&P Global Platts Analytics expects a growth of 7%.
China's economic policymakers have pledged to continue macroeconomic policies and not make any "sudden turns", according to a statement from the Central Economic Work Conference held in Beijing in December 2020.
In addition, the economy could witness strong policy support as 2021 is the 100th anniversary year of the Communist Party of China, analysts said. Oil analysts estimated China's oil consumption growth to be at least at a rate half of the country's GDP growth.
Platts Analytics has forecast oil consumption to be at 15.4 million b/d in 2021, up 3.6% year on year, while Energy Aspects' growth projection, which includes stocking demand, is estimated at 4%-6%.
Demand growth in the first quarter is set to surpass 2020 levels due to a low base last year, while the pace in the second quarter would lag behind the growth witnessed in the same period in 2020, according to a Platts Analytics' report published Jan. 8.
"This is because most of the growth in Q2 2020 oil demand, which was 5.5%, came because of a one-off effort to kick start the economy after the virus outbreak," said Sun Jianan, analyst with Platts Analytics.