Economic growth in China is increasingly driven by new energy and technology industries.

This transition is gradually replacing high-energy sectors like housing and weakening the link between GDP growth and oil demand. While 5% GDP growth is forecasted for 2025, it won’t drive oil demand as it did in the past. That said, China’s consumption remains substantial, averaging over 11 million b/d. Looking ahead, the focus is shifting toward chemicals production, with many refineries upgrading to produce more chemicals and specialty products, which will become a key driver of oil demand.

Is more stimulus needed to boost consumer demand?

The government has implemented significant stimulus measures, such as subsidies for cars, home appliances. These efforts will continue into 2025 and likely expand to cover more products, though specific figures haven’t been announced yet. We’ve already seen signs of recovery. For example, in late 2024, subsidies on products like cars boosted sales significantly. Consumer confidence is slowly returning, but the full recovery of industries, particularly domestic consumption, will take longer. China must also prepare for potential US tariffs. The government has acknowledged that 2025 will bring significant headwinds, so further stimulus and structural adjustments will be necessary.

Should we expect further devaluation of the Yuan this year?

It will likely weaken only modestly in 2025. A significant drop could strain imports, especially for commodities and essential goods, which could drive up prices domestically. China’s strategy will likely involve carefully managing the yuan while continuing to prioritize economic stability. Striking this balance is critical to maintaining growth without exacerbating inflation or import costs.

Outlook for China refined products exports?

We don’t expect significant growth in 2025. China’s policy emphasizes reducing dependence on imports while curtailing exports of refined products. For example, in December 2024, the government removed the value-added tax rebate for the export of products like gasoline and diesel. The focus is increasingly on domestic consumption rather than exports. For 2025, quotas for gasoline, diesel, and jet fuel exports in aggregate remained are steady compared to last year.