China’s oil consumption in 2003 makes it the world's second largest consumer of oil after the United States. According to last year's figures from British Petroleum, China increased its oil use by 11.5 percent, consuming 6 million barrels per day.

The growth figure continues to rise according to the International Energy Agency. During the first seven months of 2004, China's annual consumption rate increased by 40 percent, with a further nine percent rise in oil consumption expected in the third quarter.

One-third of the growth in global oil demand comes from China. With OPEC reaching its short term production limits, China's rising appetite for oil has helped drive up the world's oil prices.

China's industries consume the majority of its oil, as they help generate phenomenal growth rates. But as increasing numbers of Chinese begin using cars, they drive up demand for oil even further. In the first quarter of this year, new car sales in China increased by 45 percent.

Besides oil, China is pushing global demand for other resources. According to 2003 government figures, China consumes around half the world's production of
cement, one-third of its steel, one-fifth of its aluminum and a quarter of its copper.

With the current oil price level near US $46 per barrel, China will need an extra US $8.8 billion to be able to satisfy its demand for oil this year. The higher price for oil is cutting into company profits as production costs. The higher costs led to a 5.3 percent increase in inflation last month.

Currently there is a price cap on refined oil products to protect consumers from higher prices for products such as gasoline. However, if the price per barrel of crude oil were to rise beyond $50 per barrel, both producers and consumers would have to bear the burden.