Ahmad Khowaiter, Chief Technology Officer, Saudi Aramco
Editor's note: At the World Economic Forum's three-day meeting in Dalian, Liaoning province, China's economic growth is once again in the spotlight. More than 1,700 participants from 90 countries are attending "Summer Davos", opening on Wednesday, to chart a new course for growth as global recovery sinks into uncertainty. Before the conference began, business leaders from international companies shared their opinions with China Daily about China's economic prospects and what strategies they may take to readjust to the nation's new normal of growth.
Here are the excerpts from the interview:
1.Economic slowdown pressures have increased in China since the second half of 2014. During the first six months this year, GDP growth has fallen below 7 percent, while deflation pressures have risen in the manufacturing sector. Against this backdrop, what are the challenges that you have faced/continue to face in China, especially with regard to the business development strategy and actual operations?
There is no doubt that China is one of the fastest growing countries in the world whether with 7 percent or 6 percent or 8 percent. With the huge economic volume, I don't think the slowdown of economic growth will impact much on Chinese oil demand and China will remain one of the most important customers of Saudi Aramco.
Oil demand growth is still going strong, helped by cheap global crude prices. Most products are growing at a fast clip, but gasoil suffers from the cooling industrial activity. That occasionally can be tough for some of our customers who may have to temporarily throttle back runs.
In terms of our business development: This is a long-term commitment to China and its tremendous growth potential, and this commitment is not altered much by short-term hiccups. For us, our development activities are moving forward continuously. We do think that on the longer term, National Development and Reform Commission will slow down the pace of approving new refinery projects in China to match supply & demand of oil products.
Saudi Aramco has a good track record of cooperation with the Chinese government and companies to achieve the win-win situation whether it be crude supply, JV refinery and even product sales in the Chinese market.
2.How do you see the economic reforms unraveling further in China? What do you think are going to be the key takeaways from the ongoing reforms for your business?
To build a much healthier and sustainable economy, economic reform will definitely continue, which will benefit both China and the whole world. That being said, sound economic reforms take time and cannot be done rashly. The Chinese government is gradually moving in the right direction.
A broader customer base and a greater role for market forces will create a more vibrant environment for our various business activities in China and it is a trend we welcome very much
China is still the only major economy with a relative high annual GDP growth rate (even it is falling down around or below 7 percent. It's still much higher than other major economies). The reforms undertaken will try to find a sustainable way for GDP growth in China.
From this perspective, the demand of oil will continue to grow in the coming years and China is still an important market for crude placement and downstream investment.
More crude oil will be imported into China thanks to the strong demand for products as well as more independent refineries are getting crude import quotas/license, which will be a good opportunity for Saudi Aramco crude sales in China.
