Electric cars and trains will not be the only dampeners on oil growth in China. They won’t even be the most important ones. It is increasingly becoming clear that China’s economic miracle is sputtering and the country goes through a Japan style adjustment period. In China, the adjustment will be way more violent and much more painful. In Japan, not everything is Keiretsu. Compared to china, Japan is an economically very free and liberated country. Companies can fail and there is the self-cleaning mechanism tool of bankruptcy that keeps things sane. No such thing exists for the state sector in China which dominates the economy massively. Pull out state dominated enterprise of the Chinese economy and you would be surprised how little remains. Its fitting to speak of China Inc. And in such top-heavy, bureaucratic structures, mistakes never get corrected They get covered up. This is exactly the reason why oil use will go back. The successive cover-ups have made a mockery of Chinese economic indicators. Wait for the dip.
The country that’s driven global oil demand since the turn of the century may hit the brakes sooner than expected as travelers shift toward electric cars or even forgo the open road in favor of trains.