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TAIPEI, Taiwan--
China is using a sharp fall in oil prices to stimulate consumption.
But the price of the trend is that China's notorious air pollution is deteriorating.
Although China is trying to solve the problem, investors can actually play a role on both sides of the problem.
But first, some background.
Global oil prices fell last year, while most of China's oil prices were also falling.
As part of the government's increased income through urbanization, 36 billion of the population will live in cities.
The growth of wealth means more cars, driving up consumption and becoming a new pillar of the economy accepted by the Communist Party leadership.
Despite the overall slowdown in economic growth, car sales in the region have steadily risen since 2010, while cheap fuel means lower operating costs ---
An encouraging factor in Chinese prices
Alert middle class
But now, those cars have packed the roads.
Even on the bad peak sidewalk. hour days)
Toxic air is more severe in China's expanding cities.
Three years ago, China pledged $56 billion to reduce urban air pollution by 2015. Over the past week, urban air pollution has become so severe that China's first "red alert" of air quality to Beijing shows what the World Health Organization says is a "dangerous high level" that lasts for several days ".
Beijing's alarm temporarily closed construction sites, a rampant source of dust, banning private cars from hitting the road and requiring children to stay at home and not go to school.
Despite the recent smog crisis, which can be traced back to coal, cars are still responsible for polluting China's air.
"There will be stricter fuel efficiency requirements in the future. oil]
Demand, but growth in car sales will overwhelm it, "predicted Thomas pug, commodity economist at Capital Economics, a London economic research firm.
There are solutions and solutions for investors.
China's major oil suppliers such as Sinopec Shanghai Petrochemical (SHI)
CNOOC Limited (CEO)
Listed on foreign exchanges.
ConocoPhillips (COP -Get Report)
Oil is also produced in China.
Pug said that China's oil consumption has grown "strongly" by about 6% over the past year, and that growth may continue as the middle class buys more cars and drives more frequently.
The average daily consumption in September and October exceeded 10 billion barrels.
For consumers, this ratio is about 40%, only 5 percentage points behind the industry.
Sales of popular ByFord models (F -Get Report)
Volkswagen (VLKAY)
They also benefited from cheap oil. About 2.
In October, 2 million vehicles were sold for all brands.
"The growth in car sales ensures a healthy demand for this commodity," said Nitin Dialdas, chief investment officer in Hong Kong --
Mandarin Capital, fund manager.
"In addition, the use of cheap prices seems to be a strategic complement to the reserve commodities.
"At the same time, the demand is reversed
Pollution technology is likely to grow.
Companies like asHoneywellHON -Get Report)and Siemens (SIEGY)
Help China achieve ecological civilization
Friendly architecture and infrastructure.
China will inevitably continue to struggle with bad air, as 60% of China's population lives in cities by 2020, meaning only $56 billion will not be enough to alleviate these problems.
The biggest air purifier brand in China in 2014 is Panasonic (PCRFY), Philips (PHG -Get Report)and Sharp (SHCAY)
, RnRMarketReaserch.
Found in a study this year.
The Chinese bought five.
Last year, 1 million air purifiers protected their health from pollution.
But the frenzy of cheap crude oil is expected to disappear. -
It is ironic because of China.
China is the world's largest net importer of oil, which accounted for 60% of its total consumption last year.
Asia chief executive Alicia Garcia Herrero said the desire could raise prices
Investment bank of Asia-Pacific economy and France Natixis.
"As the world's largest importer of oil, China still plays a relevant role in the oil price decisions over the next few years," she said . ".