China gas markets long-term outlook H2 2020
China achieved a 2.3% full-year GDP growth in 2020, the quick economic recovery has provided momentum to gas demand which increased by 6% to reach 324 bcm. Although a deceleration from 2019, gas continues to increase its share in the energy mix. Economic growth and environmental policies will drive gas demand in this decade. China will set new targets to control coal consumption to promote coal-to-gas switching as infrastructure access and gas accessibility improve. Despite economic volatility and possible comeback of coal, the trend of gas demand growth won’t change fundamentally. We expect gas demand to reach 552 bcm in 2030 and decelerate afterwards as slowing urbanisation and peaking energy demand could partially compromise the effect of fuel switching. China’s gas demand will increase by 2.0% a year on average to reach 670 bcm in 2040 then slow to just 0.5% a year to reach 704 bcm in 2050, as gas penetration peaks and stabilises in non-power sectors.