China demand for oil, other resources soars as Beijing stockpiles reserves for future growth

One reason behind the rebound in world oil prices lies here on China's eastern seaboard, where tidy rows of immense, squat oil tanks tucked away on an island south of Shanghai, have been filled to guard China's energy security.

Patrolled by military personnel, these tanks in Zhoushan are one of four locations where China keeps its national strategic reserves.

Since crude oil and other commodity prices plunged last year ¡ª oil tumbled from $147 last July to nearly $33 in December ¡ª China has been rushing to build up stockpiles at bargain prices, economists say. That motive, more than a revival in actual industrial demand, has driven its recent import boom of oil, copper and other metals.

The surge in Chinese demand, along with rising hopes for a global economic recovery, has helped lift the price of oil, which is now trading at around $70 a barrel, and other commodities.

China is obsessed with making sure it has enough energy and materials to feed its economy. Authorities plan to build more oil reserve tanks while lining up diverse supply sources, from Brazil to Nigeria and Siberia.

Earlier this month, energy chief Zhang Guobao announced government approval of a second phase of strategic oil reserves that will hold 26.8 million cubic meters of crude oil ¡ª bigger than the current reserves of 16.4 million cubic meters.

Ultimately, China aims to have about three months of supply in national reserves. It now has about a month's worth, or about 38.6 million tons of crude oil in both commercial and state reserves, according to state media reports.

The United States also has taken advantage of the drop in oil prices to buy crude for its Strategic Petroleum Reserve, which is far bigger than China's.

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