ABSTRACT
Over the past two decades dramatic changes have taken place in the Chinese
energy sector. In the 1980s when economic growth took off immediately after
the spate of reform initiatives, China’s energy sector suffered from severe
supply shortage. The then energy policy focused on promoting the growth of
coal production. As a result, the coal industry expanded rapidly. In particular,
the township and village-run mines emerged as the major force in coal
production. However, since the late 1980s, the policy focus has shifted to the
development and reform of the electricity sector. One of the main changes was
that the non-state sector was allowed to enter the market. The build-operate-
transfer (BOT) model was adopted in the mid 1980s, for instance. By 1999,
about US$15 billion of private funds had been invested in China’s power sector
(World Bank 2000). These changes have led to a great expansion of the
capacity for electricity generation in China. By the late 1990s, China’s
electricity supply could almost meet the demand, and there was even a surplus
in some regions. In the meantime, China has increased its oil imports as well as
domestic production of natural gas. Currently, China’s energy sector is
characterised by (1) oversupply of coal, (2) rapidly growing electricity-
generating capacity, (3) a net oil-importing industry and (4) an expanding
natural gas sector. These new developments together with China’s recent entry
into the World Trade Organization will affect China’s energy policy in the
twenty-first century.
