ABSTRACT
The reform experience in China's power industry suggests that certain lessons can be learned for the continuing process of reform and for a better understanding of the development in the power industry and the Chinese politics in general. The first important lesson is that transition to a market economy is a complex process in which everything changes — institutions and structures, laws and regulations, governance and politics, behaviours and expectations. Second, transforming a planned to a market economy is associated with a mixture of political and economic change. A third lesson is that, in a transition economy, the state faces serious dilemmas. In order to transform a planned to a market economy, the state must withdraw itself from economic activities. A fourth lesson is that devolving authority from the central to provincial and local governments and from the state to individual enterprises is necessary to provide incentives for market competition.
