The Chinese Coal Industry: An Economic History

The Chinese Coal Industry: An Economic History

The Chinese Coal Industry: An Economic History

The Chinese Coal Industry: An Economic History

Synopsis

The coal industry has been and continues to be of critical importance for China's economic modernization. With its huge labour force, country-wide infrastructure, and vital strategic importance for the economy, the industry presents special problems for reformers, and epitomises the problems of reform in the state industrial sector as a whole. This book examines the changes in the structure and operation of the Chinese coal industry from the mid-19th century to the present, concentrating on the years of reform. Although the focus is on the economics of the industry, the book also provides many insights into China's socio-political development.

Excerpt

One of the main constraining factors in China's quest to raise living standards, modernize, and become a major world power has been a persistent shortage of energy. More than twenty years after Deng Xiaoping launched the reform and 'opening up' programme in 1978, per capita energy consumption is still less than half of the average for what the World Bank categorizes as 'lower middle-income economies', and about an eighth of what it is for 'high-income economies'. As the main source of energy in China has always been coal, whether for electric power generation, railway transport, an input to a vast array of industries, or as the principal heating fuel in the residential and commercial sectors, the energy shortage problem until the mid-1990s was essentially a coal industry problem, difficulties or bottlenecks having occurred at all stages - production, transportation, or conversion to other energy forms.

Energy shortages have greatly hindered the industrial, agricultural, and social development of China. They have caused tremendous financial losses in foregone potential production and foreign investment. Capital spent on machinery that has been damaged by power failures, or which was forced to operate at only a fraction of its capacity, has been wasted. the lack of an alternative to coal has perpetuated the gathering of burnable vegetation in the rural areas, resulting in the permanent loss of millions of acres of once fertile land through erosion, and thereby greatly contributing to recurring and devastating floods.

Since 1989 China has been by far the world's largest producer and consumer of coal. in approximate terms, China's 1,001.9 billion tons of proven coal reserves represent 50 per cent of the world total. However, only 114.5 billion tons are classified as proven recoverable reserves, representing about 11 per cent of the world total, third largest after the Commonwealth of Independent States and the United States, which each have about 23 per cent. About 74 per cent of the reserves are bituminous, 13 per cent anthracite, and 13 per cent lignites. Some 83 per cent of the total can be used as steam coals, the remainder as coking and gas coals.

While coal use in the developed world peaked in the first decades of the 1900s, and after the Second World War was being replaced with higher efficiency energy forms - oil, gas, and later hydro and nuclear electric power - China's use of coal reached its zenith only in the late 1990s. There was no foreign exchange with

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