China’s Coal Future
As observed in the main body of this monograph, China depends on coal for about 70 percent of its energy and has the world’s thirdlargest coal reserve (behind the United States and Russia). China is the world’s largest producer of coal, and until recently was a net exporter of coal. Demand for coal in China has increased with China’s economic growth and has outstripped supply. For example, Shanxi province, which produces a quarter of China’s coal, recently experienced a 15-percent coal shortage for electrical-power generation. Although coal companies in Shanxi have increased coal production by 9 percent, supply has not met demand.1 Nationwide, China’s coal reserves are shrinking, and rising coal prices are fueling inflation and cutting profits.2 Recent independent analyses suggest that if China’s economy continues to grow, China’s coal production will peak between 2015 and 2025 and that production will significantly decline (to below current levels) by 2030-2040.
Because China has always been largely self-sufficient in coal, major forces for supply and demand have been internal. The history of China’s coal industry begins with organized production in 475 BC. China’s
1 “Supply Crunch Hits Coal Cradle,” China Daily, July 9, 2008.
2 “Power Coal Reserve Falls to 12 Days Amid Rising Prices,” China Daily, April 23, 2008.