Chapter 18 - Reform Postponed: The Evolution of China’s Electricity Markets

Abstract

This chapter describes the evolution of China’s electricity industry and market since the mid-1990s. Many structural reforms were undertaken between 1997 and 2003, but since that time reform has stalled and competitive power markets have not been introduced. This failure to pursue reform has arisen from changing domestic energy priorities and perceptions of the crises in liberalized power markets in other countries. The current state of the power sector has allowed China’s government to pursue its current objectives of investing in new generation and transmission capacity, reducing national energy intensity, and building renewable energy plants through traditional administrative instruments. But at the same time, the large generation and transmission companies have been able to strengthen their positions in the sector. Further radical reform of the power sector is unlikely in the near future, though the government will continue to make minor adjustments in order to promote the transition to a low-carbon economy.