High-voltage steering: China's energy market reforms, industrial policy tools and the 2021 electricity crisis

Abstract

In 2015, the People's Republic of China initiated one of the country’s most sweeping rounds of electricity reform. The objective of reforms was to curb grid operators' monopoly power by granting regulators greater insights into the companies' cost structures, but also to introduce competition in distribution and retail. The reforms were therefore not only cataclysmic in terms of market restructuring, they also promised shifts in political bargaining power and, consequently, the ability of actors in the political system to steer the formulation of industrial policies. Thus, the purpose of this paper is to advance steering theory as a conceptual framework to capture variations in Chinese policy design and implementation. Based on the sociology of knowledge approach to discourse, the study tracks policies that reference ‘Document Number 9’, the central policy for the 2015 round of energy reforms, and conducts quantitative and qualitative discourse analysis to identify tools used to steer actors in generation, transmission and retail. The study argues that different tools and steering modes deployed across the three sectors can help explain structural rigidities that contributed to the electricity crisis in Liaoning province in the autumn of 2021.