Industrial Policy in the Electric Power Sector as Part of China’s Global Leadership Strategy

Abstract

Chinas growing economic power led to the rise of its geopolitical ambitions in the 21st century, and Chinas industrial policy has long been an important tool for implementing its global leadership strategy. Yet, how effective is the visible hand of the state? This paper examines the positive and negative effects of industrial policy implementation in Chinas electricity sector based on the analysis of policy documents, statistics, and academic publications. This study finds that together with energy policy measures industrial policy has been quite successful in promoting RD activities and production of high-tech power equipment. It gave China an opportunity to increase the share of clean energy sources in the power generation mix. Besides, Chinese power companies gradually became global leaders in the electricity sector. At the same time, the implementation of industrial policies has led to the over-expenditure of resources and is characterized by problems of horizontal and vertical coordination between the three main players in the policy-making and implementation system: the central government, local authorities, and large state-owned companies. The development of the electric power sector and related industries is managed by a large group of ministries and departments of the central government. Moreover, the heads of several energy companies have the power and influence equivalent to that of a minister, and there were divergences of priorities of central and local authorities at the regional level.