Measuring the capacity utilization of China’s coal industry based on latent class stochastic frontier model

Abstract

Due to the regional differences of coal resources storage and mining in China, the latent class stochastic frontier model is used to calculate the capacity utilization of coal industry from 2001 to 2016. The results show that China’s coal industry began to suffer from overcapacity in 2012, and capacity utilization dropped to 0.68 in 2016. The coal-producing provinces are grouped into four classes: abundant, moderate, poor and exhausted. The capacity utilization of coal industry in poor and exhausted classes are generally high and there is little room for improvement. After 2011, the capacity utilization of coal industry in rich and moderate classes showed an obvious trend of decline, falling to a low level in 2015∼2016. This indicates that there was a serious waste of resources in coal production of these province during this period. Capacity utilization of coal industry is sensitive to the economic development variable, while the market fluctuation make inter-provincial capacity utilization performance similar.