Safety, Media Coverage and Provincial SOEs: Explaining Ownership Variation in Chinese Coal-Industry Restructuring

Abstract

This paper looks at regional variation in industrial restructuring and ownership change in China’s coal industry. A growing literature exists on Chinese industrial policy, state efforts to carry out industrial restructuring, and “Chinese state capitalism”. Coal mining presents an interesting case for this research agenda. Contrary to what the literature would suggest, the industry has undergone extensive and from the Center’s perspective, successful, state-led restructuring and has also seen large-scale changes to ownership structures, at least in some provinces. I argue that three variables are key to explaining these changes. Two – geology and path-dependent legacies qua presence or absence of provincial-owned SOEs – are unsurprising. The third – political pressure over mining accidents and the Chinese media’s role in generating this pressure – is unexpected. Restructuring only happened after extensive media coverage of mining accidents converted the industry’s structural problems from a technical, industrial-policy problem into a political problem of wider significance, and restructuring went furthest and ownership changes were most drastic and conflictual where media coverage of accidents and thus political pressure thereover was greatest. In the rest of this paper I first look at the question of restructuring and private ownership in China’s strategic industries. Secondly, I lay out the structural changes coal mining underwent in the past 20 years and lay out the provincial variation. Third, I discuss the interests of local (subprovincial) governments that have led them to take a fairly protective stance towards the private mines. Fourth, I explain how media pressure over accidents reshaped these interests in the 2000s. Fifth, I lay out how these pressures and interests led to varying restructuring patterns in different provinces.