China’s Energy Governance: Perception and Reality

As observers outside of China warn of a looming Chinese endgame in global energy assets, manipulated by Beijing, leading policymakers inside of China are facing considerable challenges governing major energy companies — especially those that the state owns. Chinese President Hu Jintao’s recent tour of African states and rumors of the first Chinese takeover of an overseas listed company have attracted critical attention and spurred much discussion. Most analysis of China’s energy governance has placed the central government in the driver’s seat. The reality is that this perspective is grossly misleading.
Energy policy in China today is a battleground of negotiation among powerful actors with conflicting interests that are evident everywhere. Within the central government itself, regulatory bodies such as the State Electricity Regulatory Commission and the pricing bureau of the National Development Reform Commission seek to strengthen competition by maintaining high numbers of energy firms in industries such as power generation. In contrast, other central agencies, such as the State-Owned Assets Supervision and Administration Commission, aim to maximize returns on assets by encouraging the consolidation of existing firms.

Conflicts of interest between central and local governments are perhaps more obvious. Sub-national government leaders, eager to maintain or increase economic output and thus advance their political careers, often aid in the financing and underreporting of power production capacity expressly forbidden by the central government. Lastly, interests between local government actors diverge as well.

…At this rate, China is adding well more than one 1,000 MW plant a week, and the equivalent of nearly the entire Spanish national power grid annually. An incredible 102,000 MW were built last year alone and China will probably maintain a 70-80,000 MW annual increase through 2008.

AlterNet