China Energy Industry

State policies leaving Chinese citizens out in the cold

(January 11, 2010) While citizens across China are confronting some of the most severe winter weather in decades, they’re finding that holdover policies from the Maoist era are making the situation worse.

“For example, while coal prices have been liberalized, state-set electricity prices have been kept relatively low,” an article in the Wall Street Journal notes.  “That’s discouraged power producers from keeping costly inventories of coal.”

Because of low inventory levels, China’s massive electricity grid is highly vulnerable to sudden shocks in the event of extreme weather—like the current cold snap gripping a number of provinces. The result: government officials have imposed rations on power to the nation’s industrial users.

Meanwhile, those living in southern China, roughly defined as below the Yangtze river, have no central heating—a money saving hangover from the days when the state provided free heat as part of the iron rice bowl welfare communist agenda.

But, as the WSJ, rightly points out: “free heating has ended, but the north-south divide is still in place.”

Lacking central heating, citizens have turned to inefficient methods of heating their homes, “cranking up electric heaters instead” and “putting a huge strain on power supplies,” the article points out.

And one of the most obvious symbols of state planning in the energy sector gone awry, the Three Gorges dam, is also adding to the country’s energy crisis. Low water levels and drought have lowered power output from Three Gorges and other dams to boot. Mother Nature has limited the dam’s ability to provide much-needed electricity during times of peak demand, no matter what the propaganda says.

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