Energy price reform in China

Abstract

China has determined to assign the market a decisive role in allocating resources. To that end, getting energy prices right is crucial because this sends clear signals to both producers and consumers of energy. While the overall trend of China's energy pricing reform since 1984 has been moving away from the prices set by the central government in the centrally planned economy and towards a more market-oriented pricing mechanism, the pace and scale of the reform differ across energy types. This article discusses the evolution of price reforms for coal, petroleum products, natural gas, electricity and renewable power in China, and provides some analysis of these energy price reforms, in order to allow the market to play a decisive role in resource allocation and help China's transition to a low-carbon economy.