China should beef up macro-control of coal, electricity and transportation, expert

China should step up its macro-control of coal, electricity and transportation, said Yue Fubin, an expert with the Chinese Academy of Social Sciences (CASS), Tuesday.

Since last June, power shortage has haunted most provinces nationwide and, consequently, more and more power plants have been planned or built. According to the State Development and Reform Commission, the capacity of the power plants built in 2004 exceeds 280 million kilowatts, 80 million of which have not been approved by the commission.

Yue attributed the shortage of electricity comes to an insufficient supply of coal, which is limited by the capacity of transportation.

"These three aspects are interrelated, and so the central government should build a mechanism to coordinate the three departments," Yue said.

He noted China will suffer from shortage of electricity in the next two years -- the time it will take for the new plants to generate electricity. In 2006, however, China will have an excessive supply of electricity, he added, as all the new plants will go into operation at once.

"When people see that there's a power shortage, they begin building new power stations to the neglect of the outcome: What if there is no supply of coal? And what if nobody buy their electric power since so much electricity has been generated?" queried Yue.

This was owned to the government's lack of clear understanding of the market, supply and demand.

Yue noted his worries about this phenomena and suggested the government intervene by financial, fiscal or administrative means. And government research departments should also fully investigate in the market and provide reports to the government and companies, he urged.

"If you just think there's shortage of electricity and invest in building power stations, then you will have to pay for it," Yue said, adding that any investment should based on scientific market survey.

In east China's Jiangsu and Zhejiang provinces, two relatively developed provinces in China, many power plants have been built. However, these two provinces do not enjoy a rich storage of coal. Yue suggested these power plants should build sound relations with coal companies and transportation departments.

"This is a good way to resolve the problem of lack of power, but it needs the central government to coordinate it," Yue said.