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An Analysis of and Policy Options on Current Electricity and Coal Price(No. 17, 2018)


By Zhou Jianqi, Enterprise Research Institute, DRC

Research Report No. 17, 2018 (Total. 5292) 2018-1-18

Abstract: In 2017, the price of China's electricity and coal rose for a short period, and the current price is at the mid-level since 2010 without excessive fluctuations loomed up in the past. The price of electricity and coal has obviously rebounded, and the fluctuation is within a limited range, which is conducive to maintaining a steady growth of producer price index (PPI). It has enabled coal enterprises to gain a higher profitability, expanded the manoeuvre room for the transformation of enterprises and the reform of state-owned enterprises, and provided a micro environment for the adjustment of industrial structure. Based on the analysis of economic performance, coal supply-demand structure, weather conditions and natural disasters, workplace safety factors and the government’s macro regulation measures, it is predicted that the price of electricity and coal will witness a slight fluctuation in the next two months. The price of electricity and coal should not go beyond the benchmark, and it needs to be kept in a reasonable range. It is suggested that the short-term intervention policy should be combined with the long-term stabilized mechanism, and the policy should focus on accelerating the replacement of the old and new electricity and coal capacity, rationally distributing the electricity and coal reserves, constructing the national coal trading centers, maintaining the orderly operation of the electricity and coal market while stabilizing the excessive fluctuation of coal prices.

Key words: electricity and coal price, performance analysis, policy options