Reform of the Chinese Electric Power Market: Economics and Institutions

To power national development, the government organized electricity production and distribution as a state-owned vertically integrated utility, structured and operated under central planning. Electricity was supplied on the basis of political priority instead of cost, and the single party authority ensured that national economic, technical and social policies were implemented by managers at all levels of the industry. This study has reached two conclusions. First, the capacity growth in the past twenty years was achieved predominantly through continuing economic and political control by the central government. Second, gains were achieved through the medium of an authoritarian governmental system. [ Program on Energy and Sustainable Development At the Center for Environmental Science and Policy Stanford Institute for International Studies. Working Paper 3 (Revised), January 2004