China's Coal And Electricity Industry Longitudinal Relations And Conflict

In recent years with China's rapid economic development, energy demand is increasing. China's energy features and technology, determined the development of power industry must be based thermal power plants. The contradictions around the supply and demand of the electric coal become increasingly prominent between the coal industry and the electric industry. The contradictions not only have a serious impact on the development of coal and coal industry chain, even have the negative impact on the stable development of China's economy.Since the 1993 the reform of the coal market two major industries coal and electricity in the coal supply chain has been constant conflict, embodied in the trading price of coal for power generation. But this conflict in the coal industry and power industry did not significantly demonstrated when the price controlled by the government. As China's economic transition, the price structure of the coal market as a "horizontal price dual system", but this policy protects the transaction of the coal industry to proceed smoothly, it resulted in serious distortions in the coal industry. With China's economic development, greatly increased demand for coal has led to the situation of coal shortage, the conflict between coal also will be prominent. Since 2002, the conflict between China's coal and electricity industries were intensified, the development of the national economy has brought a more significant impact. The Government has repeatedly tried to ease the introduction of or solve this problem by policies, but with little success. Its focus performance is the price of coal is difficult to reach agreement. in the convergence of coal each year.This paper argues that the main reason of the conflict between the coal industry and the electric industry is for the price of "dual system":"The market coal" and "plan power." China's coal price has basically achieved the market price. With economic development, the demand for coal and electricity are gradually increasing, and China is a coal power generation as the main raw material, which further led to increased demand for coal, leading to rising coal prices year after year, however,the regulation of the government make the price of electricity increases in the prices of coal rose impossible.power generation companies facing the loss of the rising cost of power generation, thus reducing the production or do not produce, "power shortage" problem resulting. To solve this problem, the State introduced a number of measures including coal and electricity price linkage. On the foreign studies about the longitudinal relations between coal and electric industry have shown that vertical integration or coal-electricity integrated complexis are better measures to resolve conflicts. The YiMin Coal and Electricity has been approved by government in 1990, is China's first coal joint venture pilot project, and achieved success.This paper analyzes the current situation of the coal and electric industry. First, made the problems that the characteristics and distribution of china coal resources and technical characteristics of power plants decided coal is the main input power enterprises clearly, Therefore, the price of coal power plants largely determine the cost of electricity, this is the foundation of the conflict focused on coal prices between the coal and electric industry. In this paper, by the theory of vertical trade, the Chinese coal—electricity industry chain is analyzed, on the basis to analysis the Chinese coal—electricity generating mechanism and causes in depth. According to the China's coal—electricity industry status and the special economic system during the transition period, pointed out the causes of the conflict lies in coal price vertical track system. This price system is unique in transition period, it can not adjust through market mechanisms to change, need government action to intervene. The policies the government adopted to alleviate the conflict between the two industry and their effects are analyzed by this paper. Mainly for coal and electricity price linkage and vertical integration. Pointed out the advantages and disadvantages of the policy, on the basis of in considering the enforceability and the real situation of china, proposed vertical integration is better measures under the current conditions. The success of this model from Yimin can be proven. Through a joint venture successful experience from foreign county, on the basis of the clear problem Yimin pattern had shown by the development process, discuss the feasibility, advantages and disadvantages of coal and . electricity joint venture in china and make recommendations.Good quality power supply on the development of the national economy plays an important role, China's coal industry and electricity industry are the pillar industries, to resolve the conflict of two industry plays an important role on improve the overall efficiency of the coal—electricity industry chain and the development of the economic. These require the government to play its role to resolve conflicts and mitigation the conflict. Through in-depth study of related policies, will inevitably promote the country to actively promote the reform of the electricity market, on the grounds occupied by the enemy and practice to promote the further integration of an important significance.