Interesting article that goes into some of the details of China’s energy price regulation and planning. Apparently they had been fixing both input and output prices. I can see how this could easily produce this “weird” situation: mismatches between perceived and actual demand could easily develop and expected coal generation project risk and profitability could be an illusion.
Even these modest reforms could drastically change things. Perhaps they will realize that the projects don’t make sense either financially or environmentally. More likely overbuilding will continue and this will just become yet another unbalanced sector of the Chinese economy.
Even these modest reforms could drastically change things. Perhaps they will realize that the projects don’t make sense either financially or environmentally. More likely overbuilding will continue and this will just become yet another unbalanced sector of the Chinese economy.