The Ongoing Reforms to China's Government and State Sector: The case of the energy industry

Though the reforms announced by the Chinese government in the spring of 1998 appear to be substantial and wide ranging, by themselves they may have little impact either on the effectiveness of government or on the performance of the state industries. Two outstanding problems are the structure and allocation of responsibilities within the government, and the excessive power of the state companies. The tasks of regulation and policy formulation in the energy sector should be clearly allocated in a simple administrative structure which specifically excludes any role for the state companies. The present structure of the state-owned energy industries is such that these companies have a great deal of power, not only in the market but also with respect to the government.