The China Factor: Short and Long-term Drivers of Chinese Coal Imports

Seminar

Speaker(s)

,

Date and Time

June 29, 2010 12:00 PM - 1:30 PM

Availability

By Invitation Only.

FSI Contact

Sunny Wang

In 2009 China, the world's largest coal producer, in seemingly a counterintuitive shift, became the world's largest coal importer at the same time.  The resulting realignment of the global coal trade has altered global prices for coal and power, and may be the harbinger of an "Asian coal decade" to come. 

Drawing on their recent presentation at Coaltrans Asia 2010, PESD researchers Gang He and Richard Morse examine the recent trend of soaring Chinese coal imports, and offer a theory of what will drive this long term coal import/export balance between China and the world in the next 10 years.  He and Morse argue that China's voracious appetite for imported coal is largely profit driven and takes advantage of key arbitrage relationships in the global market.  But those relationships are in turn largely a function of key political economy issues in China's domestic energy markets. 

Major coal and power sector reforms,  such as coal sector consolidation and coal-power integration, will impact domestic coal prices and therefore will largely drive China's import trends going forward.  Thus China's shift to imports is not a paradigm shift in global markets, but rather a harbinger of greater trade volatility in the future.

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