The marketization of the coal industry is facing new challenges as local governments continue to intervene in coal and power sectors, undermining long-standing reforms. On May 28th, a coal industry insider shared his views with the *Daily Economic News* about the current state of the market. He described the recent government-led interventions—particularly in Henan and Shanxi—as excessive “favoritism,†which he believes is harming the natural development of the coal market.
Despite growing calls for market-driven policies, local governments have taken measures to protect their key industries. This has led to the rise of “coal and electricity mutual protection†strategies, where provinces prioritize local coal over imported supplies, blocking external competition. These actions are seen as a major setback for the more than two-decade-long push toward a market-oriented coal system.
Henan was one of the first to implement such policies. In April, coal companies in the province urged the government to enforce a plan that would require power plants to prefer locally produced coal, while restricting the entry of coal from other provinces. By May, the policy was officially launched, with a system linking coal purchases to electricity generation. Provinces were given targets: buying 10,000 tons of local coal earned 10 million kWh of electricity, while failing to meet the target resulted in a 12 million kWh penalty.
This approach is now being considered by Shanxi, where local coal companies are pushing for similar protections. Reports indicate that Shanxi may also restrict the flow of foreign coal into its market. A source in Datong said local coal firms are concerned about the impact of outside coal on domestic production capacity.
However, power companies argue that they are simply trying to reduce costs. A representative from a power plant explained that importing coal from Inner Mongolia is cheaper than using local coal. According to data, 29 million tons of coal from Shaanxi and Inner Mongolia entered Shanxi in the first four months of this year, significantly affecting the local market share.
Shandong has also taken action, with the Jinan Railway Bureau halting coal imports and requiring provincial power and coal companies to sign contracts at prices 50 yuan per ton higher than the market rate. These measures reflect a broader trend of regional protectionism that threatens the coal sector’s progress toward marketization.
In 2012, the State Council emphasized the need for market-driven reforms, stating that the government should minimize interference in coal trading. Experts interpreted this as a call for greater independence between coal producers and power companies, allowing the market to function more efficiently.
Yet, under pressure from coal enterprises, many local governments have continued to adopt protective policies. This has created a cycle of self-preservation that undermines competition and efficiency. In Henan, for example, the implementation of “coal and electricity mutual protection†led to a sharp drop in coal shipments from Shanxi, causing local prices to rise. This, in turn, pushed Shanxi to take similar steps, further entrenching regional barriers.
Lin Boqiang, a member of the National Energy Experts Advisory Committee, warned that these measures are not market-friendly and could harm the long-term health of the coal industry. He argued that such policies distort competition and hinder the development of a more efficient and sustainable energy system.
CNC Machined Components are mainly in six axle lathe with sticks of metal materials finished, such as variety of high precision and quality of electronic, computer precise components, communication components, automotive parts and accessories, machinery parts, sanitation hardware parts, optics precise parts, medical appliances, pneumatic tools accessories. We are very strict with our CNC machined components through the finished production is continuously improvement and growth, we will give you the best quality and services about our CNC machining products.
Cnc Machined Components,Custom Machining Part,Precision Cnc Components,Cnc Components
Stand Dragon Industrial Co., Ltd. , https://www.standdragontw.com