context: Beijing ramped up coal production to end the 2021 power crisis. Now, as rising global fuel prices put stress on the country’s power market, authorities are again turning to coal to relieve price and supply pressures in the energy market.

Authorities and large firms have taken action to ensure energy supply and stabilise energy prices in the face of rising global commodity prices.

Actions taken include

  • a meeting on the economy held by Premier Li Keqiang on 7 Apr 2022, which called for
    • further freeing up advanced coal production capacity
    • policies to support coal power companies to generate more electricity
  • several meetings since March between relevant regions and members of the inter-ministerial coordination mechanism for coal, electricity, oil and gas transport, focusing on
    • stabilising and increasing coal production
    • research on extending policy measures that ensure supply
    • finding out which coal mines are able to increase production
    • investigating the introduction of new policies to increase production and supply
  • departments
    • setting up a task force for increasing coal production and supply, aiming to
      • free up another 300 million tonnes of annual production capacity
      • stabilise national daily coal production at 12 million tonnes or above
  • China’s largest central SOE in the coal industry, China Energy Investment
    • increasing coal production to 152 million tonnes in Q1 2022, up 6.7 percent y-o-y
    • producing 235.2 billion kWh of thermal power generation in Q1 2022, also up 6.7% y-o-y

Influenced by international commodity prices, China’s PPI (producer price index) rose by 0.5 percent in February 2022 after two months of decline.

China faces significant upward price pressures on goods with limited domestic production capacity, including crude oil, natural gas and non-ferrous metals, according to Bai Xueshi 白雪石 Sunshine Asset Management Corporation, Allocation Strategy Department director.