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Energy Prices, Subsidies and Resource Tax Reform in China

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  • Zhang, ZhongXiang

Abstract

The Chinese leadership in November 2013 determined to embark upon a new wave of comprehensive reforms in China. This is clearly reflected by the key decision of the Third Plenum of the 18th Central Committee of Communist Party of China to assign the market a decisive role in allocating resources. To have the market to play that role, getting the energy prices right is crucial because it sends clear signals to both producers and consumers of energy. While the overall trend of China’s energy pricing reform since 1984 has been moving away from the pricing completely set by the central government in the centrally planned economy towards a more market-oriented pricing mechanism, the pace and scale of the reform differ across energy types. This paper discusses the evolution of price reforms for coal, petroleum products, natural gas and electricity in China, provides some analysis of these energy price reforms, and suggests few areas of reforms could take place in order to have the market to play a decisive role in allocating resources and to help China’s transition to a low-carbon economy.

Suggested Citation

  • Zhang, ZhongXiang, "undated". "Energy Prices, Subsidies and Resource Tax Reform in China," Energy: Resources and Markets 183095, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemer:183095
    DOI: 10.22004/ag.econ.183095
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    Cited by:

    1. Chen, Qiu & Huang, Jikun & Mirzabaev, Alisher, 2022. "Does fuel price subsidy work? Household energy transition under imperfect labor market in rural China," Energy Economics, Elsevier, vol. 107(C).
    2. Zuo, Na & Zhong, Hua, 2020. "Can resource policy reverse the resource curse? Evidence from China," Resources Policy, Elsevier, vol. 68(C).
    3. ZhongXiang Zhang, 2017. "Are China's climate commitments in a post‐Paris agreement sufficiently ambitious?," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 8(2), March.
    4. Gao, Shuai & Cai, Wenjia & Liu, Wenling & Wang, Can & Zhang, ZhongXiang, "undated". "Corporate Preferences for Domestic Policy Instruments under a Sectoral Market Mechanism: A Case Study of Shanxi Province in China," Economy and Society 188003, Fondazione Eni Enrico Mattei (FEEM).
    5. Zhang, Zibin & Yang, Wenxin & Ye, Jianliang, 2021. "Why sulfur dioxide emissions decline significantly from coal-fired power plants in China? Evidence from the desulfurated electricity pricing premium program," Energy Policy, Elsevier, vol. 148(PB).
    6. Zhang, ZhongXiang, "undated". "Making China the Transition to a Low-Carbon Economy: Key Challenges and Responses," Climate Change and Sustainable Development 230603, Fondazione Eni Enrico Mattei (FEEM).
    7. Zuo, Na & Zhong, Hua, "undated". "The Effect of Resource Wealth on Regional Economic Development in China," 2019 Annual Meeting, July 21-23, Atlanta, Georgia 291114, Agricultural and Applied Economics Association.
    8. Zhang, ZhongXiang, 2014. "Programs, Prices and Policies Towards Energy Conservation and Environmental Quality in China," Working Papers 249427, Australian National University, Centre for Climate Economics & Policy.
    9. Zhang, ZhongXiang, "undated". "Energy Price Reform in China," ESP: Energy Scenarios and Policy 273368, Fondazione Eni Enrico Mattei (FEEM).
    10. Guo, Jin & Du, Limin & Wei, Chu, 2019. "Equity-efficiency trade-off in China's energy capping policy," Energy Policy, Elsevier, vol. 126(C), pages 57-65.
    11. ZhongXiang Zhang, 2016. "Making the Transition to a Low-Carbon Economy: The Key Challenges for China," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 3(2), pages 187-202, May.
    12. Burke, Paul J. & Liao, Hua, 2015. "Is the price elasticity of demand for coal in China increasing?," China Economic Review, Elsevier, vol. 36(C), pages 309-322.
    13. Zhang, Zengkai & Zhang, Zhongxiang, 2017. "Intermediate input linkage and carbon leakage," Environment and Development Economics, Cambridge University Press, vol. 22(6), pages 725-746, December.
    14. ZhongXiang Zhang, 2016. "The implementation of the Paris Agreement in the international and China?s context," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2016(3), pages 63-69.
    15. Le Tang, 2020. "Energy prices and investment in energy efficiency: evidence from Chinese industry 1997–2004," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 34(2), pages 93-105, November.
    16. Zhang, ZhongXiang, 2018. "Trade and Climate Change: Focus on Carbon Leakage, Border Carbon Adjustments and WTO Consistency," Foundations and Trends(R) in Microeconomics, now publishers, vol. 12(1), pages 1-108, August.
    17. Andersson, Fredrik N.G., 2018. "Estimates of the Inflation Effect of a Global Carbon Price on Consumer, Investment, Export, and Import Prices," Working Papers 2018:22, Lund University, Department of Economics.
    18. Guo, Jin & Zheng, Xinye & Chen, Zhan-Ming, 2016. "How does coal price drive up inflation? Reexamining the relationship between coal price and general price level in China," Energy Economics, Elsevier, vol. 57(C), pages 265-276.
    19. Lin, Boqiang & Li, Zhensheng, 2021. "Does natural gas pricing reform establish an effective mechanism in China: A policy evaluation perspective," Applied Energy, Elsevier, vol. 282(PA).
    20. Wang, Haoyu & Lyu, Kefu, 2025. "Environmental tone and carbon market behavior: Understanding market dynamics through corporate environmental attitudes in China," Structural Change and Economic Dynamics, Elsevier, vol. 74(C), pages 792-813.
    21. Fu, Xiaolan & Hou, Jun & Liu, Xiaohui, 2018. "Unpacking the Relationship between Outward Direct Investment and Innovation Performance: Evidence from Chinese firms," World Development, Elsevier, vol. 102(C), pages 111-123.
    22. Zhang, Shaohui & Guo, Qinxin & Smyth, Russell & Yao, Yao, 2022. "Extreme temperatures and residential electricity consumption: Evidence from Chinese households," Energy Economics, Elsevier, vol. 107(C).
    23. Yanhui Yin & Bowen Yang, 2023. "Environmental Protection or Development? Multiple Policy Effects Evaluation of the Resource Tax Collection Reform for Iron Ore Enterprises in China," IJERPH, MDPI, vol. 20(5), pages 1-15, February.

    More about this item

    Keywords

    ;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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