Bo Kong

China's Energy Decision-Making: becoming more like the United States?

This paper investigates why some energy decisions are made faster than others in a reformed and globalized China. This investigation uncovers five factors that determine whether a proposal becomes a decision in the Chinese political system: (1) associated benefits of the proposed decision for other policy problems; (2) presence of a consistent ‘issue champion’; (3) strength of mobilized and united ‘veto players’; (4) vertical and horizontal support; and (5) clear policy preferences of the central leadership. The paper argues that the Chinese decision-making process has become increasingly consultative, iterative, and participatory and that it is also increasingly prone to deadlock, inaction, and paralysis. Thus, the Chinese decision-making process is increasingly similar to that of the United States in the era of reform and globalization. While the capacity of the Chinese state to make and implement distributive policies has remained largely unchanged, reform and globalization has weakened its capacity to make and implement redistributive policies.

An Anatomy of China’s Energy Insecurity and its Strategies

China’s energy insecurity largely originates from its constrained availability, questionable reliability, and uncertain affordability of its oil supplies. The country’s fast industrialization and urbanization, together with demand for infrastructure and increasing popularity of automobiles, requires a lot of energy, but it consumes energy both intensively and inefficiently, threatening the environmental well-being of China and its neighbors. China’s risk aversion and poor energy policy making system further magnifies its perceptions of the low availability, reliability and affordability of oil imports, which further compounds its sense of energy insecurity. Distrustful of the market, and suspicious of other major energy players in the international market, the Chinese leadership relies on the state-centered approach, or economic nationalism, rather than a market approach to enhance its energy security. However, the country lacks not only an energy policy making system that can make and implement sound energy policies but also an energy market that relies on market prices to allocate energy resources efficiently. As a result of this domestic failure, China has pushed its national flagship companies to undertake a global scavenger hunt for energy while muddling along a messy road of energy reform at home. Setbacks in acquiring new sources of oil have validated the Chinese leadership’s belief that the international oil market is not free and China’s access to international oil is not guaranteed through the market. China’s problems in the international energy market are also perceived as evidence of attempts to prevent China from exerting international influence. China’s leadership is convinced that China should focus on areas where western capital is not heavily concentrated or where western influences are weak. With the recent revaluation of Chinese currency and growing economy, China has both the wherewithal and appetite to acquire more oil assets abroad. Both China and the United States stand at a critical juncture of history where China’s rise depends on reliable energy supplies which it increasingly imports from abroad and where the growing wealth of the United States is increasingly dependent upon China’s success. If China does not have energy security it’s 1.3 billion fuel-starved people will prevent the rest of the world from achieving energy security.

Making Sense of Carbon Market Development in China

China has recently begun promoting market-oriented policy instruments to reduce carbon emissions as part of its domestic climate strategy. A centerpiece of this new policy approach has been the launch of pilot carbon markets in seven distinct regions. Based on extensive field visits to all pilot markets under development, this analysis assesses the implications of this “bottom-up” approach to carbon market development for the prospects for nationwide carbon trading in China. It concludes that initiating carbon trading in the seven regions across China with insufficient capacity building, an extremely compressed time frame, and little bureaucratic coordination has engendered challenges for the development of a national carbon market. Nevertheless, these pilots have advanced the prospects for sustained climate action in China at the local level through their contribution to indigenous technical and human capacity as well as through engaging new stakeholders, including domestic and international actors, supportive of the development of an eventual national trading scheme.

Oil and state capitalism: government-firm coopetition in China and India

ABSTRACT This paper examines the domestic sources of the internationalization of national oil companies (NOCs) in China and India. It argues that – counter to notions of state-led internationalization – the going abroad of NOCs reflects a pattern of ‘coopetition,’ i.e., the co-existence of cooperation and conflict between increasingly entrepreneurial NOCs and partially supportive and interventionist home governments. In China, the state has predominantly assumed the role of resource supplier, rarely stepping in as a veto player. In India, the NOC–government relationship has been more adversarial, with the state intervening more often as a veto player than its Chinese counterpart and only slowly emerging as a resource supplier. These patterns of internationalization can be explained by how two major trends have been playing out in the two countries: (1) the marketization of NOCs, and (2) the reform of the governance of overseas investments. The findings matter to theory and policy. First, they unpack the relational dynamics of business–government relations in hybrid models of capitalism beyond notions of top-down and bottom-up dynamics. Second, our analysis shows that the state intervenes in the international energy strategies of emerging economies as the occasional veto player rather than actively leveraging NOC internationalization for geopolitical goals.

Globalizing Chinese Energy Finance: The Role of Policy Banks

Abstract This article explores the magnitude, motivations, and mechanisms of the globalization of Chinese finance for energy. Like the national development banks and export–import banks of industrialized countries before them, China’s policy banks have provided large amounts of financing to Chinese energy companies to enter global energy markets. What is more, China’s two global policy banks, the China Development Bank and the Export–Import Bank of China, now provide as much energy finance to foreign governments as do all the multilateral development banks combined. This paper outlines the extent to which Chinese energy finance has become globalized and examines the state priorities and institutional pathways that drive the globalization of Chinese energy finance.