China's Energy Policy: Energy and Economic Development

Until the early 19705 China exported very little coal or oil. In 1978-79 decisions were made to modernize the economy by means of imported technology and capital goods and that meant China had to export more in order to pay for those imports. Energy exports, particularly oil, became an important source of foreign exchange. However, the increasing need for energy brought on by modernization has created a problem for China. With only limited amounts of oil available, it has been necessary to choose between meeting internal demand and exporting energy. In response China is, inter alia, substituting coal for oil internally and also expanding its exports of coal. Until the Chinese are able to produce other goods for export, energy will continue to be an important source of foreign exchange.