China' s coal industry development and coal supply: Impact to East Asian countries and policy challenge

China increased her coal exports dramatically after 2000 and was ranked second in the world in 2003. China's coal exports are becoming more important than before, especially for East Asian countries, which include the top three importers in the world coal market. However, China suddenly cut her exports in 2004 because of short supply in the domestic market. The decrease of China's coal exports had a large impact on East Asian countries' energy markets. This paper analyzes China's coal industry development under structural reform in recent years and forecasts demand and supply in the future. Due to the policy shift from transition towards a market economy to increased state intervention, many state coal mines are increasing their investment towards new production capacity. Therefore the recent short supply of coal in the domestic market is expected to transform into an oversupply in several years' time. Based on this outlook for the domestic market, this paper forecasts China's future coal exports as increasing from the low level in 2005, and points out the need for Japan-China cooperation involving know-how transfer regarding state coal mine reform, and the transfer of technology and capital for safe production and Clean Coal Technology (CCT).