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China's Coal Import Behavior and Its Impacts to Global Energy Market

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China, the world biggest coal producer and consumer, imported 234 million ton (Mt) of coal in 2012. China has long been a net coal exporter. However, the global coal market witnessed one of the most dramatic realignments it has ever seen since 2009. This inversion of China's role in global coal markets meant that Chinese imports accounted for nearly 30% of all globally traded coal, and China became the focal point of global demand as traditional import markets like Europe and Japan stagnated in the wake of the financial crisis. The middle kingdom's appetite for imported coal seems insatiable, and the "China Factor" appears to have ushered in a new paradigm for the global coal market. In this paper we devise a model that explains Chinese coal import patterns and that can allow the coal market to understand, and to some degree predict, China's coal import behavior. They argue that the unique structure of the Chinese coal market creates a series of key arbitrage relationships between Chinese domestic coal markets and international coal markets that determine Chinese import patterns. The implications of this argument are significant for the development of the global coal trade in the coming decade. The arbitrage relationships directly link the domestic price of coal in China to the global price of coal. Developments in China's domestic coal market will be a dominant factor determining global coal prices and trade flows (and by implication power prices in many regions). This makes understanding the domestic Chinese coal market, which operates according to a unique economic and political logic, crucial for any participant in the global markets, economic incentives and constrains will have better chance to be implemented successfully.
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... 4 China is now the world's largest coal producer and consumerconsuming half of global coal production and importing 20% of the global coal traded in 2018. 5,6 It is also the world's main international provider of finance for the building of new coal-fired power plants. 7 Coal accounted for 60% of China's primary energy consumption in 2018, contributing 50% of the country's fine particulate matter (PM 2.5 ) pollutants and 70% of its carbon emissions. ...
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Industrial organization of the Chinese coal industry
  • J Tu
Tu, J (2011). Industrial organization of the Chinese coal industry, Program on Energy and Sustainable Development.
China has historically imported coal from Vietnam, but due to increased Vietnamese domestic consumption and price increases, imports from Vietnam are expected to decline
China has historically imported coal from Vietnam, but due to increased Vietnamese domestic consumption and price increases, imports from Vietnam are expected to decline. References International Energy Agency (IEA) (2007). World Energy Outlook 2007: China and India Insights.