Asia Centre

The overarching theme is the Chinese state's capacity to address the growing sense of energy insecurity-defined as "strategic threats" posed by supply disruptions, efficiency and sustainability in energy usage, price volatility, and environmental degradation (p. 16). The authors encourage us to think beyond the conventional emphasis on supply-side policies and procurement, to investigate the political choices emerging from the key regulators' strategic interactions with stakeholders and to incorporate the macroeconomic, social and foreign policy, and fiscal and legal dimensions of energy security. They highlight the unresolved issues of corporate governance and economic efficiency in the aftermath of the restructuring of the national oil and petrochemical corporations (NOCs) and privatization of coal sectors in the late 1990s.

Chapter 1 by Michal Meidan, Philips Andrews-Speed and Ma Xin proposes an analytical framework for energy policy-making, listing and briefly characterizing the central state regulators and a variety of stakeholders. Not surprisingly, the main relationship affecting policy output is that between ministries and state-owned firms such as the national oil corporations. The chapter could benefit from greater clarity about the interests of the regulators, in particular by differentiating clearly between economic and technical concerns on the one hand and fiscal imperatives on the other. This neglect of the fiscal aspects of energy policies is a problem throughout the book.

Meidan, Andrews-Speed and Ma are absolutely right that the cherished "fragmented authoritarianism" model of bureaucratic politics does not account adequately for the emerging regulatory landscape on energy policies. Simply stated, there are more autonomous interests and energy-related issues to consider today than there were in the late 1980s. The issue linkages implied in this more inclusive analytical framework are laid out for three policy bundles encapsulating different statist priorities-energy supply, the relationship between energy supply and efficiency, and the relationship between energy efficiency and environmental protection (pp. 58-61). I would have liked to see a critical assessment of the key predictions of the fragmented authoritarian model; however, this chapter serves as a reference point for future theory-building.

Erica Downs' work on the relative autonomy of NOCs is highly respected; in Chapter 2 she turns to the supply side of policies and regulation. Her account adopts the language of the fragmented authoritarian model, but her findings push the model's boundaries. I would have liked to see more precision about the current functions of the National Development and Reform Commission (NDRC), and an assessment of the relative rule-making activism and enforcement presence of the agencies across issue areas would be informative. Downs underscores the continuing usefulness for elite promotion of work experience in the oil sector - does this pattern suggest factionalism with an "oil clique" as its base? Do regulators consider job prospects in the NOCs when they design or enforce policies? These questions relate to an important debate on the emergence of the regulatory state in China.

In Chapter 3 Brian Ricketts of the International Energy Agency analyzes the international and domestic market characteristics of coal production and trade. While coal pricing and coalmine ownership have been significantly more privatized than in the oil and petrochemical sectors, Ricketts rightly points out that coal trade remains under the oligopolistic control of state-owned trading companies. In addition, serious shortcomings in health, safety and environmental regulation and in transport infrastructure have discouraged investors. A greater focus is needed on the responses of local governments to Beijing's attempts to consolidate the market, favor large-scale mines and increase regulatory enforcement; the concluding chapter mentions the need to consider the local state (p. 226).

Chapter 4 by Shi Dan, a leading expert on China's energy, hints at the redistributive conflicts behind domestic-international price gaps and Beijing's adherence to administrative controls over price adjustments. This chapter captures succinctly the essence of the structural problems facing the oil industry since the last market consolidation and asset restructuring of NOCs in 1998. As China moves toward price convergence with global prices while keeping the NDRC firmly in control of price-setting, it exposes itself to contentious redistributive politics in times of price fluctuations. The oligopolistic market structure has also impeded the emergence of private competitors and the adoption of technology and production methods to improve efficiency in subsidiaries. Her suggestion that the government allocate funds for strategic petroleum reserves is particularly apt in the current context of depressed oil prices, but her additional suggestions for market-determination of oil prices and encouragement of private capital in exploration would be difficult to implement. If, as Downs has argued, the NOCs have leveraged their autonomous political influence, then such changes would be possible only if they can provide private gains for the NOCs.

Chapter 5 by Wei Bin on the power industry reflects the official perspective on the key reform measures in the past decade and the future reform agenda. Chapter 6 by Yang Lan, Mao Xianqiang, Liu Zhaoyang and Xing Youkai applies a general equilibrium model (using the base year 2000) to simulate the effects of an energy tax on macroeconomic indices, energy consumption, saving and demand, and the environment. The model's assumptions are certainly open to dispute. The prediction, not surprisingly, is that the higher the level of the energy tax, the greater the negative impacts on the national economy, but also the more likely that industries and households will adjust their energy usage and technology toward cleaner fuel. The authors argue that the energy tax should be supplemented by short-term side-payments to disadvantaged users and additional incentives to promote green technology. This has not been done with the recent implementation of the national fuel tax.

Chapters 7 to 9 adopt a legalistic perspective on China's energy policy in a broader geopolitical context. In Chapter 7, Wang Mingyuan identifies an interesting paradox in the legal foundation for China's implementation of "clean development mechanisms" (COM): the core domestic laws on CDM rest on China's commitments as a contracting party to the Kyoto Protocol. Furthermore, the 2004 Management Measures invite bureaucratic entanglements involving many major and supporting agencies. The chapter's faint condemnation of private interests unfortunately precludes a more thoughtful discussion of incentivizing firms and encouraging private-public partnerships in CDMs.

Chapter 8 by Yu Hongyuan provides an overview of China's involvement in international regimes concerning climate change. The central theme is China's willingness to recognize the negative impacts of its rapid growth and to come to terms with other countries' demands. I would have liked to see a discussion of whether China's position on climate change is either complicated or facilitated by participation in general multilateral institutions such as ASEM and APEC. Yu rightly points out that domestic empirical understanding of the actual impact of climate change remains woefully inadequate, hindering informed and accountable pol icy-making.

The final chapter, by Tadakatsu Sano-a former vice-minister of the Japanese Ministry of Economy, Trade and Industry (METI)-with Mikiko Fujiwara, offers lessons from the Japanese experience in managing energy insecurity. This comparison has many limitations and may overstate China's potential problems, since for China the development of domestic resources is a viable option. Sa no does not consider the Japanese government's mixed record of environmental protection, or innovative Japanese carmakers' critical contribution to meeting consumer demand for fuel efficiency. The chapter's relevance to China would also have been enhanced by further analysis of Japan's bureaucratic reorganization, along the lines of Steven Vogel's work on reregulation.

Despite its limitations, this book represents the state of the art in Western scholarship on the elite politics and institutions of China's energy security. It is appropriate for undergraduate study and graduate research on the political economy of development. I would recommend it to anyone with an interest in China's energy policy and environmental protection, as well as its developmental bottlenecks and elite policy-making in general. The Introduction and individual chapters provide adequate background information for the general-interest reader and concise literature reviews on specific topics of China's energy policy and industrial structure. It would be good to see further volumes on closely related topics such as fuel tax implementation and other tax incentives to promote the restructuring of domestic automobile manufacturers and consumption patterns of industries and households, or the roles of private capital, foreign investors and local governments in the energy sectors.