The Bank's Assistance to China's Energy Sector

Abstract

China is the second largest energy consumer in the world and the largest producer and consumer of coal. Owing to its large coal resources, it is and will remain in the foreseeable future largely energy self-sufficient, although crude oil imports have steadily increased since 1993. In just 17 years, China has become the Bank's largest borrower in the energy sector having received about 7 billion dollars in loans to date. The Bank has also carried out a substantial amount of analytical and advisory services. Despite the amount of lending to the energy sector, the sheer size of the sector in China has made the World Bank, at least in financial terms, a relatively marginal player. The Bank s assistance aimed at helping China's integration into the global economy. It focused on removing bottlenecks to the country's accelerating economic growth and on institutional development (emphasizing technology transfer and capacity building). After the major policy breakthroughs of the mid-1990s in the power sector, progress on sector reform has slowed and major policy issues in such critical subsectors as coal, oil, and gas have largely gone unattended. To address this, the Bank can choose to focus increasingly on peripheral subsectors such as renewables and energy efficiency where policy issues are less sensitive and government buy-in more likely. A more difficult path will be for the Bank to continue its sizeable financial support to the energy sector but frame it within a truly comprehensive dialogue on national energy policy issues.