Supply-side reform revives coal capital Shanxi

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North China’s Shanxi Province lies at the heart of China’s coal belt. And it’s the center of the nation’s largest pilot zone aimed at reforming the mining area and diversifying its economic drive.

After years of economic downturn, Shanxi achieved better economic growth in 2017, thanks to its continuous supply-side reform.

Shanxi plays a leading role in cutting over-capacity in China. In 2016 and 2017, Shanxi shut down more than 40 coal mines and cutting capacity by over 43 million tons, despite rising coal prices show local official statistics.

In the first three quarters of this year, Shanxi’s economic growth recovered, reaching 7.2%, 0.3% higher than the national average. It’s the first time Shanxi outperformed the national average in three years.

Shanxi produces about a quarter of China's coal annually./CGTN Photo

Wang Yuan, Deputy Director of China Taiyuan Coal Transaction Center, said, “As the supply-side reform deepens, a new mechanism of mid- and long-term coal trade contracts was put in place this year. It has greatly contributed to a more balanced and stable coal market, ensuring the healthy development of the industry.”

Meanwhile, the province has begun to invest more in non-coal industries. In the first 10 months of this year, the investment increased by 6.1% while that in the coal industry declined by 6.2%.

Shanxi is now making unprecedented efforts to develop non-coal industries. /CGTN Photo

The non-coal industries include new materials, clean energy, information technology, green agriculture, ecological medicine, and cultural tourism.

“The provincial government has issued many favorable policies, to attract talents, and also create a very favorable environment for businesses in non-coal sectors to boom,” says Professor Wei Hulin, head of the Business Administration Institute of Shanxi University of Finance and Economics

This year has seen supply-side reform taking place across China. Shanxi’s improved economic performance has not only proved the efficacy of the reform, but also become a motivating force for the province to further promote the policy in the years to come.