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Philip Andrews-Speed and Sufang Zhang

This chapter examines the evolution of China’s energy policy since 1949 using the electricity industry as an example. Applying a public policy framework, the paper examines the processes of agenda setting, of policy design and decision-making and of implementation and learning. The policy agenda for energy in China has become progressively more complex, in reaction to changing domestic priorities, external events and ideas from abroad. The number of actors has grown in the energy sector, in general, and the power industry in particular. In combination with the decentralization of authority to local governments, this has made the process of policymaking more complex and the coordination of implementation more difficult. In the design of policy, the government has been reluctant to give up the tried and tested administrative instruments in favour of economic instruments. Rather, officials have preferred to stick to what they know, namely deploying exhortation, command and control regulation, direct financial support and state ownership. Market forces have played only a subordinate role in China’s electricity industry. Economic instruments such as subsidies, fines and feed-in tariffs have been deployed but often at too low a level to provide the incentive to change behaviours. This has led to frequent adjustments of policy instrument in order to achieve a programme’s objectives as the agencies learn from experience. For these reasons, China’s electrical power industry over nearly seven decades has been characterized by incremental reform and path dependency.