Meanwhile, construction of nuclear projects is an
effective way to boost domestic demand, as they require large amounts of
investment and can boost many industries such as steel and cement. As a result,
nuclear power companies have recently received capital injection both from the
government and banks.
China National Nuclear Corp, China's largest nuclear
company signed agreements with eight domestic banks, under which the company got
bank facilities of 350 billion yuan, and it also signed agreements with 10 banks
for 11.8-billion-yuan in loans in 2009.
At the same time, industry insiders said that too
many coal-fired power plants are in the process of being built, which will
further contribute to the overcapacity situation. China's power capacity will
exceed 800 GW in 2009, up from a little over 700 GW.
The Chinese government is well aware of this problem.
Recently, it introduced stricter environmental standards to stop the
construction of polluting coal-fired plants. At the beginning of January, the
Ministry of Environmental Protection revealed that 11 big projects in the
country's stimulus package, involving more than 40 billion yuan in investment,
had not won its approval following environmental impact assessments. Most of
them are coal-fired projects.
This appears to be a continuation of the policy
implemented in 2008, as statistics indicated that the country slowed down
investment in coal-fired plants. The China Electricity Council said in January
that the country's nuclear and wind power investment soared in 2008, while
investment in coal-fired plants declined year-on-year.
Nuclear and wind power investment increased by 71.85
percent and 88.10 percent respectively compared with the same period in the
previous year, while thermal power investment dropped 21.99 percent, according
to the council. China's total power generating capacity reached 790.25 million
kW in 2008, up 10.3 percent year-on-year.
However, China's electricity consumption fell 8.6
percent from a year earlier in November and 3.7 percent from the same month the
year before in October - its first such decline since 1999.
Meanwhile, two large solar power plants will be built
in the western provinces of Qinghai and Yunnan in 2009, as China cuts its
reliance on coal and oil. Construction of the first phase of the Qinghai
project, a gigawatt-level solar station, will begin this year. The plant, funded
by an initial investment of 1 billion yuan, could become the world's largest
when completed, according to a recent statement by its developers.
In December 2008, the southwestern Yunnan province
announced it would begin construction of a 166-megawatt solar plant with an
investment of 9.1 billion yuan - the largest in China at the time.
Overseas cooperation
Meanwhile, Chinese energy investors have been
encouraged to "become bold" in acquiring stakes in overseas enterprises. That's
the message from Zheng Xinli, vice-director of the Policy Research Office of the
Central Committee of Communist Party of China.
He suggested recently that China should use its
2-trillion-dollar foreign exchange reserves to encourage overseas mergers and
acquisitions, especially in energy and resources.
He said that the foreign exchange reserve should be
invested in removing energy and resource bottlenecks that have hindered the
country's development for so long. Zheng said the Chinese government should
cooperate with investors, if necessary, by offering preferential loans to
improve infrastructure of the destination countries.
As an advisor directly serving China's highest
leadership, Zheng's suggestions are likely to become the central government's
policy to boost overseas investment with the priorities being exploring overseas
oil, gas and other mineral resources.
Amid global recession, many resource-exporting
countries have pinned their hopes on manufacturing-led countries. This is a
mutually beneficial solution for China and the rest of the world.
(Source: China Daily)
