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China has cut coal production for the third year in a row, according to government figures, despite a host of reasons to doubt that it did.


A truck unloads coal at a coalyard in Huaibei, eastern China’s Anhui province, Nov. 11, 2016.

Based on official data, China’s mines produced 3.36 billion metric tons of coal last year, down sharply by 9.4 percent from 2015. The decrease marked the biggest annual drop so far since production peaked in 2013.

The steep decline reported by the National Bureau of Statistics (NBS) would be good news for environmental advocates seeking reductions in smog and greenhouse gas emissions, if it turns out to be true.

China produces and burns about half the world’s coal, accounting for 64 percent of the country’s energy supply last year, based on official data.

Largely coal-fired power, winter heating and the recent resurgence of steel production have been blamed for China’s unrelenting bouts of urban smog.

While the reported drop in coal production suggests that conditions are getting better, China’s frequent smog alerts make the opposite case that coal-caused pollution has been getting worse.

Over 57 percent of China’s 338 cities monitored by the Ministry of Environmental Protection (MEP) suffered varying degrees of air pollution late last month. Nearly 20 percent reported “serious” or “heavily polluted” air, state media said.

The cumulative 13.2-percent cut in officially-reported coal output since 2014 suggests citizens could see some relief, but doubts about the figures may outweigh NBS claims.

Reason for concern

One reason for concern is a widely reported disruption of the coal market in the second half of 2016, caused by the government’s poorly executed plan to shed surplus production capacity at China’s mines.

Last February, the cabinet-level State Council responded to a three-year slump in coal prices and profits by ordering mines to reduce overcapacity by 500 million tons a year and to consolidate another 500 million tons under more efficient operators by 2020.

After months without progress in meeting targets set for 2016, the government’s top planning agency pressured the mines to make rapid cuts, resulting in sudden shortages at power plants and a price spike of over 50 percent.

At the end of 2016, the price of coal used for power production stood at 639 yuan (U.S. $93) per ton, up 72.7 percent from the start of the year, the official English-language China Daily said.

Production surged in the third and fourth quarters as idled mines reopened to reap the profits and meet the demand.

The National Development and Reform Commission (NDRC) authorized an increase in operations and urged 900 mines to boost output by a collective 1 million tons a day.

Coal output rose each month from September through December as the mines responded, although the output never reached year-earlier levels, according to NBS data.

But the NBS calculations are impossible to verify, in part because the agency apparently neglects to update adjustments to its year-earlier figures.

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see also FT Report: Fake China data: was it just one province?