Summary: In the context of the prevailing downward pressure on the economy, the importance of supply-side structural reforms is increasingly highlighted. There are also deep-seated problems of inadequate and inefficient supply and innovation capacity in some industries, which are severely overproductive. The domestic electricity industry, as a traditional industry, exhibits greater competitiveness and resistance under pressure, efficiency gains and accessibility of transition exploration, …

In the context of the prevailing downward pressures on the economy, the importance of supply-side structural reforms is increasingly highlighted. There are also deep-seated problems of inadequate and inefficient supply and innovation capacity in some industries, which are severely overproductive. The domestic electricity industry, as a traditional industry, exhibits greater competitiveness and resistance under pressure, yields efficiency gains and explores possibilities for transformational upgrading, with the increasing influence of my national electricity industry in domestic and foreign markets. The in-depth analysis of the development of the electricity sector has a reference and inspirational role for manufacturing and other industries to better advance supply-side structural reforms.

Competition as an engine of domestic energy

Our manufacturing industry as a whole is under downward pressure, and some industries are experiencing increased difficulties. The domestic electricity industry, in turn, has shown itself in terms of efficiency gains and transitions. In the past, there have also been cases of overcapacity and high-price fighting in the home. How, then, has the electricity industry been successful in these years, and what is the main experience?

Typhoon: Our national electricity industry has been looking for size, low-price competition, overall benefits have been less than 2 per cent. In recent years, the industry has focused on quality-efficient development, although the market was not favourable last year, the domestic electricity industry’s profits have grown by 8.3 per cent, at a profit rate of 7 per cent, at the highest level for almost 10 years. This significant change is due to the early transformation of the domestic electricity industry, particularly the high level of technological innovation in enterprises, which has led to the beginning of the transition.

The electricity industry is generally aware of the fact that it is also forced into the market to upgrade. After more than 30 years of development, wave consumption has progressed far, with market increases and gaps less. In the rural market, for example, 100 households have already been very high, with ice boxes, laundry machines reaching 70 per cent, with over 110 per cent. The market as a whole has entered the phase of updating consumption, and consumer demand for products has shifted from being absent to being good, requiring better and more sophisticated products. This has led to problems of supply and demand mismatch, i.e., low-end yields are surplus and high-end supplies are inadequate. The end-of-service energy sector was gradually phased out during the “12th Five” period, with higher-end supply through technological innovation and technological upgrading, which is now largely capable of achieving a relative balance between supply and demand.

Continent: The domestic electricity sector is a very good sample of manufacturing development in our country, with a typical experience of four areas. First, market competition. Among industries, the first to be marketed and fully competitive is the domestic electricity industry. In the 1980s, hundreds of domestic electricity production lines were introduced, when competition was extremely intense and brutal, but the domestic electricity industry was constantly moving forward in the course of competition. Secondly, technological advances. Under full competition, business needs to be driven by market demand for survival and to evolve. From the 1980s to the present, the domestic electricity industry has continued to have new products, new technologies introduced to meet the changing and growing needs of the population. Thirdly, it comes from openness. The opening of the domestic electricity sector is relatively early and adequate, and some technologies are beginning to be modelled and introduced, on which to absorb reinnovations. Greater openness to industrial development and aggressive reform is evident in the electricity sector. Fourthly, the role of government has created a good development environment for industry. For more than 30 years, the domestic electricity sector has been able to respond positively to market competition and to make continuous progress.

蔡莹: After accession to WTO, the domestic electricity sector is in full marketization. Both industry managers and competition participants have been used for good or bad business. This is not the same as some of the previously protected manufacturing industries in the year. Since domestic electricity enterprises are essentially in a competitive market environment, active adjustment of production to provide up-to-date products to meet market demand is a very normal business activity. For the domestic electricity sector, supply-side adjustments are traditional, a conscious act, and key or market factors are working.

There are also some objective reasons why the domestic electricity industry is able to develop well and consistently. First, there is a very broad domestic market base, which is sufficient to support larger and more productive reforms and innovations in the domestic electricity sector. Secondly, thanks to a relatively favourable international market environment, our country, as a major power producer of electricity, has been able to become a world-wide pole. Thirdly, it may be related to the share of the domestic electricity sector in the overall economy. Over the years, a few parts of the world have been pursuing GDP growth, resulting in overcapacity in some sectors. Fortunately, the electricity sector is not an important industry that underpins local GDP.

Market-based mechanisms

There is now a hot term called “inflexible enterprises”. Structural reforms on the supply side will require the disposal of “inflexible enterprises” for industries with serious surpluses. How can such cases be dealt with in the course of the development of the domestic electricity industry?

The emergence of a continent, “inflexible enterprises”, is mostly in the period of economic restructuring. By definition, it is rigid and dead, and people continue to feed them. The electricity industry is a fully competitive industry and the issue of “inflexible enterprises” is not prominent.

Inflexible enterprises are often found in surplus industries, such as steel, coal and colour, especially in industries with more State-owned components, which are generally larger in size and relatively long in industrial chains. They are bankruptcy or collapse, and the chain reaction is relatively large. How can workers be resettled? How are the huge liabilities handled? How can the impact on local GDP be compensated? As a result, some local governments continue to feed themselves, hoping that this period will be over. At present, such a misalignment of resources results in limited resources not being configured to new and truly supportive enterprises.

For the disposal of the “inflexible” enterprise, the resolve is great to allow resources to be truly optimized.