-Incomplete market system and emergency response capability yet to be enhanced. China's energy market system is yet to be completed, as the energy pricing mechanism fails to fully reflect the scarcity of resources, its supply and demand, and the environmental cost. Order in energy exploration and development must be further standardized, and the energy supervisory system improved. Coal production safety is far from satisfactory, the structure of power grids is not rational, the oil reserves are not sufficient, and an effective emergency pre-warning system is yet to be improved and consolidated to deal with energy supply breakdowns and other major unexpected emergencies.

II. Strategy and Goals of Energy Development

China's energy development emphasizes thrift, cleanness and safety. Believing that development is the only way for its survival, China solves problems emerging in the process of advance through development and reform. To this end, it is applying the Scientific Outlook on Development, persevering in putting people first, changing its concept of development, making innovations in the mode of development, and improving the quality of development. It strives for high scientific and technological content, low resource consumption, minimum of environmental pollution, good economic returns, and guaranteed safety in energy development, so as to realize the coordinated and sustained development of all energy resources to the fullest possible extent.

China's energy development is based on the principle of relying on domestic resources and the basic state policy of opening to the outside world. The country is striving to ensure a stable supply of energy with a steady increase in domestic energy production and promote the common development of energy around the world. China's energy development will bring more opportunities for other countries and expand the global market, and make positive contributions to the world's energy security and stability.

The basic themes of China's energy strategy are giving priority to thrift, relying on domestic resources, encouraging diverse patterns of development, relying on science and technology, protecting the environment, and increasing international cooperation for mutual benefit. It strives to build a stable, economical, clean and safe energy supply system, so as to support the sustained economic and social development with sustained energy development.

-Giving priority to thrift. China has made resource-conservation a basic state policy, and stresses both developing and saving, with priority given to saving. For this, it is actively changing the pattern of economic growth, adjusting the industrial structure, encouraging research and development of energy-saving technologies, popularizing energy-saving products, improving energy management expertise, improving energy-saving legislation and standards, and enhancing energy efficiency.

-Relying on domestic resources. China mainly relies on itself to increase the supply of energy, and tries to satisfy the rising market demand by way of steadily expanding the domestic supply of reliable energy resources.

-Encouraging diverse patterns of development. China will continue to develop its coal resources in an orderly way, spur the power industry, speed up oil and natural gas exploration, encourage coal bed gas tapping, boost hydroelectric power and other renewable energy resources, actively promote nuclear power development, develop substitute energy resources in a scientific way, optimize its energy structure, realize supplementation between multiple energy resources, and guarantee a steady supply of energy.

-Relying on science and technology. China fully relies on science and technology to enhance its ability for independent innovation and its ability to digest and improve imported technologies, tackle technological bottlenecks in energy development, improve key technologies and the manufacturing level of key equipment, seek new ways for energy development and utilization, and redouble the strength for further development.

-Protecting the environment. China has set the goal of building a resource-conserving, environment-friendly society, and is endeavoring to coordinate energy development with environmental protection. It endeavors to make the two promote each other for sustainable development.

-Cooperation for mutual benefit. China works sincerely and pragmatically with international energy organizations and other countries on the principle of equality, mutual benefit and win-win to improve the mechanism, expand the fields of cooperation and safeguard international energy security and stability.

The 17th National Congress of the Communist Party of China, held in October 2007, set the goals of quickening the transformation of the development pattern and quadrupling the per-capita GDP of the year 2000 by 2020 through optimizing the economic structure and improving economic returns while reducing the consumption of energy resources and protecting the environment. The Outline of the 11th Five-Year Plan for National Economic and Social Development of the People's Republic of China projects that the per-unit GDP energy consumption by 2010 will have decreased by 20 percent compared to 2005, and the total amount of major pollutants discharged will have been reduced by 10 percent.

To realize the country's economic and social development goals, the energy industry has set the following targets in the 11th Five-Year Plan (2006-10): By 2010 the energy supply will basically meet the demands of national economic and social development; and obvious progress will have been made in energy conservation; energy efficiency will have been noticeably enhanced and the energy structure optimized; technological progress, economic benefits and market competitiveness will have been greatly increased; and energy-related macro-control, market regulation, legislation and emergency pre-warning system and mechanism compatible with the socialist market economy will all have been improved. The result will be that the coordinated development will have been achieved between energy production, economy, society and the environment.

III. All-Round Promotion of Energy Conservation

China is a developing country with a large population but deficient resources. To attain sustainable economic and social development, it must take the path of conserving resources. China started energy conservation work in a planned and organized way in the early 1980s, and achieved the goal of quadrupling economic growth while doubling energy consumption by the late 1990s by implementing the policy of "stressing both development and saving, with priority given to saving." To further promote energy conservation, the Chinese Government made conservation of resources a basic state policy, and issued the Decision of the State Council on Strengthening Energy-Conservation Work. The Chinese Government has always regarded energy conservation as a major factor in macro control and as breakthrough and driving force for transforming the pattern of economic development and optimizing economic structure. While advancing the work of saving energy and reducing emissions, the Chinese Government depends on structural adjustment as the fundamental approach, on scientific and technological advances as the key, on improved administration as a crucial measure, on the strengthening of law enforcement as an important guarantee, on the deepening of the reform as an internal motive force, and on public participation as the social foundation. It promulgated and implemented the Medium- and Long-Term Special Plan for Energy Conservation, setting the goal for energy consumption reduction during the 11th Five-Year Plan period (2006-10) and sharing out the tasks and responsibilities to the various provinces, autonomous regions and municipalities directly under the Central Government, as well as key enterprises. China is perfecting the index system of energy consumption per-unit GDP. It will incorporate energy consumption into the overall evaluation of economic and social development and the annual performance evaluation of regional governments. It will adopt an announcement system for this index, implement a target responsibility and accountability system for energy conservation and build an energy-conserving industrial system to effect the fundamental transformation of the country's pattern of economic development.

Energy conservation is a realistic choice for China to alleviate the pressure of energy shortage. It is a long and arduous strategic task to keep promoting energy conservation in the course of the country's economic and social development. China will advance energy conservation in all aspects, with the government playing the leading role, the market forming the basis and enterprises playing a major role, with participation of the whole society. China will establish an energy- and resource-saving industrial structure, development pattern and consumption mode by taking improvement of energy efficiency as the core, and transforming the mode of economic development, adjusting the economic structure and accelerating technological advance as the foundation. China will establish an energy-saving industrial system and practice a target-responsibility and performance-evaluation system in this regard. It will improve the mechanism for spreading energy-saving technologies, and encourage R&D of such technologies and products. It will deepen the reform of the energy system, improve the energy-pricing mechanism and give full play to economic policies, including fiscal and taxation ones, in promoting energy conservation.

To promote all-round energy conservation, China will take the following measures:

-Pushing forward structural adjustment. The major reasons for low efficiency of energy utilization for a long time have been the extensive mode of economic growth and a high proportion of high energy-consuming industries in China. The country will put the transformation of the development pattern and the adjustment of the industrial structure and of the internal structures of industries in the key place for the energy-conservation strategy, and work hard to bring into being a pattern of economic development with "low input, low consumption, less emission and high efficiency." China will accelerate the optimization and upgrading of its industrial structure, make energetic efforts to develop high- and new-tech industries and the service trades, set strict limits on the development of high energy-, material- and water-consuming industries, and eliminate industries with backward productivity, so as to fundamentally change the pattern of economic development and put in place an energy-saving industrial system on an early date.

-Improving energy conservation in industry. Industry is a major sector of energy consumption in China. The country is determined to take a new road to industrialization characterized by high scientific and technological content, good economic returns, low resource consumption, minimum of environmental pollution, and full use of human resources. To achieve this, China will accelerate the development of high tech industries and transform traditional industries with high and new technologies, as well as advanced and applicable ones, and in turn upgrade the overall industrial standard. Industries with high energy consumption, such as steel, nonferrous metals, coal, electricity, petroleum and petrochemicals, chemical engineering and building materials, will be the target sectors for saving energy and reducing energy consumption. The Chinese Government has launched an energy-conservation drive among 1,000 enterprises, with the focus on tightening control over those consuming 10,000 tons of standard coal or more each year. It will readjust the product mix, speed up technological reform, improve management and economize on energy. It will support a group of key and demonstration projects aiming to conserve energy and cut consumption so as to rally industries to enhance their energy-saving level. It will continue to raise the standards for energy efficiency of industry, eliminate backward and high energy-consuming products, and perfect the market access system.

-Launching energy-saving projects. China is carrying out 10 key energy-saving projects, including petroleum substitution, simultaneous generation of heat and power, surplus heat utilization and the construction of energy-saving buildings. The Chinese Government supports key and demonstration energy-saving projects, and encourages extensive application of high-efficiency, energy-saving products. China will make vigorous efforts to construct energy- and land-saving buildings, actively promote the energy-saving renovation of existing buildings, and extensively use new walling materials. China will continue to implement petroleum substitution and develop substitute fuels in a scientific way. It will speed up the elimination of old automobiles and ships, actively develop public transport; set limits on high oil-consuming automobiles, and develop energy-saving and environment-friendly automobiles. It will accelerate the innovation of coal-fueled industrial boilers (kilns), regional simultaneous generation of heat and power and surplus heat and pressure utilization, and improve the efficiency of energy utilization. It will save more energy in the sphere of electrical machinery and optimize energy systems, so as to improve the efficiency of both. It will carry out the Green Lighting Project, and spread more rapidly high-performance electrical appliances. It will also spread technologies for firewood- and coal-saving stoves and energy-saving houses in rural areas, and eliminate old, high energy-consuming farm machinery and fishing boats, so as to promote energy conservation in agriculture and the rural areas. It will urge government bodies to save more energy, giving full play to the role of the government in leading energy conservation. It will put in place at an early date the system of energy-conservation monitoring and technological support, strengthening energy-conservation monitoring and establishing new energy service platforms.

-Strengthening the administration of energy conservation. The Chinese Government has established a system of compulsory government procurement of energy-saving products, actively advocating energy-saving (including water-saving) products as a priority for government procurement; and included some products with outstanding results and stable performance on the list of compulsory procurement. It will give full play to the role of governmental purchase in policy guidance and in encouraging all sectors of society to produce and use energy-saving products. It will study and formulate fiscal and taxation policies to encourage energy conservation, implement preferential taxation policies for those effectively making comprehensive use of resources, and set up an energy-saving mechanism with multi-channel financing. It will deepen the reform of energy prices to introduce a pricing mechanism favorable for energy conservation. It will put in force an evaluation and examination system in respect of energy conservation in fixed assets investment projects and strictly control increase of energy consumption at the roots. It will set up a new energy-conservation mechanism for enterprises, adopt an energy efficiency labeling mechanism, and promote contract-based energy management and voluntary energy-conservation agreements. It will improve the legal framework regarding energy conservation, and strengthen energy-conservation management by law. It will improve the overall quality of energy-conservation managerial personnel, and step up efforts in law enforcement, supervision and examination.

-Advocating energy conservation in society. The Chinese Government energetically advocates the significance of energy conservation by various means, constantly strengthening the public awareness of the importance of resource conservation. It will promote the culture of energy conservation, and work hard to bring into being a healthy, civilized and economical mode of consumption. It will incorporate energy conservation into the system of elementary education, vocational education, higher education and technical training, and publicize and popularize relevant knowledge by means of mass media. It will enhance the energy-conservation week campaign, and mobilize all sectors of society to participate in it. All these measures will help to build a long-term mechanism of energy conservation with the participation of all sectors of society.

IV. Improving the Energy Supply Capacity

For a long time China has relied largely on domestic energy resources to develop its economy, and the rate of self-sufficiency has been above 90 percent, much higher than that in most developed countries. China is now the second biggest energy producer in the world, and has a relatively strong foundation for the energy production and supply. In the course of building a moderately prosperous society, China will rely mainly on domestic energy resources, give priority to optimizing its energy mix, and work hard to increase its energy supply capacity.