Study On Formation And Resolution Mechanism Of Coal Overcapacity In China

Since the 21st century,the rapid development of industrialization has driven the rapid development of the coal industry,which has made the coal industry the most prosperous "golden decade" from 2002 to 2012.During the period,coal prices have been operating at a high level.Attracted by the high profits of the industry,a large number of social funds have poured into the coal industry.The investment in the industry has increased rapidly year by year.The number of new coal mines has been increasing continuously,and the production capacity has expanded rapidly.However,due to the shift of economic growth since 2012,the downstream demand of the coal industry has decreased.In addition,under the severe environmental pressure,the government has proposed to promote the energy revolution and develop non-coal energy and other policies.The demand for coal consumption has slowed down and started declining.The concentrated release of production capacity caused by a large amount of investment in the previous period and the sharp drop in demand for coal consumption have caused a serious overcapacity problem in the coal industry.Since 2016,the government has issued a series of policy documents to remove the excess capacity of coal and promote the development of the industry.With the help of the policy,the coal de-capacity has achieved certain results.In 2016 and 2017,the total coal production capacity was reduced by 540 million tons.However,the goal of resolving 800 million tons of excess capacity proposed in the "13th Five-Year Plan for Coal Industry Development" has not yet been achieved,and the problem of overcapacity in coal still exists.Controlling production capacity growth through government administrative intervention has achieved remarkable results in the short term,but it is difficult to resolve the contradiction of excess production capacity from the root cause because it has not been improved and controlled from the root cause of excess production capacity.Only by finding out the causes of overcapacity in the coal industry and starting from the root cause can achieve the effect of treating both the symptoms and the root causes.Therefore,this paper studied the formation mechanism and dissolving mechanism of overcapacity in China’s coal industry,focused on the theoretical analysis of the formation and dissolution of overcapacity in coal industry,the measurement of the degree of overcapacity in China’s coal industry,the empirical study of the formation mechanism and the dissolving mechanism of overcapacity in coal industry.Empirical researches,a total of four aspects of the problem,tried to find out the causes of overcapacity in the coal industry and put forward countermeasures and suggestions to resolve.The main research contents and conclusions of this paper are:Theoretical study on the formation mechanism and resolution mechanism of coal overcapacity.This paper combined institutional factors with market factors,and put forward the theoretical hypothesis of the formation mechanism of overcapacity in China’s coal industry:Local governments in the coal-producing province intervened in the coal factor market under the financial incentives,promotion incentives and rent-seeking incentives,which resulted in distortions in the coal factor market.By generating investment subsidy effects and lowering labor prices,coal enterprises were over-investing,which leaded to unbalanced supply and demand of coal by reducing innovation ability and demand,and ultimately leaded to overcapacity of coal industry.From the root causes of the institutional factors of overcapacity in the coal industry,this paper put forward the theoretical mechanism to resolve the excess capacity of the coal industry from three aspects:financial marketization,the optimization of property rights system and the improvement of legal environment.Research on the measurement of coal overcapacity in China.The panel data of the 25 coal-producing provinces in China from 2002 to 2016 were collected,and a stochastic frontier exceeding logarithmic production function model for measuring coal overcapacity was constructed.The coal productivity utilization rate of each coal-producing province,each region and the whole country was estimated.The conclusions are as follows:from 2002 to 2016,most of China’s coal-producing provinces were in a state of overcapacity;in terms of regions,the utilization rate of coal production in the four regions of eastern,central,western and northeastern China rised from 2008 to 2012,declined from 2012 to 2015,and has rebounded since 2016.From the national perspective,the national coal capacity utilization rate was in a state of excessive volatility from 2002 to 2007,and the average capacity utilization rate was 71.32%.The capacity utilization rate increased year by year from 2008 to 2012 with an average of 83.28%,which was basically in a reasonable range.The capacity utilization rate declined rapidly from 2013 to 2015 with an average of 72.93%,and the production capacity was in an excess state.Capacity utilization has rebounded since 2016.Research about the formation mechanism of coal overcapacity based on Incentive distortion effect.Based on the data of 25 coal-producing provinces in China from 2002 to 2016,the distortions of coal capital,labor and total distortions in all coal-producing provinces in China were measured.And an econometric model was established to test the causes of coal factor distortions,and the effects of local government promotion incentives,fiscal incentives and rent-seeking incentives on coal factor cities were empirically tested.An econometric model was established to test the impact of market distortion of coal factors on excess capacity.The direct impact of capital and labor factors distortion and total distortion on excess capacity of coal was empirically tested.The intermediary effect model was established to test the impact mechanism of capital distortion and labor distortion on excess capacity of coal.The conclusions are as follows:(1)The improvement of promotion incentive,financial incentive and rent-seeking incentive has a significant positive impact on the distortion of coal factor market.The promotion incentive,financial incentive and rent-seeking incentive of local governments in coal-producing provinces are the important reasons for the distortion of coal factor market;(2)The distortion of capital,labor factor and the increase of total distortion will reduce the utilization ratio of coal production capacity and cause excess coal production capacity;(3)Capital distortion will cause excess coal production capacity by generating investment subsidy effect,reducing demand effect and innovation ability.Labor distortion will cause excess coal production capacity by reducing labor price,reducing demand effect and innovation ability.Based on the optimization of the institutional environment,the mechanism of eliminating the excess capacity of coal was studied.The direct influence model of system environment on coal factor distortion was constructed,and the influence of financial market,property right system optimization and legal environment system improvement on coal factor distortion was empirically tested.The influence mechanism model of system environment on coal factor distortion was constructed,and the influence mechanism of system environment optimization on coal factor distortion was tested.Coal factor distortions have an improvement effect.A threshold model was constructed to empirically test the difference of the influence of local government incentives on coal factor market distortions when the institutional environment is in different threshold intervals.The conclusions are as follows:(1)The improvement of financial market,the optimization of property right system and the improvement of legal environment are helpful to reduce the distorted degree of coal factor market and promote the resolution of excess coal production capacity;(2)The improvement of the degree of financial marketization reduces the distortion of the coal factor market by reducing the incentives for promotion,fiscal incentives and rent-seeking incentives.The optimization of the property rights system reduces the distortion of the coal factor market by reducing the incentives for rent-seeking.The optimization of the legal environment reduces the distortion of the coal factor market by reducing the degree of promotion incentives and rent-seeking incentives,which promote the utilization rate of coal production capacity and reduce the degree of overcapacity;(3)The influence of institutional environment on the distortion of coal factor market is non-linear.There is a threshold effect on the degree of financial marketization,property rights system and legal environment on the distortion of coal factor market.In different threshold intervals,the influence of local government incentives on the distortion of coal factor market is different.Finally,suggestions were proposed from four aspects:institutional environment,local government incentives,factor market and enterprises to resolve the excess capacity of coal.The main innovations of this paper are:(1)This paper established a coal overcapacity measurement model based on stochastic frontier transcendental logarithmic production function,measured the capacity utilization rate of coal industry in the whole country and various regions and coal-producing provinces,and revealed the fluctuation law of coal capacity rate utilization in China.(2)This paper put forward the motivation of local government intervention in coal-producing provinces based on political incentives and private interests→distortion of coal factor market→ over-investment of enterprises and imbalance between supply and demand in coal industry→the formation mechanism of overcapacity in China’s coal industry,and constructed the direct impact model and the mediation effect model to empirically test the existence of this influencing mechanism.(3)This paper put forward the mechanism of reducing the distortion degree of coal factor market caused by the intervention of local government by optimizing the institutional environment,thus promoting the reduction of excess capacity.The role of financial marketization,property right system optimization and legal environment optimization in reducing the market distortion degree of coal factors and promoting the reduction of excess capacity is empirically tested,and the mechanism of reducing excess capacity in the coal industry is proposed.