The Last Word: Chinese Exceptionalism
China’s challenges are daunting because of their scale and complexity but they are not necessarily unique in their causes or fundamental nature. Nor are the possible solutions open to China unique: the types of regulatory frameworks and market-based mechanisms are limited and have been tried elsewhere. Approvals and cost recovery can be linked to demonstrable need; price-setting and dispatch mechanisms can be made more transparent. As long as investment risks in China remain opaque, private sector involvement is likely to be limited. Even without private sector participation, overall power sector and macroeconomic efficiency will benefit from reform, especially now that excess capacity is unlikely to be mopped up through rapid demand growth. Other countries provide examples of challenges and solutions; exactly what China will do remains unclear.