Shanxi Authorities Set Limits on Production of Coking Coal

Shanxi provincial officials announced a policy that will limit production of coke to 80 million tons each year for the next three years, according to an August 12 news report (in Chinese). Shanxi province is China’s largest coal and coke producing province, China producing 70 percent of China's coal (in Chinese). Companies involved in the coke industry estimate that they will have to reduce coke production by 20-30 percent to meet the reduced production goal.

Currently the world's largest producer of coke and the world's largest steel producer, China exports little of either commodity, as its manufacturing sector consumes most domestic production. In the past, however, a WTO inconsistent export quota system governed this relatively small amount of exports. The quota system appeared to violate Articles 11 and 20 of the General Agreement on Tariffs and Trade (GATT), because it was not a short term or emergency export quota. The provincial government’s decision to reduce coke production in Shanxi could limit the amount of coke available for export, while avoiding the conflict with international trade rules.

For a more complete discussion of the export licensing system and the problems it created, please see this section of the CECC 2004 Annual Report.