China country overview

The economy of China

Geography, People, Culture, and Economic Profile

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Resources and power of China

China boasts a wealth of mineral resources, with over thirty-six minerals possessing reserves of significant economic value. The nation possesses a substantial potential for energy production, yet much of this capacity remains untapped. The distribution of these energy resources across the country is uneven, with the majority situated at a considerable distance from the primary centers of industrial activity. Specifically, the Northeast region is abundant in coal and oil reserves, North China’s central area is rich in coal, and the Southwest holds substantial hydroelectric potential. In contrast, the industrial hubs near Guangzhou and the lower Yangtze area, including Shanghai, face a scarcity of local energy supplies. Moreover, few industries are established in proximity to the major energy reserves, with the exception of the southern part of the Northeast. Despite rapid growth in energy production, domestic output still lags behind demand, compelling China to increasingly rely on imported petroleum and natural gas.

Mining contributes modestly to China’s Gross Domestic Product (GDP) and employs a relatively small segment of the workforce. It also accounts for a minor, yet noteworthy, percentage of the annual industrial output value. Nevertheless, the sector is confronted with several challenges. Notably, the discovery of new reserves has not kept pace with the nation’s long-term developmental requirements. Furthermore, a significant number of mining operations suffer from low productivity due to managerial inefficiencies and the use of outdated equipment, leading to suboptimal recovery rates and considerable resource wastage. Environmental concerns have also arisen, with extensive waste rock and debris from mining activities occupying large land areas and the production of contaminated wastewater from mining processes, which has had detrimental effects on waterways and agricultural lands.


China’s principal mineral wealth lies in its vast hydrocarbon resources, with coal being the predominant element. The distribution of coal reserves is geographically extensive, with traces found in every province, though the majority is concentrated in the northern regions. Shanxi Province is estimated to hold nearly half of the nation’s coal reserves. Other significant coal-rich provinces include Heilongjiang, Liaoning, Jilin, Hebei, and Shandong. Beyond these, substantial coal deposits are also found in Sichuan, with notable occurrences in Guangdong, Guangxi, Yunnan, and Guizhou. The coal reserves primarily consist of high-quality bituminous coal, complemented by significant lignite deposits and smaller quantities of anthracite, particularly in Liaoning, Guizhou, and Henan.

In response to government initiatives, a multitude of small-scale, locally operated mines have been established across China. These mines aim to distribute coal production more evenly and alleviate the pressure on the nation’s transport infrastructure. They contribute approximately 40% of China’s coal output, though their production is generally costlier and predominantly consumed locally.

China’s terrestrial oil reserves are chiefly located in the Northeast, particularly the Daqing oil field, and extend to the northwestern provinces of Xinjiang, Gansu, and Qinghai. Additional reserves exist in Sichuan, Shandong, and Henan. Liaoning’s Fushun region and Guangdong are notable for their shale oil deposits. High-quality light oil has been discovered in the South China Sea’s Pearl River estuary, Qinghai’s Qaidam Basin, and Xinjiang’s Tarim Basin. China has engaged with Western oil companies for joint exploration and development of oil reserves in various offshore locations, including the China Sea, Yellow Sea, Gulf of Tonkin, and Bo Hai. The nation primarily consumes its oil production, with a portion of crude oil and oil products being exported.

The full scope of China’s natural gas reserves remains to be determined, with confirmed reserves at about 42 trillion cubic feet and estimates reaching up to 187 trillion cubic feet. Exploration activities for natural gas have been on the rise, with Sichuan province accounting for nearly half of the known reserves and output. Additional natural gas is sourced from associated gas in the Northeast’s oil fields, particularly Daqing, with other deposits discovered in Inner Mongolia, the Qaidam Basin, Shaanxi, Hebei, Jiangsu, Shanghai, Zhejiang, and offshore near Hainan Island.

China’s iron ore reserves are widespread, with the richest deposits in Hainan, Gansu, Guizhou, southern Sichuan, and Guangdong. The largest reserves are situated north of the Yangtze River, serving the regional iron and steel industries. The country is well-endowed with various ferroalloys and manganese, barring a few exceptions such as nickel, chromium, and cobalt. Tungsten reserves are known to be sizeable. Copper resources are moderate, with high-quality deposits being relatively scarce, though notable findings have been made in the Ningxia Hui Autonomous Region. Lead, zinc, and bauxite are accessible, with China boasting the world’s largest reserves of antimony. Tin resources are abundant, and the nation has considerable gold deposits. Phosphate rock is found in multiple locations, with significant pyrite reserves located in Liaoning, Hebei, Shandong, and Shanxi. Additionally, China possesses extensive resources of fluorite (fluorspar), gypsum, asbestos, and cement.

China also produces a diverse array of nonmetallic minerals, with salt being one of the most crucial, harvested from coastal evaporation sites in Jiangsu, Hebei, Shandong, and Liaoning, as well as from the extensive salt fields of Sichuan, Ningxia, and the Qaidam Basin.

Hydroelectric potential

China’s expansive network of rivers and its varied topography present significant opportunities for the generation of hydroelectric energy. A considerable portion of China’s hydroelectric capabilities is concentrated in the southwestern regions, particularly in the provinces of Sichuan, Yunnan, Tibet, and Hubei. These areas are characterized by limited coal reserves yet face increasing energy demands. In contrast, the hydroelectric potential in the northeastern region is relatively modest. Notably, it was in this region that the earliest hydroelectric facilities were established, initially by Japanese efforts.

The operational efficiency of hydroelectric stations in China is subject to seasonal variations in precipitation. During the winter months, there is a marked decrease in river flow, which often necessitates that power stations function below their optimal capacity. Conversely, the summer season can bring about flooding, which poses challenges to hydroelectric production.

One of the most ambitious hydroelectric initiatives in China is the Three Gorges project, situated on the Yangtze River to the east of Chongqing. This project, which includes the construction of a substantial dam and reservoir, commenced partial hydroelectric generation in 2003 and achieved its full designed generating capacity by the year 2012.

Energy production

Since 1980, China has experienced a significant surge in energy production, yet it consistently struggles to meet the escalating demand. This shortfall can be attributed in part to historically low energy prices, which provided minimal motivation for industries to engage in conservation efforts. Nonetheless, the gap between supply and demand has widened over time. The logistical challenges of transporting fuel, particularly coal, from production sites to areas of consumption have further compounded the issue. Coal remains the predominant source of energy in China, accounting for approximately two-thirds of consumption, although its dominance is gradually diminishing.

The growth in petroleum production, which saw a notable increase from a very low starting point in the early 1960s, has slowed since 1980. Meanwhile, natural gas, despite representing a smaller portion of the energy mix, is on the rise and is increasingly replacing coal for residential use in major urban centers.

China’s capacity for electricity generation has undergone remarkable growth since 1980, with a significant portion now dedicated to residential use. Thermal power plants are responsible for generating around eighty percent of the electricity, while hydroelectric power accounts for the majority of the remainder. Nuclear energy contributes a minimal amount to the national grid, with operational plants primarily situated near Shanghai and Guangzhou.

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