Embedded interests and the managerial local state: The political economy of methanol fuel-switching in China

Journal of Contemporary China

Volumn 22, Issue 80, 2013, Pages 204-218

  Kostka, Genia ^a   Hobbs, William ^b  

^a FRANKFURT SCHOOL OF FINANCE AND MANAGEMENT   (Germany)

^b UNIVERSITY OF CALIFORNIA   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ALTERNATIVE FUEL; BUREAUCRACY; INDUSTRIAL DEVELOPMENT; LOCAL GOVERNMENT; METHANOL; POLITICAL ECONOMY; PROFITABILITY;

CHINA;

EID: 84873660229     PISSN: 10670564     EISSN: 14699400     Source Type: Journal    
DOI: 10.1080/10670564.2012.734078     Document Type: Article

References (39)

1. For examples of academic research, see Bo Kong, 'China's energy decision-making: becoming more like the United States?', Journal of Contemporary China 18(62), (2009), pp. 789-812
2. Nan Zhou, Mark D. Levine and Lynn Price, 'Overview of current energy-efficiency policies in China', Energy Policy 38(11), (2010), pp. 1-37.
3. Potential benefits: while not as clean as automobile fuel-switching options like electric, hydrogen, or dimethyl leter, pure methanol fuel (M100) is still cleaner than diesel or gasoline with respect to carbon monoxide and nitrous oxide emissions. Also, emissions from the use of methanol fuel have around half the atmospheric reactivity of those from gasoline which results in less smog.
4. 2 emitted per unit GDP by 40-45% by 2020 compared to its 2005 levels. Also, coal-based methanol is neither as cheap nor as clean as natural gas or natural gas-based methanol.
5. Coal-based blended methanol is created and distributed as follows: first, fertilizer enterprises produce methanol in the process of making fertilizer; this is followed by specialized enterprises mixing methanol with gasoline, followed by distribution at specialized gasoline stations. Methanol automobile fuel can be used as pure methanol (M100) or as mixes of gasoline, additives, and methanol from 5% methanol (M5) up to 85% (M85). M5-M30 are more common as they can be used as fuel in automobiles without significant engine conversions. Both local companies producing and mixing fuel and NOCs are capable of supplying mixed methanol fuel to the public, however, given the supply infrastructure and market dominance of NOCs, oil majors are often the only players which can distribute the fuel on a large scale.
6. See, for example, Shaoguang Wang, 'The rise of the regions: fiscal reform and the decline of central state capacity in China', in Andrew G. Walder, ed., The Waning of the Communist State: Economic Origins of Political Decline in China and Hungary (Berkeley, CA: University of California Press, 1995), pp. 87-113.
7. See, for example, Yasheng Huang, Inflation and Investment Controls in China: The Political Economy of Central-Local Relations during the Reform Era (New York: Cambridge University Press, 1996).
8. John P. Burns, 'Strengthening central CCP control of leadership selection: the 1990 nomenklatura', China Quarterly no. 138, (1994), pp. 458-491.
9. Yumin Sheng, 'Central-provincial relations at the CCP Central Committees: institutions, measurement and empirical trends, 1978-2002', China Quarterly no. 182, (2005), pp. 338-355.
10. For an excellent literature review, see Jae Ho Chung, 'Studies of central-provincial relations in the People's Republic of China: a mid-term appraisal', China Quarterly no. 142, (1995), pp. 487-508.
11. This dynamic is not unique to the methanol fuel industry. Many sub-national governments promote 'local champions' even when sub-national government involvement in an industry would seem frowned upon by central authorities. Anhui Province's Chery Automobile, for example, was initially an illegal enterprise, registered as a 'car parts supplier', due to strict entrance limits in the automobile industry at the time.
12. See Weidong Liu and Henry Wai-chung Yeung, 'China's dynamic industrial sector: the automobile industry', Eurasian Geography and Economics 49(5), (2008), pp. 523-548. Thun writes in depth on the contribution of local government support for automobile industry development in Shanghai, Beijing, Guangzhou, Changchun, and Wuhan.
13. See Eric Thun, Changing Lanes in China: Foreign Direct Investment, Local Governments, and Auto Sector Development (New York: Cambridge University Press, 2006). The case of methanol automobile and fuel promotion differs from these comparisons in that the widespread feasibility of the product (methanol fuel) is currently unknown and sales of the product require the use of potential competitors' distribution infrastructure.
14. China's National 863 Program offers financial support to foster technology innovation in China.
15. Zhigui Peng, 'The new definition, development, and rethinking of methanol fuel industry in China', Paper presented at the 17th International Symposium on Alcohol Fuels, 2008.
16. Zhongguo Huagong Wang [ChemNet], Jiachun Qiche: Zai Zhengce De Miwu Zhong Qianxing [Methanol Automobiles: Moving Forward within the Policies' Fog], available at: http://news.chemnet.com/item/2010-08-17/1400688.html (accessed 17 August 2010).
17. Qijue Chen, 'Zhongshihua Cheng Bu Xiwang Jiachun Qiyou Rushi Jiachun Qiye Zaoyu Jiaji' ['Sinopec states that it does not wish for methanol fuels to enter the market, methanol enterprises encounter attacks from two sides'], Shanghai Zhengquan Bao [Shanghai Securities News], (2 August 2010).
18. Interview 25, July 2010, Shanxi Transportation Methanol Project Office.
19. Interview 70, September 2010, China Association of Alcohol and Ether Clean Fuels and Automobiles.
20. Interview 70, September 2010, China Association of Alcohol and Ether Clean Fuels and Automobiles.
21. Zhongguo Huagong Wang [ChemNet], Jiachun Qiche.
22. Interview 43, July 2010, Methanol Engine Conversion Company.
23. Interviews 38 and 39, July 2010, Yuncheng Economic Commission.
24. Interview 43, July 2010, Methanol Engine Conversion Company.
25. Interview 70, September 2010, China Association of Alcohol and Ether Clean Fuels and Automobiles.
26. Erica S. Downs, 'China's "new" energy administration-China's National Energy Administration will struggle to manage the energy sector effectively', China Business Review, (November-December 2008), pp. 42-45.
27. Ibid.
28. Zhihong Wan, 'Wen heads "super ministry" for energy', China Daily, (28 January 2010), available at: http://www.chinadaily.com.cn/china/2010-01/28/content_9388039.htm (last accessed 23 June 2011).
29. Kong, 'China's energy decision-making'.
30. Interview 70, September 2010, China Association of Alcohol and Ether Clean Fuels and Automobiles.
31. The concept of 'framing' originates from sociological research.
32. See Erving Goffman, Frame Analysis (Cambridge, MA: Harvard University Press, 1974). Frame analysis has been applied to the politics of environmental, energy, and climate change discourse and describes the effectiveness of linguistic 'reframing' of policies in dominating public perceptions of issues.
33. See Maarten Hajer, The Politics of Environmental Discourse. Ecological Modernization and the Policy Process (Oxford: Clarendon Press, 1995).
34. J. Ivan Scrase and David Ockwell, 'The role of discourse and linguistic framing effects in sustaining high carbon energy policy: an accessible introduction', Energy Policy 38(5), (2010).
35. For an example of how local governments reframe energy policy in China, see Genia Kostka and William Hobbs, 'Local energy efficiency policy implementation in China: bridging the gap between national priorities and local interests', China Quarterly 211, (2012), pp. 765-785.
36. Emily Chang, 'Choking in China's polluted city', CNN, (15 December 2009), available at: http://articles.cnn.com/2009-12-15/world/china.pollution_1_coal-mines-polluted-factories?_s=PM:WORLD (accessed 23 June 2011).
37. Interview 7, July 2010, Shanxi Province Environmental Protection Bureau.
38. Interview 38, July 2010, Yuncheng Economic Commission.
39. Methanol is acidic, wearing away the fuel lines of cars without appropriate equipment to handle the fuel, and many consumers believe it to be highly toxic. It is also sometimes hard to start a car running on the mixed methanol fuel in cold conditions.