Coal Wars Excerpt

shanghai 157

of a sophisticated, centrally governed, technologically advanced society in

China. When China began using coal to make cheap iron in the eleventh

century, . . . coal and iron spurred industrial development on a scale that the

world had never before seen, and would not see again until Britains indus-

trial revolution, writes Barbara Freese in her anthropological history of coal,

Coal: A Human History.12 Abundant energy from coal allowed urbanization

on an unprecedented scale: Kaifeng, the capital of the Northern Song dy-

nasty (9601125), had as many as a million inhabitants at a time when Paris

had fewer than 200,000 souls and London was a muddy settlement of barely

20,000.

By the early twentieth century, the coal industry, though still fragmented,

extended across China. The production and use of coal expanded after the

forced opening of the empire following the Opium Wars of the mid-nineteenth

century. Despite the chaos that engulfed the countryside and the withering of

the central government in the last decades of the Qing dynasty, coal helped

accelerate industrialization: the first railway line officially sanctioned by the

government was built to reach the Kaiping coal mines in Hebei Province. Coal

fueled the railway explosion, funded by European banks, that saw 1,000 miles

of new rail lines laid between 1912 and 1920, stretching from Canton in the

south to Manchuria in the north. Chinas first large-scale industrial complex,

producing iron and steel, was built in the early years of the twentieth century

at the Han-Ye-Ping coal mines in Hubei Province.13

Coal also played a central role in Chinas revolutionary politics. Dur-

ing the Battle of Shanghai, the National Revolutionary Army fought to hold

off imperial Japanese troops in one of the major engagements of the Second

Sino-Japanese War. In the three-month siegewhich ended with the fall of

the city on November 26, 1937the burgeoning Shanghai coal industry

mobilized to aid the soldiers, forming a battlefield rescue operation called

the Shanghai Coal Industry Ambulance Corps. Coal laborers were a major

source of recruits for the Communist Party, and after the fall of Shanghai

dozens of the drivers, along with their vehicles, joined the New Fourth Army,

the fledgling outfit that would become a key unit of the communist Chinese

forces. The coal workers support for the revolution led to a triangular rela-

tionship between coal industry capitalists, the [ambulance] corps itself, and

the Communist army based in the countryside, writes Allison Rottman in

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sarah.becksTypewritten Text






158 Coal Wars

her history of revolutionary Shanghai.14 That relationship helped to shape the

complex dynamics of wartime China as well as the history of Maoist China

after World War II. Like Stalin, who gained fame organizing the oil workers in

Baku, Mao got his start in the energy industry. At the Han-Ye-Ping complex,

where more than 20,000 workers toiled, Mao cut his teeth as a labor orga-

nizer, helping to organize the famous 1922 strike at the Anyuan mine, which

served as a springboard for the revolution.15

Chinas coal wealth formed a key piece of the vast mosaic of conflict that

would coalesce into World War II: energy-poor Japan invaded northern China

in the 1930s in part to seize the rich coal deposits of Manchuria.

After the war, energy from coal helped fuel Maos disastrous economic

experimentsalthough coal shortages became a major factor in the disastrous

attempts at industrial development (including the notorious backyard steel

furnaces that produced useless pig iron rather than steel) during the Great

Leap Forward. Big state-owned mines were established under central plan-

ning, becoming centers not only of industry but housing, education, and ser-

vicesthe coal cities that would dominate economic life in many provinces

well into the twenty-first century.

Once economic reform took hold in the 1980s, the countrys hunger for

coal to produce steel, concrete, and electricity became insatiable. The archi-

tects of reform under paramount leader Deng Xiaoping realized early on that

economic growth depended entirely on abundant supplies of coal. They ad-

opted a policy of unfettered development of large, medium-sized, and small

mines simultaneously. If you had a pickax, a mule, and a cart to load, you

could become a coal miner. Millions did.

In 1987 coal production surpassed 1 billion tons for the first time. From

1980 to 1996, production more than doubled, from 683 million tons to more

than 1.4 billion.16 In the coal-producing regionsthe coal belt that stretches

from Inner Mongolia to Xinjiang in the far west, encompassing the whole of

Shanxi Province in the northmines sprang up with little regard for safety,

the availability of water, transport capability, or environmental consequences.

In truth, by the turn of the twenty-first century the Chinese coal industry had

changed little since before the war. Mechanization had come to the big mines,

but in most mines the work was done mostly by hand, performed by men will-

ing to crawl into dark underground chambers and hack away at the rock face

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shanghai 159

because they had few other options for making a living. Profits were as scarce

as safety: coal industry losses before the reforms of the 1990s stretched into the

hundreds of millions of dollars per year. The five-year plan for 199195 called for

the elimination of 400,000 coal mining jobs, nearly 6 percent of the 7 million

workers in the industry.17 Prime Minister Zhu Rongji, known as One-Chop

Zhu for his ruthless management style, was shown on state TV in 1992 angrily

lecturing coal managers at a large mine in Shanxi Province for their waste and

profligate hiring practices.18 Slowly, the industry was forced to modernize.

At the same time, the State Power Corporationthe state-controlled mo-

nopoly that generated and transmitted electricity in China up through the

reforms of the mid-1990slaunched an astonishing binge of power plant con-

struction that continued through the first decade of the twentieth century.

After the revolution, in which the communists took control of the shat-

tered country after World War II and the civil war that followed, the power

sector in China was small, fragmented, and outdated. Total national capacity

was only 1.85 gigawattsa small fraction of the capacity of, for example, the

state of California at the time.19 Over the next seven decades the country em-

barked on the greatest and fastest expansion of power generation the world has

ever seen. Energy use per capita was far below the world average, to say nothing

of developed countries like the United States; but it began to climb steadily

in the 1980s, finally matching the world average around 2008.20 All of Asia

Pacific accounted for only about 15 percent of total world energy consumption

in 1971; by 2010 that figure had ballooned to 38 percent, driven mostly by

growth in China.21 Total electricity use in China in 1980 was 250 terawatt-

hours, only slightly more than the state of California. By 2010 that number

had ballooned to nearly 4,000 terawatt-hoursalmost as much as the entire

United States consumed.22

Most of that new power came from coal. During the eighth five-year plan,

which ran from 1991 to 1995, total coal production in China grew by 40

million tons a year. Between 1997 and 2005, China added 206 gigawatts of

power generation capacity, or 500 megawattsthe equivalent of a medium-

sized coal-fired power plantevery week.23 These are official figures; the actual

total is probably more, as illicit mines proliferated and many companies set up

their own private coal boilers, off the national grid, to run factories and steel

mills and cement plants.

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160 Coal Wars

By the turn of the twenty-first century, the central government had begun

to realize that the countrys dependence on coal was a devils bargain. With an-

nual production growing at nearly 10 percent a year, officials in Beijing began

a program of closing small mines that managed to reduce production from just

under 1.4 billion tons in 1996 to less than 1 billion in 2000. That proved to

be a pause: the worldwide construction boom of the 2000s fueled a seemingly

limitless expansion of coal. Coal production doubled from 2001 to 2004, reach-

ing 2 billion tons; by 2009 it was 3 billion, still not enough.24 Imports climbed

as well, and in 2007 China, for the first time, became a net importer of coal.25

That same year, China surpassed the United States to become the worlds

largest emitter of carbon dioxide.

chIna Is sTIll growIng at 7 to 8 percent a year, a rate that all of the Western

industrial nations envy. But the model is faltering, and there are increasing

signals that a powerful and unpredictable transition is gathering force.

We have hit the limit of this type of growth, Zou Ji, deputy director of

Chinas National Centre for Climate Change Strategy, told the online news

outlet China Dialogue in 2013.26

In June 2014, the energy information provider Platts reported that Shen-

hua Group, the state-owned coal giant, was pleading with utilities and coal

traders to reduce oversupplies at Shenhua loading facilities.27 For the worlds

largest coal producer, this was an extraordinary development. Created in 1995

by the State Council of the Peoples Republic, Shenhua had grown into a ver-

tically integrated behemoth with interests in not only coal mines, but also

railways, power plants, ports, shipping, and coal liquefaction. Its revenue had

grown in tandem with Chinas booming economy, reaching more than $46

billion in 2013, nearly twice as much as those of Exelon, the largest U.S. utility

in terms of revenue.28 Enjoying deep connections with the Communist Party

leadership and the Peoples Liberation Army, it epitomized the for-profit state

enterprises that dominated Chinese economic life. Even as the coal boom be-

gan to slow, Shenhuas low-cost mines and its sheer scale buffered it from mar-

ket forces that battered other coal companies: its coal sales grew by more than

10 percent in 2013. In 2012, with its fleet of coal-fired plants growing across

the country and its thirst for coal growing faster than its domestic production

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Coal Wars Excerpt