The State Reform and Development Commission (SRDC) expects coal shortages to take the place of electricity shortages this year as the biggest challenge to China's economy.

The commission's deputy secretary-general, Cao Yushu, said at a regular news conference in Beijing on Thursday, "China faces overall power shortages of coal, oil and electricity, of which coal shortages will be the first concern."

Coal production exceeded 1.9 billion tons last year, a 15 percent year-on-year increase. However, supply continues to fail to meet demand. By the end of December, power stations had stocked up only 10.99 million tons of coal, 1.12 million tons less than the previous month, according to SRDC.

Zhu Hongren, another SRDC official, predicted that demand for coal in 2005 will climb to more than 2 billion tons, half of which will be for power generation.

But most coal mines across the country are worked to capacity already, making safety and production growth even more difficult, Zhu said.

Supply and demand of coal, oil and electricity will be mainly dependent on companies, which Cao said are subject to market forces.

He said the government only plays a role in supporting the construction of large coal bases, exploring more coal transportation lines and upgrading mining facilities to ensure safety.

(Xinhua News Agency January 28, 2005)