Reforming China’s Power Sector: In the Middle of the River by

China's power sector has experienced unprecedented growth during the past three decades. This paper examines three major phases of reform from 1985 to 2008 that contributed to this growth. Before 1980, electricity was largely considered a social service. Investments were fully funded through budget allocations and the sector was administratively controlled by the government. Economic reforms in 1978, however, fueled GDP growth which, in turn, induced a surge in electricity demand that the power sector struggled to meet. The first wave of electricity reforms in the mid-1980s were designed gradually to mobilize investment funds to alleviate power shortages. These reforms included a shift from funding the development of the sector through budget allocations to equity and debt obligations incurred directly by power companies and experimentation with foreign investment through joint ventures. A new phase of reforms commenced in 1996 with the adoption of the Electricity Law. The law, which was designed to reconfigure the power sector with a socialist market economy and to protect consumers, defined the rights and responsibilities of power enterprises and established provincial power companies as "single buyers". Though these reforms increased th