Why does China treat electricity as a public resource rather than a profit center?

Answer

Direct Response

China views energy as the **"currency of industry."** By keeping it a public resource, the government can ensure that electricity prices remain low and stable, which acts as a hidden fuel for manufacturing competitiveness. Munawar notes that the "profit" is not made on the electricity sale itself, but on the resulting **economic dominance**, job creation, and export strength of the industries that use that energy.

Detailed Explanation

The logic follows a "Foundational" economic model:

• Indirect Monetization: If a factory pays less for power, it can hire more workers, export more goods, and pay more taxes. The government recovers the energy "subsidy" through broader economic growth.
• Stability: Public control prevents the wild price swings often seen in deregulated markets, allowing industries to plan their investments with high confidence.
• Industrial Leverage: Low energy costs counteract rising labor costs, allowing China to remain the world's factory even as its middle class expands.

Practical Application

Business leaders should look at energy costs as a primary variable when choosing manufacturing locations. China's model has essentially "codified" cheap energy into its industrial DNA. This is why energy-intensive industries (like steel or silicon wafer production) remain heavily concentrated in China despite logistical challenges.

Expert Insight

"By treating electricity as a strategic public resource rather than a profit center, China has created a sustainable competitive advantage in manufacturing."