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Oliver, head of UBS’s Asian equities investment research team, predicts that China’s demand for energy will maintain a high growth rate in 2008, at around 12.5%, although this will be lower than the 15% rate seen in the previous year. He believes that Chinese power companies will face significant development opportunities this year, with substantial increases in profits, though the pressure to boost profit margins remains high. Oliver recently released a research report titled \"China’s Energy Sector – Ongoing Operational and Cost Pressures,\" stating that the additional capacity added to Chinese power plants this year will remain at a relatively high level, at 85,000 megawatts, which is less than the 91,000 megawatts of new capacity added last year ； However, a notable phenomenon is that in some provinces, power plants are facing dual pressures: on one hand, rising coal prices are squeezing their profit margins, and on the other hand, their capacity utilization rates may be declining. O’Leary said that for most power plants in China, 2008 will present the challenge of high coal prices, with contract coal prices likely to rise by 10% in 2008 compared to 2007. This is because, on the one hand, there is a shortage in coal supply, and on the other hand, the related infrastructure for coal extraction and transportation also represents a bottleneck. Statistical data show that in recent years, the proportion of coal prices in the cost of electricity has been increasing. Therefore, the future operational performance of power plants in China depends to a large extent on whether electricity prices can be raised. O’Leary said that, under the current circumstances, China is facing significant inflation pressures, **and has also announced that electricity prices cannot be raised arbitrarily. As inflation in China is expected to gradually decline starting from the first quarter of this year, electricity prices might see an increase of around 3% at an appropriate time; of course, this still depends on the specific trend of inflation in China. UBS’ report also found that under the current circumstances, due to the inability to raise electricity prices, power plant profit margins have declined significantly, with the asset turnover rate reaching a new low in a decade. Therefore, the coal supply bottleneck faced by Chinese power plants cannot be resolved in the short term. According to UBS’s more conservative estimates, China’s demand for coal will rise from 1.7 billion tons in 2006 to 4.3 billion tons by 2020. By 2020, China will import 230 million tons of coal, reaching a very high level.