In recent years, the US has received widespread attention for its success at the large-scale exploitation and commercial application of shale gas, inspiring worldwide enthusiasm for shale gas development.

Since 2012, China has been rapidly relaxing restrictions on shale gas development. It has also created a series of ambitious plans to stimulate development of the energy source.

Shale gas is a highly efficient and relatively clean fossil fuel. China can improve its energy security by exploiting and utilizing shale gas to make itself less dependant on imported sources of energy.

Shale gas can also help China create a greener economy by providing a substitute to coal, which would in turn reduce greenhouse gas emissions.

China is rich in shale gas resources. It has the world's largest recoverable reserve of 31.6 trillion cubic meters, accounting for 14.3 percent of the total globe shale gas reserves, according to a 2011 survey by the US Energy Information Administration.

China has a lot of incentives to exploit shale gas, but the Chinese government also needs to realize that the country has a long way to go before it can achieve large-scale commercial exploitation and utilization of shale gas.

First, the government needs to facilitate technological innovation in the field, specifically to reduce the amount of water needed to exploit shale gas.

Second, the government ought to take measures to protect the property rights of private enterprises to encourage them to invest and develop shale gas resources.

Third, it has to accelerate the construction of gas pipelines and establish a pipeline transportation system that is equally available to State-owned, private and foreign enterprises.

The author is Lin Boqiang, associate dean of Newhuadu Business School.