For more than a decade, Nobel laureate George Olah and coworkers have advocated the Methanol Economy - replacing petroleum-based fuels and chemicals with methanol and methanol-derivatives - as a path to sustainable development. A first step to this vision appears to be occurring in China. In the past five years, China has quickly built an industry of coal-based methanol and dimethyl ether (DME) that is competitive in price with petroleum-based fuels. Methanol fuels offer many advantages, including a high octane rating and cleaner-burning properties than gasoline. Methanol also has some disadvantages. A coal-based Methanol Economy could enhance water shortages in China, increase net carbon dioxide emissions, and add volatility to regional and global coal prices. China's rapidly expanding Methanol Economy provides an interesting experiment for what could happen elsewhere if methanol is widely adopted, as proposed by Olah and researchers before him. (C) 2011 Elsevier Ltd. All rights reserved.