New York, US: Amid the power crisis in China, the factories are forced to reduce operations, some provinces are facing blackouts and there are power cuts in other cities says the media reports.
China’s electricity shortage is testing the nation’s status as the world’s capital for reliable manufacturing and exposing a strategic weakness. According to The New York Times, power shortage has prompted authorities to announce a national rush to mine and burn more coal. Interestingly, this decision has come under the scanner due to previous pledges to curb emissions that cause climate change.
“We will make every effort to increase coal production and supply,” Zhao Chenxin, secretary-general of the National Development and Reform Commission, China’s top economic planning agency, said on Wednesday.
Depending on how much coal can be mined, China’s electricity shortage could call into question whether Beijing can deliver in the coming months the strong economic growth, NYT report said.
As many as 20 of the total 31 provinces are implementing energy-rationing, putting the industry sector of the world’s second-largest economy in a fix. Experts believe that the problem has emerged due to the expected rebound in demand in power from Chinese factories after a COVID-19-led slump.
The NYT report stated that Beijing relies on energy-intensive industries like steel, cement and chemicals to power growth. Ahead of the winter season, China will require to dig up and burn still more coal.
Amid the fast-approaching winter, Beijing must decide whether to allow factories to continue running full-tilt producing industrial materials for global supply chains.
“They have to sacrifice something to make sure households will have heat and power,” said Chen Long, a co-founder and partner of Plenum, a Beijing economics and politics research firm. “They have to cut energy-intensive industries.”
Apart from leaving difficult choices, the electricity crisis has hugely disrupted the industrial supply chain in the country. Media reports say that electricity curtailment in many places in China has caused chaos in the industrial supply chain.
The most prominent example is Yiwu in Zhejiang, which is known as China’s commodities center. It has taken a hit in the e-commerce sector (which is a huge part of China’s economy) due to electricity curtailment, as per reliable sources.
Factories and warehouses are relying on diesel generators which are driving their expenses up, leading to dissatisfaction among the business owners.
According to CNN, power shortages have had forced the Chinese government to ration electricity during peak hours and forcing some factories to suspend production. The report further said that these disruptions resulted in a sharp drop in industrial output last month and weighed on the outlook for China’s economy.