![]() That included Guangdong province in southern China, a major factory hub where one wood mill recently lowered capacity by more than half because of power limits, according to the Global Times.Īnother 10 provinces - including Heilongjiang and Liaoning - did not meet energy requirements, the NDRC said in its August announcement. Nine of China’s nearly three dozen provinces and regions increased energy intensity in the first half of the year, according to the agency. In August, China’s National Development and Reform Commission (NDRC) called out nearly every major Chinese region and told them to curb or monitor their energy consumption and intensity through the rest of the year. Hu pointed out that the Chinese government is targeting a 3% drop in “energy intensity” per unit of GDP this year. Perhaps the biggest contributing factor, according to several analysts, is the drive to meet President Xi Jinping’s goal for a carbon neutral China by 2060. It doesn’t help that trade tensions with Australia have caused China to put up barriers to importing coal from that country. Hu pointed out that the price of thermal coal - which is primarily used to generate power - has surged this year from 671 yuan ($104) per ton to roughly 1,100 yuan ($170). The post-pandemic commodities boom and ambitious climate targets, meanwhile, have driven coal prices sky high, given the increase in demand and decrease in mining. “Unfortunately, the energy intensity in the industry sector is much higher than that in the consumption sector.” “The economy is much more driven by the industrial sector than the consumption sector,” wrote Macquarie economist Larry Hu in a Monday research note. The agency said that was the fastest rate of growth in more than a decade. The focus on infrastructure and construction pushed China’s carbon emissions to record highs in the first quarter of 2021, according to research released in May from the Centre for Research on Energy and Clean Air (CREA). The acute shortages in parts of the northeast will “continue for some time,” reported state broadcaster CCTV.Ĭhina pulled itself out of the pandemic slump largely thanks to a boom in construction and manufacturing: But real estate projects and factories require a ton of power to operate, and thus massive amounts of coal. This summer, several Chinese provinces warned of shortages in what was then country’s worst power crunch since 2011.īut the latest reports are even more concerning. ![]() They noted “considerable uncertainty” headed into the final quarter of the year, given that the Chinese economy already faces risks because of the debt crisis at Evergrande - the embattled conglomerate that has sparked fears among some analysts of a potential Lehman Brothers moment for China.Įnergy supply problems aren’t new for China. ![]() The shock is even prompting economists to cut growth expectations this year for the world’s second largest economy.Īnalysts at Nomura trimmed their forecast for Chinese growth in 2021 by half a percentage point to 7.7% on Friday, citing the “rising number of factories” that have had to “cease operations,” either because of local energy consumption mandates or power outages due to rising coal prices and shortages.Īnalysts at Goldman Sachs followed on Tuesday, cutting their 2021 GDP growth forecast to 7.8% from 8.2%, citing “recent sharp cuts to production in a range of high-energy intensity industries.” “Which still is manageable, but it’s a delay.” There is “probably some delay of the components for a week or so,” Gai said. Outages in areas where smartphone modules are typically assembled could lead to some short-term delays. Power rationing could create new headaches for the tech supply chain, according to Dale Gai, a director at Counterpoint Research, although likely not as severe as the worldwide shortage of computer chips that has hammered everything from cars and washing machines to other electronics.
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