![]() 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. Pegatron has a big factory in eastern China’s Kunshan city, where Taiwanese media has reported that authorities are limiting electricity supply. Certain northern areas also need to reserve enough coal for the upcoming winter heating season, which is worsening the current shortage.Pegatron - a Taiwanese firm that produces components and assembles iPhones for Apple - said Tuesday that it is cooperating with “local government policies” to “activate energy-saving mechanisms” and adjust its production line, in response to a request from CNN Business for comment about the power crisis. (Factory activity contracted in September for the first time since the start of the Covid pandemic.) China’s coal production grew by 6% in the first eight months this year, but the power output from coal-fired generators surged 14% in the same period, leading to a decline in inventories. Demand for power from Chinese factories soared as orders from overseas mounted, but utilities were unable to buy enough fuel after prices surged. Coal-based producers account for more than 70% of the country’s electricity generation, but Xi’s push to reduce greenhouse gas emissions and go “ carbon neutral” by 2060 has capped the growth of coal mining. ![]() ![]() In China, it’s also partially due to the government’s environmental agenda: President Xi Jinping’s vision of de-carbonizing the economy has discouraged the burning of coal, a cheap energy source that subsidized the country’s growth for decades. Part of the problem is that the economic rebound after Covid lockdowns lifted has boosted demand, while lower investment by miners and drillers has constrained fossil fuel production. The shortages, mirrored in Europe and elsewhere, have roiled commodity markets as well. A power crunch across China has rippled from factory floors to homes, crimping growth forecasts for the world’s second-largest economy.
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