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Thread: China is facing its worst power shortage in a decade. That's a problem for the whole world

  1. #1

    China is facing its worst power shortage in a decade. That's a problem for the whole world

    Hong Kong(CNN Business)China is in the middle of a huge power crunch as extreme weather, surging demand for energy and strict limits on coal usage deliver a triple blow to the nation's electricity grid. It's a problem that could last for months, straining the country's economic recovery and weighing on global trade.

    Several Chinese provinces have said they are facing a power crunch in recent weeks, including some of the country's most important engines for economic growth.

    Guangdong province — a manufacturing center responsible for $1.7 trillion, or more than 10%, of China's annual economic output and a bigger share of its foreign trade — has been rationing power for over a month. The restrictions have forced companies across the province to shut down for a few days per week. Some local authorities are warning that power rationing could last through the end of the year...

    The shortages could deliver a one-two punch that may knock China's fragile recovery off course, while spelling further trouble for global supply chains that are already struggling to cope.

    "The power rationing will inevitably hurt the economy," said Yan Qin, lead carbon analyst for Refinitiv.

    A shortage of electricity could reduce output across virtually every sector of the economy, including key construction and manufacturing industries. Such businesses used nearly 70% of China's electricity last year, according to the National Bureau of Statistics, and have been major drivers of the recovery in 2021.

    Guangdong-based Chengde New Material, one of the country's largest stainless steel producers, told clients late last month that it would shut operations for two days per week until power no longer needs to be rationed. The company expects production volumes to decline by 20%, or as much as 10,000 tons of steel per month...

    China has also struggled to shore up overseas supply. Coal is really expensive to import, according to Eurasia Group's Gloystein, who said that prices have more than doubled in the last year.

    Gloystein also pointed out that trade tensions with Australia — which in 2019 was responsible for nearly 60% of China's thermal coal imports — have created a strain. Beijing imposed trade barriers against Australian coal last year after Canberra called for an independent investigation into the origins of Covid-19.

    Since then, China has imported more coal from Indonesia and South Africa to make up for the deficit, but that hasn't filled the gap.

    "This has left some Chinese utilities short of fuel for their power stations," Gloystein said, adding that it's tough to get extra supply on short notice from places like Indonesia...

    China is facing its worst power shortage in a decade. That's a problem for the whole world - CNN

  2. #2
    I can hear AOC cheering this.

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