China power cuts hit homes, factories; threatens growth

China power cuts

Northeastern China is experiencing power cuts because of coal shortages and the tightening of emissions standards.

The power cuts have hit millions of homes in China and halted production at factories, including some supplying Apple and Tesla.

“Power cuts eight times a day, four days in a row … I’m speechless,” wrote one frustrated user from Liaoning.

Another complained that malls were shutting early and a convenience store was using candlelight. “It’s like living in North Korea,” they wrote.

Footage on local media Beijing News shows cars travelling on a busy highway in the city of Shenyang in complete darkness without traffic lights or street lamps.

Nearly 60% of the Chinese economy is powered by coal. However, supply has been disrupted by the pandemic, put under pressure by tough emissions targets and squeezed by a drop in coal imports amid a trade tiff with Australia.

Several key Apple and Tesla suppliers said they had halted production on Sunday at some of their Chinese facilities to comply with the country’s tighter energy consumption policy.

Apple supplier Unimicron Technology said factories in two regions were told to stop production from Sep 26 for five days.

It did not expect a major impact, adding that other factories would make up production, the company said in a statement late on Sunday.

Earlier this month, coal prices hit a record high, with restrictions imposed on businesses and homes amid the supply crunch.

Still, China’s power demand in the first half of the year exceeded pre-pandemic levels, according to the National Energy Administration.

Analysts at Nomura said on Sep 27 that many factories had been forced to cease operations due to either government mandates to meet carbon targets or surging prices and coal shortages. As a result, it cut its annual GDP growth forecast to 7.7%.

As a result of the cuts, Goldman Sachs lowered its annual economic growth forecast for the world’s most populous country.

The investment bank said it expects growth to drop to 7.8% from 8.2%. It cited power cuts that led heavy industries to cut output, leading to “significant downside pressures”.

According to Bloomberg Intelligence, at least 17 provinces and regions – accounting for 66% of the country’s gross domestic product – have announced some form of power cuts in recent months. The cuts mainly targeted heavy industrial users.


Additional reading

News category: World.

Tags: ,