Rising Blackout in China Threatens Economic Growth

In the past, China has failed to match electricity supply with demand, putting several of the country's provinces at risk of power disruptions.

Demand for Chinese goods is increasing as the world begins to reopen following the pandemic, and the companies that produce them require a lot more power.

Beijing's rules, aimed at making the country carbon neutral by 2060, have slowed coal production, despite the fact that coal still provides more than half of the country's electricity.

As the need for power has grown, so has the price of coal.

However, because electricity rates are tightly controlled by the government, coal-fired power plants are unwilling to operate at a loss, and many have severely reduced their output instead.

Factories in China's busiest industrial areas have been told to shut down for up to a week. Urban areas are now being blacked out, prompting social media requests for the government to address the issue.

As much of the country enforced power cuts Wednesday to fulfill state conservation objectives and ease shortages in some places, people in northeastern China ate breakfast by the light of their cellphones while merchants turned on generators.

The proprietor of a noodle shop, Li, gave a reporter a social media notification announcing that power will be off in his neighbourhood from 7:30 a.m. until 4:30 p.m.

As diners ate by the light of their smartphones, Li observed, “There are some repercussions, but not a significant impact.”

Yang Chang, the shopkeeper, had a generator running on the pavement to keep the meat freezers cold.

“Unlike restaurants, we can sell products as long as there is electricity,” Yang explained. Yang didn't know or care why the power was out, but he did say, "It's understandable."

“I was born in the 1990s,” she says. “Electricity wasn't stable when I was a kid,” Yang explained. “The government will find a solution, notwithstanding our difficulties.”

Meanwhile, factories in China's busiest manufacturing areas have been told to shut down for up to a week, raising fears that global supplies of smartphones and other items would be interrupted. Urban areas are now being blacked out, prompting social media requests for the government to address the issue.

China's electricity consumption is nearly double, despite the Communist Party's efforts to lower energy intensity, or the amount of energy utilised per unit of economic production.

The power outages occur as world leaders prepare to participate in a UN environmental meeting via video link on October 12-13 in Kunming, China's southwestern city. As the meeting's host, President Xi Jinping's government will be under even more pressure to demonstrate compliance with emissions and energy efficiency standards.

The power outages "may be more disruptive than prior shortages," according to a research by Bank of America. "A relaxation of the government's energy consumption goals may not immediately alleviate the power bottleneck," it warned, citing power shortages in some locations.

China is one of the world's largest emitters of climate-changing industrial gases and consumes more energy per unit of GDP than industrialised countries. Given its massive population, it scores far lower on a per capita basis.

China is also preparing for the Winter Olympics, which will be held in the capital, Beijing, and the nearby city of Shijiazhuang in February.

Officials in Jiangsu province, northwest of Shanghai, informed state media that some cities in the region have used up 90 percent of this year's electricity quota. Individual local governments must decide how to meet their targets, according to authorities from the provincial planning office.

The administration of Guangdong province, China's largest manufacturing centre, has cited both official energy use limits and low water levels in hydropower reservoirs that supply a large portion of the region's electricity as reasons for the shortage.

Another reason China is running out of power is that it has placed severe restrictions on imports from Australia because Australia supported a call for a global investigation into China's handling of Covid-19 early on.

Since then, Beijing has imposed a slew of limitations on Australian imports, ranging from tariffs to various bans and restrictions. This has had an impact on Australian products such as barley, wine, meat, cotton, and coal.