• Power Outages Hit China, Threatening the Economy and Christmas

    From (David P.)@21:1/5 to All on Thu Oct 7 10:43:15 2021
    Power Outages Hit China, Threatening the Economy and Christmas
    By Keith Bradsher, 9/27/21, NY Times

    DONGGUAN, China — Power cuts & even blackouts have slowed
    or closed factories across China in recent days, adding a
    new threat to the country’s slowing economy & potentially
    further snarling global supply chains ahead of the busy
    Christmas shopping season in the West.

    The outages have rippled across most of eastern China,
    where the bulk of the population lives & works. Some building
    managers have turned off elevators. Some municipal pumping
    stations have shut down, prompting one town to urge residents
    to store extra water for the next several months, though
    it later withdrew the advice.

    There are several reasons electricity is suddenly in short
    supply in much of China. More regions of the world are
    reopening after pandemic-induced lockdowns, greatly increasing
    demand for China’s electricity-hungry export factories.

    Export demand for aluminum, one of the most energy-intensive
    products, has been strong. Demand has also been robust for
    steel & cement, central to China’s vast construction programs.

    As electricity demand has risen, it has also pushed up the
    price of coal to generate that electricity. But Chinese
    regulators have not let utilities raise rates enough to
    cover the rising cost of coal. So the utilities have been
    slow to operate their power plants for more hours.

    In the city of Dongguan, a major manufacturing hub near
    Hong Kong, a shoe factory that employs 300 workers rented
    a generator last week for $10,000 a month to ensure that
    work could continue. Between the rental costs & the diesel
    fuel for powering it, electricity is now twice as expensive
    as when the factory was simply tapping the grid.

    “This year is the worst year since we opened the factory
    nearly 20 years ago,” said Jack Tang, the factory’s GM.
    Economists predicted that production interruptions at
    Chinese factories would make it harder for many stores in
    the West to restock empty shelves and could contribute to
    inflation in the coming months.

    3 publicly traded Taiwanese electronics companies, including
    two suppliers to Apple and one to Tesla, issued statements
    on Sunday night warning that their factories were among
    those affected. Apple had no immediate comment, while Tesla
    did not respond to a request for comment.

    It isn't clear how long the power crunch will last. Experts
    in China predicted that officials would compensate by
    steering electricity away from energy-intensive heavy
    industries like steel, cement and aluminum, and said that
    might fix the problem.

    State Grid, the govt-run power distributor, said in a
    statement on Monday that it would guarantee supplies “and
    resolutely maintain the bottom line of people’s
    livelihoods, development and safety.”

    Still, nationwide power shortages have prompted economists
    to reduce their estimates for China’s growth this year.
    Nomura, a Japanese financial institution, cut its forecast
    for economic expansion in the last three months of this year
    to 3%, from 4.4%.

    The electricity shortage is starting to make supply chain
    problems worse. The sudden restart of the world economy has
    led to shortages of key components like computer chips & has
    helped provoke a mix-up in global shipping lines, putting
    in the wrong places too many containers and the ships that
    carry them.

    Power supplies are little different. Compared with last
    year, electricity demand is growing this year in China at
    nearly twice its usual annual pace. Swelling orders for
    the smartphones, appliances, exercise equipment and other
    manufactured goods that China’s factories churn out has
    driven the rise.

    China’s power problems are contributing in some part to
    higher prices elsewhere, like in Europe. Experts said a
    surge in prices in China had drawn energy distributors to
    send ships laden with liquefied natural gas to Chinese
    ports, leaving others to scurry for further sources. But
    the bulk of China’s power problems are unique to the country.

    2/3 of China’s electricity comes from burning coal, which
    Beijing is trying to curb to address climate change. Coal
    prices have surged along with demand. But because the govt
    keeps electricity prices low, particularly in residential
    areas, use by homes and businesses has climbed regardless.

    Faced with losing more money with each additional ton of
    coal they burn, some power plants have closed for maintenance
    in recent weeks, saying this was needed for safety reasons.
    Many other power plants have been operating below full
    capacity, and have been leery of increasing generation when
    that would mean losing more money, said Lin Boqiang, dean
    of the China Inst. for Energy Policy Studies at Xiamen U.

    China’s main economic planning agency, the National Develop-
    ment and Reform Commission, also ordered 20 large cities &
    provinces in late August to reduce energy consumption for
    the rest of the year. The regulators cited a need to make
    sure that the cities & provinces met full-year targets set
    by Beijing for their CO2 emissions from the burning of
    fossil fuels.

    Besides coal, hydroelectric dams supply much of the rest
    of China’s power, while wind turbines, solar panels and
    nuclear power plants play a growing role.

    China’s difficulty in keeping the lights on & the faucets
    running poses a challenge for Xi Jinping, the country’s
    top leader, & the Chinese Communist Party. They have taken
    a triumphalist stance this year, emphasizing China’s success
    in quickly eliminating outbreaks of the coronavirus & in
    winning the release of a senior Huawei executive, Meng
    Wanzhou, in a dispute with the United States and Canada.

    But Xi risks getting tagged for problems as well as
    successes. He has moved strongly to quell any opposition
    within the Communist Party and has extended its reach into
    more sectors of Chinese life. If people in China begin to
    point fingers, there are few others to blame.

    China’s economic rebound from the coronavirus has been
    driven in large part by heavy investment in infrastructure
    as well as the rise in exports. Overall industrial use
    consumes 70% of the electricity in China, led by the mostly
    state-owned producers of steel, cement and aluminum.

    “If those guys produce more, it has a huge impact on
    electricity demand,” Professor Lin said, adding that China’s
    economic minders would order those three industrial users
    to ease back.

    Disruptions from power shortages have already been felt in
    Dongguan, at the heart of China’s southern manufacturing
    belt. Its factories produce everything from electronics &
    toys to sweaters.

    The local power transmission authority in Houjie, a township
    in NW Dongguan, issued an order shutting off electricity to
    many factories from Wed thru Sun. On Monday morning, the
    suspension in industrial electricity service was extended
    at least thru Tues night.


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