China’s electricity crisis hinders economic growth

Beijing [China], Oct 10 (ANI): China, the world’s largest manufacturing nation, faces an electricity crisis, forcing factories to cut operations, reduce energy use and lead to blackouts in some provinces, according to media reports.

Millions of people are affected by what is considered one of the country’s worst energy crises. The Hong Kong Post reported that 20 of a total of 31 provinces are implementing energy rationing, putting the industrial sector of the world’s second-largest economy in dire straits.

Experts believe the problem arose due to the expected rebound in electricity demand from Chinese factories after a COVID-19 crisis.

The immediate cause is that China is still heavily dependent on coal, which provides 70 percent of the country’s electricity generation, Foreign Policy magazine reported.

However, the foreign policy report noted that the reasons for the crisis can also be attributed to a series of political missteps and ill-conceived market interventions after the start of the pandemic.

The energy crisis in China led to a drop in industrial production in September for the first time since China began to recover from lockdowns from COVID-19.

At the end of September, the country’s manufacturing powerhouse, Guangdong Province, announced that it would widen the “peak to valley” price difference and increase peak electricity prices by 25% for industrial users.

Chinese state media Global Times reported that the electricity shortage threatens to weigh on industrial production in the coming months.

The peak electricity price hike is aimed at industrial users and will not apply to residential electricity consumption, China South Grid said. It comes as the price shift in the economic powerhouse of the south came as an electricity shortage hit China.

The operator of the Chinese power grid has denied the existence of an energy crisis and has promised to modernize the national power grid and ensure normal power supply. The cuts and restrictions have been implemented piecemeal by local governments, often with little warning and little explanation, sparking public anger, Radio Free Asia reported.

“China’s energy supply capacity is currently sufficient to meet demand,” said State Grid Corp. in comments reported by the Global Times. “China does not have an energy crisis,” he said.

Despite China’s denial, major international suppliers are gearing up to impact businesses already facing delays caused by global shipping shortages and delays.

According to media reports, the shock is even leading experts to lower China’s growth expectations.

Meanwhile, some sections of the Chinese media have also called for a balance to be struck between climate goals and allow the electricity crisis to get out of hand. (ANI)

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