Power Cuts Hit China’s Economy and The Global Supply Chain | Why Is China Facing Power Shortage?

Power Cuts Hit China’s Economy and The Global Supply Chain | Why Is China Facing Power Shortage?

Power Cuts Hit China’s Economy and The Global Supply Chain | Why Is China Facing Power Shortage?

Since late July this year, 16 of China's 31 provinces, ranging from the industrial hub of Guangdong in the south to the "rust belt" of the northeast, have introduced power usage restrictions. It has been reported that even the two largest cities-- Beijing and Shanghai have not escaped from this "disaster." However, the power departments of the two cities have claimed that the power outage is due to scheduled routine maintenance. Such extensive power outages, not only introduced chaos in the country's industrial sector but also caused serious disruptions to people's daily lives. Northeast China is one of the regions with the most severe power restrictions. Since September 23rd, not only has electricity been restricted for businesses, but also for residents. Because of the power outage, residents' water supply has also been stopped, elevators in high-rise apartments are out of service, and cell phones have no signal. Some people couldn’t have dinner for two days, some people were trapped in elevators because of the sudden power outage, and a pregnant woman climbed 24 floors to go home...... The massive power cuts have not only affected people's normal lives but have had a serious impact on the Chinese economy and global markets. The three main industrial provinces of Jiangsu, Zhejiang, and Guangdong, which account for nearly one-third of China's total GDP, are the main areas where electricity supply is restricted. Guangdong Province has been implementing an "open two days, close five days" power supply schedule since September 18. Jiangsu Province also introduced electricity restrictions in some areas. Zhejiang Province requires the high energy-consuming enterprises to reduce electricity consumption immediately, all local governments should ensure that these enterprises stop production until the end of the month. Under the government's strong implementation of the policy of "dual control of energy consumption and intensity", the industries and regions affected are still expanding. Nomura Holdings analysts warned that China's economy will shrink in this quarter. The current market is mainly focusing on Evergrande's financial turmoil and Beijing's control of the real estate industry, the impact of electricity restrictions may be underestimated or even ignored, but "electricity restrictions" will indeed have a serious impact on the economy. Nomura also pointed out that China's power restrictions will further disrupt the global supply chain, which will soon feel the supply pressure from textiles, toys, to machine parts and other categories. Why did the Chinese Communist authorities cut off electricity at this time? According to mainland media reports, the main reason for the power outage was that the "dual control of energy consumption and intensity" target was not fulfilled well in the first half of 2021. Local governments decided to launch a surprise operation in order to complete the task. "Dual control of energy consumption" was introduced at the Fifth Plenary Session of the 18th Central Committee of the CCP in 2015. #Chinapoweroutage#powercut#chinaPowerCrisis#chinaeconomy