China’s sprawling power crisis has engulfed Beijing, as two-thirds of the country’s provinces also ration power, plunging hundreds of millions of people into rolling blackouts.
- Experts say coal prices and the CCP’s emissions policy is driving the power shortages
- Beijing is scheduled to have power cuts in the lead up to Golden Week
- Apple and Tesla’s component manufacturers have also been impacted by the power problems
The energy supply problem has been put down to a mix of factors, including the price of coal and China’s ambitious carbon emission plan.
It’s led to factory shutdowns and suspensions, and has been impacting tech firms like Apple and Tesla.
The energy supply crisis has hit right before Golden Week — one of the biggest national holidays in China, which starts on October 1.
So far, 20 of China’s 31 provinces have reportedly had to intermittently cut power, and China’s State Grid Corp has issued a power rationing plan for the Chinese capital.
As a result, most of Beijing’s districts will face scheduled power cuts from September 27 to 30, right at the time of one of the world’s biggest internal migrations.
Last year, about 637 million Chinese tourists travelled around the country during the October Golden Week.
And with some Chinese media reporting that coal prices in China would not fall soon, the power shortage may be intensified in the near future.
Shortage spreads from industry into homes
The power problems have been slowing the supply chains of some of the world’s biggest tech firms.
Eson, a key supplier of mechanical parts to Apple and Tesla, said last Sunday it had suspended its operation in Kunshan city, Jiangsu province, from September 26 to October 1 in response to the city’s industrial electricity rationing.
Apple may face more issues due to the power shortage, as its printed circuit board supplier Unimicron and speaker parts supplier Concraft were also idle for at least a week.
In Liaoning province, in north-east China, 23 people in a metal casting factory were hospitalised with gas poisoning due to malfunctioning ventilation caused by the power outage.
Yang Li* runs an electronic components factory in Dongguan city in Guangdong province — one of the biggest manufacturing powerhouses in China.
He is worried he could lose a third of orders he was set to manufacture, due to the country’s widespread power outages.
Most of his clients are home appliance manufacturers and usually work around the clock.
But with the recent power supply problems, Mr Yang said the production capacity had been reduced by one-third.
According to a notice from the Dongguan electricity bureau, the restrictive measures, which took effect on September 24, apply different limitations depending on the hour.
It said all factories needed to limit their electrical load by up to 94.5kW from 8:00am to 12:00am, which was equal to 15 per cent of regular consumption.
In order to cope with the power crisis, Mr Yang has rearranged the roster to staff the night shift.
It’s not only manufacturers that have been affected.
Liaoning has expanded power cuts to residential areas.
Locals in the provincial capital of Shenyang have complained about the power shortage, and have been sharing photos of a massive blackout on social media.
A local resident told the media the outage had happened “suddenly” and lasted 7 hours.
“Restaurants and hotels have no power. We have a lot of workers here, and they don’t even have a place to have dinner.”
Dr Wei Li, a leading China economy researcher at the University of Sydney, told the ABC China faced huge power shortage challenges as “a strict limit on coal usage, surging coal prices, and extreme weather conditions continue”.
The cost of China’s new carbon policy
It’s believed the power shortage was partly due to local authorities echoing Chinese President Xi Jinping’s push for “CO2 emissions [to] peak before 2030 and [to] achieve carbon neutrality before 2060” by reducing coal power consumption.
These new climate change goals have been called “double carbon policy”, and it’s become one of the key performance evaluation criteria for government officials.
“Some Guangdong provincial government officials had been summoned to Beijing and warned for failing to achieve the carbon control goals,” Associate Professor Tang Kai, an expert on China’s carbon and energy policy at Guangdong University of Foreign Studies, told the ABC.
“For the local authorities, limiting electricity consumption is the fastest way to curb the carbon emission in the short term,” he said.
Dr Tang stressed that it was important to understand the significance of China’s new “double carbon policy” in the scope of international relations.
“China, especially the country’s top leader, genuinely means to achieve it,” he said.
Australian coal ban is not the reason
Apart from “double carbon policy” requirements, tightening coal supplies has also contributed to the power shortages.
China has placed an unofficial ban on Australian coal imports for months amid escalating trade tensions between the two countries.
However, Dr Tang said China’s coal mining industry, based in the northern provinces of Shanxi and Inner Mongolia, was also under carbon policy restrictions and had been constraining coal supplies.
“The shortage of coal supply has limited relations with the ban on Australian coal,” Dr Tang said.
“China has produced nearly 3.9 billion tons of coal on its own while purchased merely more than 300 million tons from overseas.
“China’s coal-fired power stations are mainly using domestic coal rather than imported.”
Price, rather than supply, has been more crucial to the ongoing power supply problems.
“The power plants reduced their electricity production because of the soaring coal price,” Dr Tang said.
A wake-up call for China’s industrial transformation
Experts believe the power crisis may accelerate China’s industrial transformation, from low-end, high-emission sectors to more green and high-tech sectors.
Mr Xi addressed the country’s ambition in a speech at the UN and put it into the five-year plan, the most important strategic development plan for the Chinese Communist Party.
“The recent power shortage crisis will put pressure on companies in energy-intensive industries, including pulp and paper, metals, cement, chemicals and refining, and iron and steel,” Dr Li told the ABC.
Professor David Goodman, the Director of the China Studies Centre at the University of Sydney, said China was not alone in “taking this path to the post-carbon neutral era”.
“If the push is to meet the needs of restricting climate disaster, then party-state action will push in that direction,” he said.
“Such government action is sometimes easier to bring about in that kind of a political system than in a liberal democracy.”
Due to the energy shortages and deep industrial output cuts adding “significant downside pressures”, Goldman Sachs has cut China’s economic growth forecast for 2021 to 7.8 per cent, down from 8.2 per cent.
*Names have been changed to protect identities.