China’s State Grid Corporation said on Monday it would be “fully prepared to fight the uphill battle for power supply” while doing everything possible to secure residential consumption.
China was battling a similar power crisis in June, but the situation is only getting worse due to a perfect storm. Its industries are facing enormous pressure to deal with rising energy prices and carbon emissions from Beijing.
The world’s biggest polluter is trying to fulfill a pledge that its carbon emissions will peak before 2030. This requires its provinces to use less fossil fuels for each unit of economic output, for example by burning less coal to generate electricity. Also, there has been an increase in demand for Chinese-made goods as the global economy emerges from the pandemic. Result: not enough power to spin.
Major international suppliers are gearing up for the impact on businesses already facing shortages and delays caused by global shipping delays.
In areas where smartphone modules are usually assembled, there may be some short-term delays.
“There’s probably some delay in the components for a week or two,” Guy said. “Which is still manageable, but it is getting delayed.”
cut growth forecasts
The setback is also prompting economists to cut growth expectations for the world’s second-largest economy this year.
Analysts at Nomura cut their forecast for Chinese growth in 2021 by half a percentage point to 7.7% on Friday, citing an “increasing number of factories” that have had to “shut down operations”, either through local energy consumption mandates. or due to a power outage. For rising coal prices and shortages.
Analysts at Goldman Sachs on Tuesday cut their 2021 GDP growth forecast to 7.8% from 8.2%, citing “recent sharp cuts in production across a range of high energy intensity industries”.
The focus on infrastructure and construction pushed China’s carbon emissions to a record high in the first quarter of 2021, according to research released in May from the Center for Research on Energy and Clean Air (CREA). The agency said it was the fastest rate of growth in more than a decade.
“The economy is more driven by the industrial sector than the consumption sector,” Macquarie economist Larry Hu wrote in Monday’s research note. “Unfortunately, the energy intensity in the industry sector is much higher than in the consumption sector.”
ambitious climate goals
Hu pointed out that the Chinese government is targeting a 3% drop in “energy intensity” per unit of GDP this year.
In August, China’s National Development and Reform Commission (NDRC) called on nearly every major Chinese sector and asked them to curb or monitor their energy consumption and intensity for the rest of the year.
The NDRC said in its August announcement that another 10 provinces – including Heilongjiang and Liaoning – do not meet energy requirements.
“Beijing’s unprecedented resolve in enforcing energy consumption and intensity limits may result in invaluable long-term benefits, but the short-term costs for both the real economy and financial markets are substantial,” it wrote. Nomura Analysts.
Some Chinese state media outlets have also called for a balance between meeting climate goals and letting the power crisis spiral out of control.
“As it pertains to the development of the economy and society, they must decide where they should work and balance,” the piece read. “Otherwise, it will make people wary, especially for some industries, where they may be forced to stop production at short notice.”
— Lauren Lau, Eric Cheung, Laura He and Granthshala’s Beijing Bureau contributed to this report.
Credit : www.cnn.com