SOURCE / ECONOMY
Chinese firms face difficulties amid power cuts, but remedial measures underway
Published: Oct 11, 2021 07:53 PM
Workers assemble a transmission tower for a bridge across the Yangtze River on Tuesday in East China's Jiangsu Province. The bridge is a major infrastructure project under China's 13th Five-year Plan (2016-20) on electricity development. It will improve the connectivity of the electric grid across the Yangtze River. Photo: cnshphotos

Workers assemble a transmission tower for a bridge across the Yangtze River on Tuesday in East China's Jiangsu Province. The bridge is a major infrastructure project under China's 13th Five-year Plan (2016-20) on electricity development. It will improve the connectivity of the electric grid across the Yangtze River. Photo: cnshphotos





Chinese businesses and factories in certain areas, including the country's main small commodity export hub in Yiwu, East China's Zhejiang Province, are facing difficulties in producing and delivering products to clients on time due to restrictions on electricity use amid a power shortage, local industry insiders told the Global Times on Monday.

The situation reflects the negative impact of recent power restrictions on the country's manufacturing and export sectors. However, industry insiders said that the challenges are temporary and the impact will be controlled, as authorities and businesses are already moving to address and cope with the situation. They also noted that the restrictions are limited to certain areas rather than the entire country.

Premier Li Keqiang chaired a meeting of the National Energy Commission on Saturday, during which he urged an overhaul of a "one-size-fits-all" approach to power and production curbs or a "campaign-style" carbon reduction to ensure that residents in North China have a warm and safe winter, China Media Group reported on Monday.

At the meeting, which focused on energy reforms and development plans for the 14th Five-Year Plan (2021-25), the premier also called for an increase in the proportion of clean energy, noting that market-oriented mechanisms ought to be more relied upon to push for energy conservation, emission cuts and carbon reduction, and enhance green development capabilities. 

In recent days, an unprecedented power shortage hit a number of Chinese provinces and cities, with regions imposing various restrictions on power use by businesses. Some provinces, like Southwest China's Sichuan, only halted unnecessary use of electricity, but some provinces, like East China's Jiangsu and Zhejiang, the restrictions are affecting more sectors. 

Zeng Xiaohong, who owns a suitcase shop in Yiwu and a factory in Wenzhou, both in Zhejiang, said that his business has been severely affected by the power crunch. According to him, air conditioners at the Yiwu International Trade Market, where his shop is located, have been turned off. At another retail market in Yiwu, even lights have been shut off.

For Zeng, however, the real problem is with power restriction at factories. Zeng's Wenzhou factory gets power only two days in every six days, which has led to severe problems with production. 

"We have hundreds of thousands of yuan worth of orders that can't be made and delivered on time... all we can do is to explain the situation to our customers and try to deliver the products by the end of this month," he told the Global Times. 

This is adding to the difficulties that Zeng has faced since the COVID-19 pandemic hit his business last year. "Doing business is very hard this year. Orders are sluggish, the rent is not cheap, and one of our South Korean clients cancelled our orders recently for reasons we don't know," he said. 

Zeng's factory has exported suitcases to a number of markets including Europe, the US and Indonesia. 

In the face of the challenges, some businesses are exploring ways to cope with the situation. 

Wang Jinhua, an exporter of maternal and baby products based in Yiwu, told the Global Times on Monday that he bought a generator to generate electricity to cope with the power cut problem.

He made the decision after his company was ordered to use a maximum of 700 kilowatt hours of electricity per day in recent days, compared with 2,000 kilowatt hours in the past. 

"Our whole manufacturing plan is impacted. It is estimated that nearly one-third of the orders cannot be finished before the Double 11 shopping festival, and we might lose 5 or 6 million yuan because of that," he said.

A Guangdong-based toymaker surnamed Chen also told the Global Times that the major impact of power cuts is that they will prolong deliveries, but he said that the long-term impact of power rationing is "yet to be seen".

China's power crunch is not an isolated case, and it comes against the backdrop of global power shortages and supply chain disruptions. According to a report by brudirect.com, millions of migrant workers in Vietnam recently fled the country's factory heartland Ho Chi Minh City and nearby provinces, which might disrupt global supply chains as the regions are home to suppliers for international companies.

But despite the global situation, some overseas reports have hyped up the power shortage in China, saying that the restrictions might slow the country's economic growth and place more strain on global supply chains.

Chinese industry analysts said that the current power shortage in China is temporary and will be addressed in due time, as officials and industries are already moving to increase coal output and ensure power supply. 

The National Development and Reform Commission (NDRC), the top economic planner, said on Monday that it has taken measures to secure power supply during the National Day holidays, such as making sure that power plants' coal storage was at a reasonable level, as well as increasing transport capacity in certain regions. 

As of Thursday, the number of power plants facing coal storage with inventory for less than seven days has dropped by 90 percent compared with September, the NDRC noted. It has also vowed to take measures to increase coal supply and ensure power supply for the upcoming winter. 

Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times that the impact on the economy will be limited and the main issue is about distribution of coal rather than a real shortage in supplies. 

"Currently there are two challenges: one, the flood in Shanxi will halt production for some time; second, there's the problem of coal transportation arising from a sudden demand boom. But those problems will be solved in due time," he said. 

Lin added that recent power restrictions are only applied to certain regions and its impact on the overall economy is controllable. 


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