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China’s runaway economic recovery has been so successful that it has caused electricity shortages in dozens of industrial and industrial centers in the south of the country.
Factories in cities such as Guangzhou, Foshan and Dongguan, known for producing global and high-tech consumers products, have been ordered to consume less energy and even shut down between one or three days a week to mitigate the shortage.
Klaus Zenkel, president of the EU Chamber of Commerce in southern China, said around 100 of the organisation’s companies were affected and that the new shortage runs the risk of having a negative impact on foreign investment in the region.
“After the post-pandemic economic recovery, companies are very busy and have many orders. . . Some have now been asked to close three days a week. It’s not reasonable, “Zenkel said.” It’s an infrastructure problem that needs to be fixed immediately. “
While other economies are struggling to return to growth, record energy demand from factories and industry has outstripped supply in Guangdong Province, where cities are located. The problem has been exacerbated by high temperatures and low rainfall in Yunnan, which Guangdong relies in part on for hydropower.
Analysts said that central government carbon emissions targets it had also made local governments reluctant to expand their dependence on coal energy, forcing officials to ration electricity.
“With China’s carbon plan. . . local governments are very nervous about their use of coal and thermal energy, ”said Shan Guo, a partner at Plenum China Research.
Lara Dong, of IHS data provider Markit, said limits on coal imports and domestic production was also a factor contributing to scarcity.
Factories are worried they may not be able to fulfill their orders in time after Southern China Power Grid Company said on Saturday that 21 Guangdong cities and regions would be included in rationing or restrictions on use. Companies must limit their electricity supply or their electricity will be cut off.
Mike Wang, the manager of an electronics factory in Dongguan affected by the shortage, said staff “sweated heavily” for 36C days as they could not turn on the air conditioners and fans without fail the limits of energy use.
“I am just worried. I don’t know how to explain it to customers [that their orders would be late]”He told the Financial Times. He said energy shortages had reduced the efficiency of the factory by 20 to 30 percent.
China has experienced one of the fastest economic recoveries in the world since the Covid-19, driven primarily by its industrial and manufacturing sectors. Its economy grew 18.3% in the first quarter of 2021 compared to the same period last year, although the growth rate was boosted on a low basis in early 2020.
From January to April, total electricity consumption in a group of Guangdong cities on the Hong Kong-Macao border, known as the “Great Bay Area,” rose nearly 30 percent year-on-year. the electric company.
Provinces across China are under pressure to reduce their energy intensity (carbon dioxide emissions per unit of GDP) central government efforts to reach maximum carbon emissions by 2030 and achieve “carbon neutrality” by 2060.
Dong said there was a risk of more rationing as the province approached the maximum expected demand in July or August.
Additional reports on Qianer Liu in Shenzhen and Emma Zhou in Beijing
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