Why China is suffering from mega power cuts
Audio 03:52
Electricity pylons, near residential buildings, in the Chinese capital of Beijing, September 28, 2021. © REUTERS - TINGSHU WANG
By: Dominique Baillard Follow
7 mins
Like the United Kingdom, China is now in the midst of an energy crisis: electricity consumption is starting to be rationed.
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In some skyscrapers residents must now use the stairs, because the elevator has been blocked to reduce electricity consumption.
In the province of Guandong, in the south of the country where it is still summer temperatures, individuals are asked to give up air conditioning, and to light up with daylight.
In several large cities in the north public lighting and traffic lights were cut this weekend, causing massive traffic jams.
It is a shock for Chinese households who have so far been spared from the energy crisis.
Because the rise in electricity prices, sensitive for several months in the industry, is not reflected in their bill.
On the other hand, companies suffer from shortages and increases in electricity.
The most power-hungry sectors, aluminum producers, cement, soybean crushers, fertilizer manufacturers have all revised their production sharply for this year due to power outages or plant closures. caused by shortages.
At the moment, subcontractors from Apple and Tesla are at a standstill to reduce consumption.
Several large companies, exhausted by the rise in energy prices, have already gone out of business in the large industrial city of Tianjin, near Beijing.
A dozen electricity producers are on the verge of bankruptcy, they beg the government to pass the increase on to households.
How to explain this surge in the price of electricity?
In China, electricity is produced mainly from coal but also from gas, and the prices of these two hydrocarbons are soaring, which explains the mechanical increase in electricity.
Chinese coal production, subject to increasingly stringent standards, cannot keep up with demand and imports are insufficient.
Activity has picked up so strongly after the period of successive confinements that the energy supply is no longer able to meet demand.
China imports hydrocarbons at all costs, however, this year it imported twice as much gas as in previous years to replenish its stocks, but this is still not enough to meet demand.
The Chinese government has also decided to ration the electricity of large carbon emitters.
Nearly one in two regions has not reached the targets for reducing CO2 emissions set by the authorities.
Bad students, communities and businesses are therefore punished by power cuts, a radical way to reduce consumption.
Because China has the ambition to completely eliminate these carbon emissions by 2060. This expeditious policy worsens the Chinese energy crisis, but it is not the main cause.
Will this energy crisis slow down the recovery?
Growth should indeed suffer.
The energy problem was partly masked by the announced bankruptcy of real estate developer Evergrande.
Its negative effects on the economy are however at least as important.
This rise in Chinese electricity could lead to high inflation, with soaring agricultural prices that could spread like wildfire around the world as winter approaches, a time when more is needed. energy to heat homes.
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