The energy crisis in China restricts the manufacturing centers .. What impact on the economy?

BEIJING

- Dozens of people flocked to subway stations in Chongqing, China, to escape the heat wave in the city last August, as residents complained of power outages that lasted for a few hours a day for nearly a week.

Parts of China have been hit by their worst heat wave since records began in 1961, with intense heat from Sichuan in the west to Shanghai in the east, and droughts lowering water levels in hydroelectric reservoirs.

This necessitated restrictions on energy use across the country, particularly in the southwestern region, while the Chinese government promised to step up support for coal-fired power plants and miners;

To ensure the stability of the power supply.

Why renewed energy crisis in China?

The high temperature during the summer peak caused electricity consumption to increase by 6.3% year on year in last July, as residential consumption jumped by 26.8%, according to the China National Energy Administration.

The southwestern province of Sichuan and the city of Chongqing on the upper reaches of the Yangtze River (China's longest) were hardest hit.

Sichuan is famous for its hydropower, which provides 80% of its energy, but drought reduced electricity generation capacity by 50% year on year in August, according to the provincial government.

The decline in hydropower generation in Sichuan has also affected the country's overall electricity supply, as Sichuan is one of China's major energy-exporting provinces.

According to the local government, the electricity generated in the county is sent to the middle and lower reaches of the Yangtze River under the "West-East Electricity Transmission Project".

Severe weather is the direct cause of electricity shortage in China (Shutterstock)

Is the manufacturing sector affected?

Experts say various manufacturing sectors have been affected by the energy restrictions, as manufacturing centers along the Yangtze River restrict consumption to meet rising energy demand.

The southwest contributes to China's reputation as a global manufacturer of automobiles, technology and consumer goods.

Wei Junhu, chief China economist at financial services group Macquarie, says Sichuan province has bore the brunt of the blackout this time, accounting for just 4 percent of China's industrial production.

In a research note, he predicted some disruptions in the supply chains of raw materials such as lithium, given that Sichuan produces about 20% of lithium, 5% of aluminum and 13% of polysilicon in China.

This could affect the manufacture of electric vehicle batteries, semiconductor electronic components, solar panels and computers, said economic journalist Zhao Ziwen.

Zhao adds - to Al Jazeera Net - that this can translate into higher costs for electronic products, such as electric car batteries, "but the effect should be short-lived."

Zhao also predicted that the energy crisis will keep many potential electric vehicle buyers away for now due to the uncertainty about the electricity supply.

What is the government doing?

In light of the most serious energy crisis that China has experienced in decades, Beijing has stressed not to repeat the electricity crisis that rocked the country last year, starting with President Xi Jinping, who vowed not to allow large-scale power outages, and Premier Li Keqiang, who promised to make unremitting efforts. To avoid future crises.

The energy crisis saw Beijing shift its political discourse and declare energy security as a more urgent national task than the transition to green energy.

As a result, coal projects in China, the world's largest consumer of fossil fuels, continue to expand, undermining efforts to tackle climate change.

The China Electricity Council recommended that the country reach 1,300 gigawatts of coal-fired power in 2030 to meet rising demand and enhance energy security, which means building more than 300 new plants.

According to official data, the newly approved coal-fired power capacity increased in the fourth quarter of 2021 by 36.3% year on year, while it jumped in the first quarter of this year by 103.1%.

Various manufacturing sectors in China have been affected by energy restrictions (Reuters)

Is the crisis short or long-term?

Although severe weather is the direct cause of the electricity shortage, experts believe that China faces long-term challenges.

Being highly affected by climate change, especially the monsoon winds, is accompanied by structural problems facing the energy sector in China, as statistics indicate that investment lags behind the growth in electricity consumption.

In 2021, the compound growth rate of investment in China's electricity infrastructure fell by 2.7 percent compared to 2018, while electricity consumption grew at a high compound rate of 6.7 percent, according to China's Essence Securities.

At the same time, economic analyst Wang Yishan believes that the overall impact of this round of energy cuts on industrial production will be limited, as the round of energy cuts is a seasonal, temporary and regional measure in light of high temperatures and little rain.

Wang added - to Al Jazeera Net - that the impact on GDP in the second half of the year will not be significant in light of the improvement in demand for thermal coal, with expectations of a slight disruption in economic growth.