Asia Correspondent Debi Edward reports on why China's energy rationing could mean a Christmas gift shortage in the UK
A majority of the country’s 31 provinces have had to introduce some level of energy rationing in response to supply constraints, soaring prices and stricter environmental controls. The interruption to factories and utilities will affect the supply of everything, from gadgets by the world’s leading tech companies like Apple, to textiles, toys, and even Christmas decorations.
In Kunshan, where there is one of the biggest iPhone assembly lines, we found workers idling by the side of the road with operations suspended until after the National Holiday, which starts on October 1. This should be one of their busiest times of the year. In the Northern city of Shenyang, there have been intermittent power outages and they’ve had to roll out generators and batteries to keep their businesses open.
In some cities they’ve had traffic light failures and even water supplies have reportedly been affected.
China is facing a triple squeeze on its energy sector. This year, it has enjoyed a surge in global demand as countries began to recover from the pandemic. But as it resumed its role as the engine of the world, the president upped his pledges on climate change and the cost of coal and gas has soared.
These factors have added strain to a trade network already suffering severe delays and disruption due to the virus.
The port of Ningbo, which handles more cargo than any other had to shut down for several weeks after a single Covid case was reported. It’s now trying to make up for lost time and increase container capacity.
The country’s industrial sector also finds itself trying to keep up with demand but adhere to tighter provincial guidelines on emissions. Almost 60% of China’s energy comes from coal, but the government is trying to cut back in line with climate change targets and ahead of COP26, when it knows all eyes will be on it as the world’s biggest polluter.
However, as it is trying to switch to cleaner sources of energy, climate change has affected its other major sources of power. Some of the country’s hydropower plants have underperformed due to drought this year and wind farms in the north have suffered from a lack of wind. But the main factor this year has been a shortage of coal due to a tightening of domestic safety restrictions, problems in the regional supply network and rising prices. It has left some manufacturers unable to operate and running at a loss. The State Grid Corporation has pledged to make sure that businesses and homes will have an adequate supply to see them through the winter. However, just as that pledge was hitting the front page of the national newspapers, more areas were announcing power rationing.
Something will have to give if China is to keep its lights on and also meet its global economic and climate change targets.