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China's 'unprecedented' power cuts hit homes and businesses, according to reports.

Power outages in northeastern China have plunged millions of houses into darkness, prompted factory shutdowns, and threatened to disrupt the water supply in at least one province, according to reports. The "unexpected" and "unprecedented" power cuts in Jilin, Liaoning, and Heilongjiang's provinces were caused by electricity rationing

Coal shortages and no advance warning prompted rationing to begin last Thursday, according to the Communist Party-owned tabloid, with power outages igniting public outrage and causing traffic lights and 3G mobile phone coverage to go down in certain areas. A utilities firm in Jilin said the power shortages could disrupt water supplies at any moment, while government television CCTV reported that a plant in Liaoning had to transport 23 staff to hospital because of carbon monoxide poisoning after ventilation machines stopped during a blackout.

Electricity outages stifle economic expansion.

The lack of electricity has also had an impact on industrial production in China, with facilities including some that supply Apple and Tesla shutting down. On last Monday, Unimicron Technology, an Apple supplier, reported that two factories were instructed to stop operating from midday Sunday through Thursday. According to stock exchange notifications, dozens of businesses, including a Tesla parts manufacturer

Meanwhile, Goldman Sachs predicted that as much as 44 percent of China's industrial activity has been disrupted by power shortages, which might cause a 1-percentage-point fall in GDP growth in the third quarter and a 2-percentage-point drop from October to December. It lowered its China GDP growth forecast for 2021 to 7.8 percent from 8.2 percent previously.

The Chinese economy is heavily reliant on coal, and the electricity crisis has intensified as a result of the pandemic and an international trade conflict with Australia.

Coal shortages, rising greenhouse gas emissions standards, and strong industrial demand have all pushed coal prices to new heights in China. Because electricity costs are capped in China, local authorities had no choice but to restrict supply.

Another reason for the limitations is authorities' desire to meet provincial energy savings targets, according to Ni. China aims to peak emissions by 2030 and carbon neutrality by 2060, according to him.

‘No energy crisis'

While the power outages have sparked worries about an energy crisis in China, industry officials were certain that "China's energy supply capacity is sufficient to meet demand and that there is no energy crisis" according to the Global Times. Coal-fired power firms are now “opening up all avenues” to ensure winter heat and electricity supplies, according to a note from the China Electricity Council (which represents power suppliers).

The report also said China needed to boost coal production and supply while ensuring safety and environmental protection. To prepare for the winter, more medium - and long -term contracts need to be finalised. However, finding new import sources may be more difficult than it appears.

The outages, according to Andy Mok, a senior research fellow at the Centre for China and Globalisation, are “a short-term cyclical problem" that he expects the Chinese government to address.


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