China Restricts Electricity Use Amid Coal Shortage

By Charles Kennedy of OilPrice.com

Despite the swift industrial recovery from the pandemic, factories in areas in China are working only part-time, and residents in several provinces are asked to save electricity, while authorities are turning off street lights and billboards, warning of coal shortages this winter.

In at least three provinces in China, authorities have ordered limits on electricity use, saying there could be shortages of coal, The New York Times reports. At the same time, Chinese authorities vehemently deny that the potential shortages have had anything to do with the diplomatic spat with Australia, which has turned into a true energy trade war, with China banning imports of coal from one of its major suppliers (last week we reported that “China Endures Worsening Electricity Shortages In Name Of Punishing Australia“).

Still, China has admitted there is a problem with electricity supply in parts of the country, just ahead of the winter season when Chinese industrial activity has been recovering very well from the COVID-related economic slump earlier this year.

“At the moment, some provinces temporarily do not have enough electricity. This is an objective fact,” the NYT quoted the Chinese authority overseeing state-held firms as saying during the weekend.

As a result of the power shortages with a reduced supply of thermal coal, some factories are cutting working hours and are operational only two or three days a week, while office workers in some cities have had to climb 20 flights of stairs to reach their workplaces because elevators have been shut down to save electricity.

“We are not living a normal life when our factory can only work two days a week and the streets are dark at night,” Mike Li, who owns a plastic flower factory in the city of Yiwu, eastern China, told the Financial Times.

Despite the fact that the Chinese government denies that the spat with Australia is responsible for coal shortages and electricity rationing, an official at state-owned power producer China Huadian Corporation told FT that many local power plants depend on Australian coal and scramble to source alternative supply.

“Politics come first,” the official told FT, adding that the company doesn’t see China relaxing import control just because it is causing trouble.