China’s energy crisis looks like another shock to global supply chains, experts say. Factories in the world’s second-largest economy, which is also the world’s largest exporter of electricity, are forced to save electricity by limiting production, world agencies report.
At least 20 Chinese provinces and regions, which account for more than 66% of the country’s gross domestic product, have announced some form of power outages. At the moment, they are aimed primarily at consumers in heavy industry, according to Bloomberg Intelligence.
Problems in supply chains are becoming more serious
Even if they manage to produce, it is difficult for companies to find a way to transport their goods
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And the reasons for this are record high coal prices, which are forcing electricity producers to reduce production, despite growing demand. At the same time, some regions in the country have completely cut off electricity flows to meet emissions targets.
The interruptions come at a time when global manufacturers and exporters of goods are literally competing in the supply and demand of everything from clothing to toys and products related to holiday shopping at the end of the year. They do not stop struggling with difficult supply chains. And they, in turn, are making it even more difficult due to rising raw material costs, long port delays and a shortage of transport containers.
At the same time, in China, local producers warn that austerity measures to reduce electricity consumption will reduce production at economic plants such as Jiangsu, Zhejiang and Guangdong, which together account for nearly a third of the country’s gross domestic product and are likely to raise prices. The number of factories that have a complete lack of electricity is also increasing.
Some Chinese producers complain that it is becoming increasingly difficult for them to sell their goods abroad due to the cessation of production. Another part says they are forced to raise prices in the name of the survival of their business.
Everyone has problems, even the giant Apple. IPhone assembly operations in China have begun to reduce energy consumption. The company said it was taking energy-saving measures to comply with local government policies.
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Chaos in the ports. But shipping companies are preparing for unprecedented profits
One of the leaders in the industry forecasts up to 1025% growth in its profits compared to 2019
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Global analysts say power shortages and port blockages will inevitably affect heavy industries such as aluminum and steel, as well as all downstream sectors. As for China’s economy, it is already burdened almost to the limit.
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