Power Cuts Threaten China’s GDP in 2021

Power Cuts Threaten China's GDP in 2021

China’s economy is facing the brunt of excess energy consumption, tightened coal supplies, real estate fall-outs and the coronavirus.

After the Evergrande crisis, another issue may threaten China’s GDP. This holiday season, some of us across the world may not get to buy smartphones and other goods for our loved ones. That’s because China’s state-mandated power cuts have forced factories to shut down and halt production. This will affect the supply of some sought-after products, like Apple and Tesla

The cuts come as China aims to meet its official energy use targets and its climate goals. The nation has vowed to cut its energy consumption by around 3% in 2021. Another reason behind the power cuts is the high cost and tight supply of coal. China is home to numerous manufacturing plants for top companies around the world. These power cuts might prove detrimental for these companies, especially with the peak sales season approaching.

Around 15 Chinese companies have blamed the power shortages for disrupting production. In light of this, banks have changed their economic forecast for China too. Goldman Sachs cut its forecast for China’s 2021 economic growth to 7.8% from 8.2%. In 2022, the bank expects it to fall further to 5.5%. For Chinese startups, this also acts as a lesson in energy management and navigating through abrupt stressors.

What prompted the power cuts?

As per economists and environmentalists, China’s manufacturers have exhausted this year’s energy quota faster than planned. This comes with the increasing demand for exports as the spread of Covid slows. 

Additionally, China is set to attend a U.N. environmental conference between October 12 and October 13, 2021. That puts pressure on the Chinese government to meet its targets and show the world that the country is being energy-efficient. 

What are the consequences of this power shortage?

For one, it is worsening the existing supply chain issues around the world. With factories shutting down and production slowed, companies like Apple, Tesla and more have to delay the sales of their products. This will affect the global economy. Nomura’s analysts noted, “The power-supply shock in the world’s second-biggest economy and biggest manufacturer will ripple through and impact global markets.”

Many companies have already declared that rationing energy could affect production and hurt them financially. Nomura’s economists Ting Lu, Lisheng Wang and Jing Wang echo this sentiment. They said in a report, “Beijing’s unprecedented resolve in enforcing energy consumption limits could result in long-term benefits, but the short-term economic costs are substantial.”

Goldman Sachs bankers feel that, besides the power shortages, the government’s approach to the Evergrande crisis and the record-high coal prices are harming the economy. 

Besides factories, households are facing power cuts too

In North-east China, residents are having to ration power during peak hours. Plus, Changchun residents noted that these cuts were happening sooner and lasting for a longer duration than informed. In Huludao, citizens were asked not to use energy-intensive appliances, including water heaters and ovens, during peak periods. In Harbin city, shopping malls were closing earlier than usual to save electricity. 

Many of these residents are not pleased with this move. They are appealing to the government on social media, asking them to restore all power supplies.

Header Image by Unsplash

SHARE THIS STORY

Share on facebook
Share on twitter
Share on linkedin
Share on email

RELATED POSTS

Navigating the Growing Crisis of Space Debris

Orbital Fallout: Navigating the Growing Crisis of Space Debris

Ever since we stepped into the space age back in the 1950s, we’ve been busily sending rockets and satellites up, up and away, painting our mark way beyond our planetary borders. But here’s the thing—our ventures have left the cosmos littered with about 2,000 operational satellites and another 3,000 that are just space junk now.

Pryon Secures US$100 Million in Series B to Advance AI in Knowledge Management

Pryon Secures US$100 Million in Series B to Advance AI in Knowledge Management

Pryon Inc., a North Carolina-based company specializing in integrating artificial intelligence (AI) with knowledge management, has completed a Series B investment round, raising US$100 million. The funding was led by Thomas Tull’s US Innovative Technology Fund (USIT), with contributions from both new and existing investors, including Aperture Venture Capital,

Amazon Launches Upgraded AI Enhanced Fire TV Sticks

Amazon Launches Upgraded AI Enhanced Fire TV Sticks

Amazon has rolled out a series of updates to its Fire TV offerings. The new features include an improved conversational voice search powered by generative AI and Fire TV Ambient Experience advancements. Among the latest hardware releases are the Fire TV Stick 4K Max and the Fire TV Stick 4K, incorporating the enhanced Fire TV Ambient Experience.

Interactive Learning with Augmented Reality

Interactive Learning with Augmented Reality: Applications, Benefits and Challenges

Ever wondered what it would be like if your textbooks could talk, if the illustrations in your lessons could come to life, or if you could step into history rather than just read about it? Welcome to the world of augmented reality (AR) in education! Like a magic wand, AR can turn the abstract into tangible and the mundane into extraordinary, unfolding boundless educational possibilities.

How AI Threatens Your Password Security

Unlocking the Dangers: How AI Threatens Your Password Security

You may have heard of artificial intelligence (AI) technology’s many cool capabilities, such as assisting doctors or predicting the weather. However, there is something not-so-cool we need to discuss: AI could make our passwords less safe, which is concerning.