China’s economic boom has left manufacturing centers with no momentum
China’s galloping economic recovery has been so successful that it has led to power cuts in dozens of manufacturing and industrial centers in the south of the country.
Factories in Guangzhou, Foshan, Dongguan and other cities are famous for producing global and high-tech consumer goods product, Ordered to use less electricity and even shut down one to three days a week to reduce power cuts.
Klaus Zenkel, chairman of the South China European Chamber of Commerce, said around 100 companies in the organization were affected and further shortages could hurt foreign investment in the region.
“After the economic recovery after the pandemic, the company was very busy with a lot of orders… Now some people are forced to close three days a week. It’s very unreasonable, ”said Zenkel. “This is an infrastructure problem that needs to be addressed immediately. “
As other economies struggle to resume growth, record demand for electricity from factories and industries has exceeded supply in Guangdong Province, where these cities are located. High temperatures and low rainfall in Yunnan have exacerbated this problem, and Guangdong is partly dependent on hydropower.
The analyst said, Central government carbon emission target It has also made local governments reluctant to expand their dependence on coal-fired power generation, forcing authorities to cut electricity.
“With China’s carbon plan… local governments are very nervous about the use of coal and thermal energy,” said Guo Dan, partner of Plenum China Research.
Says Lara Dong of data provider IHS Markit Coal import restrictions National production is also a factor of scarcity.
China Southern Power Grid said on Saturday that 21 cities and regions in Guangdong would be included in the scope of rationing or restriction, and factories fear they will not be able to complete orders on time. Businesses must restrict the power supply, otherwise their electricity will be cut off.
Wang, manager of an electronics factory in Dongguan, said that on 36-degree Celsius days, employees “sweated profusely” because they could not turn on air conditioners and fans without violating power restrictions. .
“I’m really worried now. I don’t know how to explain to customers [that their orders would be late]He told the Financial Times. He said the power shortage has reduced the efficiency of his plant by 20 to 30 percent.
From Covid-19, China experienced one of the fastest economic recoveries in the world, mainly driven by its industry and manufacturing sector. Its economy has grown 18.3% in the first quarter of 2021 Compared to the same period last year, although the growth rate was boosted by the weak base in early 2020.
The power company said that from January to April, the electricity consumption of a group of cities in Guangdong Province, which borders Hong Kong and Macao and is called the “Big Bay region,” has increased by almost 30% year on year.
All Chinese provinces are under pressure to reduce energy intensity – the amount of carbon dioxide emissions per unit of GDP – because Central government efforts It will reach its peak in carbon emissions by 2030 and will be “carbon neutral” by 2060.
Dong said that as the province approaches its expected peak demand in July or August, there is a risk of increased rationing.
Additional reporting on Liu Qianer from Shenzhen and Emma Zhou from Beijing