Netizen Voices: Coal Costs, Climate Commitments and Competing Priorities Inform China’s Latest Power Outages

Power outages and blackouts across twenty Chinese provinces have forced factories to slow production and disrupted daily life for millions of residents. Power supply shortages are being driven by rising coal prices and increased demand for electricity; they also coincide with President Xi Jinping’s international and domestic climate commitments, which include reducing China’s reliance on coal. Among the worst-hit are Chinese factories in highly energy-intensive industries such as steel, concrete and aluminum; U.S. and European importers of those products; and ordinary citizens who have suddenly found themselves without power. Yuan Ye and Zhang Wanqing at Sixth Tone delved into the root of the problem:

The current electricity crisis, of a scale China hasn’t seen since 2011, has been building since June and is caused by an unbalanced coal market and policies that aim to improve energy efficiency and reduce emissions.

The cost of coal, the dominant source of power generation in China, has risen sharply mainly due to increased international and domestic demand and suspensions of Chinese coal mining operations amid tightening environmental regulations.

But the price of electricity is largely inflexible, creating a situation where power plants are losing more money the more electricity they generate, Yuan Jiahai, professor at North China Electric Power University, told Sixth Tone. “For every kilowatt-hour of electricity, the coal-fired power generators could lose 0.20 to 0.30 yuan ($0.03 to $0.05),” he said.

State-owned newspaper Liaoning Daily reported that authorities had been implementing rolling blackouts for companies since mid-September to ease the burden on the regional power grid. However, shortages had become so “severe” that supplies to both residential and commercial power were cut to “prevent the collapse of the entire power grid.” [Source]

In addition to disruptions to business and manufacturing, ordinary citizens were also inconvenienced by the power cuts. The BBC reported on how the unannounced power cuts put people’s health and safety at risk:

In Liaoning province, a factory where ventilators suddenly stopped working had to send 23 staff to hospital with carbon monoxide poisoning.

There were also reports of some who were taken to hospital after they used stoves in poorly-ventilated rooms for heating, and people living in high-rise buildings who had to climb up and down dozens of flights of stairs as their lifts were not functioning.

One video circulating on Chinese media showed cars traveling on one side of a busy highway in Shenyang in complete darkness, as traffic lights and streetlights were switched off. City authorities told The Beijing News outlet that they were seeing a “massive” shortage of power.

Social media posts from the affected region said the situation was similar to living in neighboring North Korea. [Source]

Stricter environmental regulations, particularly regarding coal, are a major factor in the reduced energy supply. Coal accounts for about 57 percent of China’s energy use and is responsible for about 80 percent of its overall CO2 emissions. China is responsible for 27 percent of the world’s total CO2 emissions, more than all developing nations combined. This means that China’s overall energy use is at the heart of global climate issues. 

Cognizant of this burden, the Chinese government has taken measures to reduce the country’s coal usage. Earlier this year, the Central Environmental Inspection Team hurled unprecedented criticism at China’s domestic coal policy. In mid-September, the National Development and Reform Commission vowed to crack down on local officials who did not limit energy use, after twenty of thirty provinces and regions failed to meet energy consumption targets. Last week, President Xi Jinping announced China would stop producing coal-fired power projects abroad. The recent power cuts adhere to the spirit of these measures, and they may be linked to upcoming events such as the COP15 biodiversity summit in Kunming, the COP26 climate summit in Glasgow, and the Beijing Winter Olympics, when China’s environmental record will be in the global spotlight. 

On the other hand, some analysts argue that environmental and supply-side factors are not as important as purely economic factors, highlighting the continuing bureaucratic battle over environmental and economic policy planning priorities

The reasons for the power shortages also vary widely between different regions and provinces:

The energy crisis is also related to China’s role in international markets. Keith Bradsher from the New York Times explained how jump-starting the global economy strained energy supply in China’s export industries:

More regions of the world are reopening after pandemic-induced lockdowns, greatly increasing demand for China’s electricity-hungry export factories.

Export demand for aluminum, one of the most energy-intensive products, has been strong. Demand has also been robust for steel and cement, central to China’s vast construction programs.

[…] China’s economic rebound from the coronavirus has been driven in large part by heavy investment in infrastructure as well as the rise in exports. Overall industrial use consumes 70 percent of the electricity in China, led by the mostly state-owned producers of steel, cement and aluminum.

“If those guys produce more, it has a huge impact on electricity demand,” Professor Lin said, adding that China’s economic minders would order those three industrial users to ease back. [Source]

Given the production bottlenecks in China, international supply chains for electronics face major disruptions, as reported by Stella Yifan Xie, Yang Jie, and Stephanie Yang in the Wall Street Journal:

In one of the most affected areas, Kunshan, a city in China’s eastern Jiangsu province near Shanghai, more than 10 Taiwan-based semiconductor-related companies filed announcements with the Taiwan Stock Exchange this week saying they are temporarily closing local facilities until the end of September.

Several Apple suppliers are affected, such as mechanical-parts maker Eson Precision Engineering Co. and Unimicron Technology Corp., a printed-circuit-board maker.

[…] Eric Tseng, chief executive of research firm Isaiah Research, said semiconductor companies might avoid more significant power cuts, given China’s support of the industry. Meanwhile, manufacturers of other electronic components that go into laptops or consumer devices, which run with high power consumption, could face stricter measures, he said. [Source]

Orange Wang at the South China Morning Post described how the energy crisis has diminished China’s economic growth forecasts:

In light of the dire situation, Lu [Lu Ting, chief economist at Nomura] and his team have slashed their China GDP growth forecast from 8.2 per cent to 7.7 per cent, but even that may be too optimistic.

[…] Alongside Nomura’s Lu, who also warned that the conditions would likely result in a shortage of goods for the Thanksgiving and Christmas shopping seasons, Morgan Stanley now expects China’s GDP growth in the fourth quarter to drop by another percentage point if the conditions persist.

Peng Wensheng, chief economist at investment bank China International Capital Corporation, wrote in a note on Sunday that he expected the decline in production to drag down the national economic growth rate by 0.1 to 0.15 percentage points in both this quarter and next quarter. Peng also expects the wide-reaching impacts from the dramatic cuts in energy consumption to last until the end of the year. [Source]

The Global Times was unusually candid in reporting on the power cuts in Northeast China, noting the “collapse of the local power grid,” without any announced date for its restoration. By contrast, when Texas suffered a powerful snowstorm in February that knocked out much of its power grid, the Global Times leaped at the opportunity to publish a series of articles criticizing the U.S. response and touting China’s resilience to such widespread power outages. Hu Xijin, the editor-in-chief of the Global Times, was also highly critical of Tsai Ing-wen’s governance after rolling blackouts hit Taipei and other cities after an accident at a Taiwanese power plant in May

This hypocrisy, coupled with the tremendous inconveniences the power shortages have imposed on Chinese citizens, has inspired an outpouring of criticism, mockery, memes and personal stories on social media. CDT Chinese has collected some of these netizen comments, a selection of which are translated here:

人生何处不神抽:Hu [Xijin], you sure didn’t talk the same way in that Weibo post you wrote about Taiwan’s power outage back in May.  // len_babii: Please delete that “incorrect memory.”

坏球老胡:Historical Weibo has no practical significance. Please don’t use it for comparison.

你们啊太年轻sometimesnaive:Hu: “The power outage in Taiwan was due to Tsai Ing-wen’s incompetence, and but the power outage in Northeast China means our nation is playing the long game—and winning!”

walle2015: Didn’t you say we were playing the long game, and that after a few more months of power outages, the U.S. won’t be able to handle the [resulting] inflation? 

notmyChris:I just overheard a conversation between my parents: Mom: “The economy’s not looking so good.” Dad: “How’s it not looking good?” Mom: “This electricity rationing.” Dad: “That just goes to show the economy’s doing great – all those factories using electricity.” Mom: “Then why are you off work six days a week?” Dad: “The power’s out!” I just can’t…

China_VideoNews:Ultraman was banned, resulting in a flood of monsters in the Northeast who went on a rampage destroying power generating facilities, which resulted in electricity rationing—the logic is clear! [Chinese]

Translation by Cindy Carter

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