Plant shutdowns are being ordered in many regions of China - affecting European companies as well. It's going to get worse.
That's because the problems are likely to intensify with the upcoming heating season and last for a while, the chairman of the EU Chamber of Commerce in China, Joerg Wuttke, warned journalists in Beijing on Wednesday. »We are in a marathon, not a sprint.« Rationing will remain in place until at least March, he estimated.
The background to the energy shortage is rising demand and less production. So is the shift to cleaner energy sources, as China seeks to reduce its carbon dioxide emissions to fight climate change. Lack of wind and overcast skies curbed alternative energy production, while summer demand increased due to hot weather and strong industrial production.
China meets two-thirds of its energy needs with coal. But imports were also cut by 20 percent year on year and coal mines closed for safety reasons. Coal prices tripled in some cases, which power plants can no longer afford. As a result, coal stocks were depleted. The crisis is aggravated by price controls and mismatches in the energy sector, which is controlled more by the state than the market.
EU companies complained of »chaotic conditions«. Often, they are only informed at short notice, such as the night before or even an hour before the start of a shift, that the power will be cut off. Businesses would have to shut down several days a week. »It affects normal business«, said Klaus Zenkel of the EU Chamber in South China. Customers are unhappy, he said. »There is no plan«, complained EU Chamber representative Christoph Schrempp in Tianjin. The situation creates great uncertainty. The northeast and the economically strong provinces of Jiangsu in the east and Guangdong in the south are particularly affected.