Power cuts and even blackouts have slowed or closed factories across China in recent days, adding a new threat to the country’s slowing economy and potentially further snarling global supply chains ahead of the busy Christmas shopping season in the West.
The outages have rippled across most of eastern China, where the bulk of the population lives and works. Some building managers have turned off elevators.There are several reasons electricity is suddenly in short supply in much of China.
In the city of Dongguan, a major manufacturing hub near Hong Kong, a shoe factory that employs 300 workers rented a generator last week for $10,000 a month to ensure that work could continue. Between the rental costs and the diesel fuel for powering it, electricity is now twice as expensive as when the factory was simply tapping the grid.
Three publicly traded Taiwanese electronics companies, including two suppliers to Apple and one to Tesla, issued statements Sunday night warning that their factories were among those affected. Apple had no immediate comment, while Tesla did not respond to a request for comment.
State Grid, the government-run power distributor, said in a statement Monday that it would guarantee supplies .The electricity shortage is starting to make supply chain problems worse.
Many other power plants have been operating below full capacity and have been leery of increasing generation when that would mean losing more money, said Lin Boqiang, dean of the China Institute for Energy Policy Studies at Xiamen University.
Two-thirds of China’s electricity comes from burning coal, which Beijing is trying to curb to address climate change. Coal prices have surged along with demand. But because the government keeps electricity prices low, particularly in residential areas, use by homes and businesses has climbed regardless.
China’s main economic planning agency, the National Development and Reform Commission, also ordered 20 large cities and provinces in late August to reduce energy consumption for the rest of the year.
Besides coal, hydroelectric dams supply much of the rest of China’s power, while wind turbines, solar panels and nuclear power plants play a growing role. Disruptions from power shortages have already been felt in Dongguan, a city at the heart of China’s southern manufacturing belt.