Day: September 24, 2021

China’s coal-fired power plants are facing the threat of bankruptcy as a result of government policies and soaring prices for coal, industry groups say.

On Sept. 11, the South China Morning Post reported that companies in the power sector had petitioned authorities for increases in electricity rates to stem losses and avoid bankruptcies due to record coal costs.

In a letter to municipal regulators, the Beijing Electric Power Industry Association pressed for higher end-user rates, citing losses among five member companies ranging from 20 million yuan to 192 million yuan (U.S. $3 million to $29.7 million) in the first seven months of the year, the Morning Post said.

The complaint follows a similar letter in August from 11 generating companies serving the Beijing-Tianjin-Tangshan power grid, warning that they were “on the verge of bankruptcy” as a result of the squeeze between fixed rates and surging coal costs.

“It has severely disrupted normal electricity transactions and stable electricity supply … operations are extremely difficult, with some companies experiencing capital chain ruptures,” the generators said.

The letter was signed by companies including Datang International Power Generation, China Huaneng Group, China Huadian Corp. and CR Power, Reuters reported.

Thermal coal prices hit a high of 1,028 yuan (U.S. $159.46) per metric ton on Sept. 9, according to Reuters. In July, prices soared 65.3 percent from a year earlier, although regulated end-user rates have dropped so far this year, it said.

China’s rules on rate increases are the subject of conflicting accounts.

Power companies were previously allowed to raise rates by up to 10 percent to cover higher operating costs. But in October 2019, the government’s top economic planning agency, the National Development and Reform Commission (NDRC) barred all rate hikes for industrial and commercial users, the Morning Post said.

A provision of the NDRC “guidance” document leaves it unclear as to when the rate freeze is supposed to end. Under the rule, the rates were not allowed to “float” in 2020, but the NDRC “can regulate the post-2020 floating patterns according to the situation,” the document says.

Even without the freeze, a 10-percent adjustment would not cover the generating costs from this year’s huge increase in coal prices, said Philip Andrews-Speed, a senior principal fellow at the National University of Singapore’s Energy Studies Institute.

“This is insufficient to compensate generators for the recent rise in coal prices. But the government is not keen to let prices rise further as that will add further downward pressure on the economy,” Andrews-Speed said.

The trouble for China’s domestic coal plants have highlighted the need for major changes in the country’s energy and environmental policies after more than a decade of intermittent power shortages and conflicts over state controls.

On Tuesday, President Xi Jinping suggested that some partial policy changes may be in the works.

In a videotaped statement to the annual session of the U.N. General Assembly on Tuesday, Xi pledged that China “will not build new coal-fired power projects abroad.” Chinese coal projects have been a significant source of pollution in countries that have joined in China’s Belt and Road Initiative.

Xi’s commitment was hailed by John Kerry, the U.S. special presidential envoy for climate change, as a “great contribution” and an “important decision,” Reuters reported.

Homegrown problem

But Xi said nothing about the larger problem of China’s continuing construction of domestic coal plants.

The environmental group Greenpeace East Asia estimates that 250 gigawatts (GW) of domestic coal-fired power capacity remains under development, despite warnings that the new plants will lose money as the costs of renewable energy sources come down.

In the meantime, the government is scrambling to come up with short-term fixes for the plants that are already losing money.

On Tuesday, the NDRC said it was sending joint teams with the National Energy Administration (NEA) to unspecified regions, companies and ports to see that directives on energy supplies and price stabilization are carried out, Reuters reported.

The agency said it has lowered the minimum inventory level of coal for power plants to seven days, setting the maximum at 12 days in an apparent attempt to ease market demand.

The pressures on generating companies are the result of a series of policy decisions in response to economic conditions and market forces in recent years.

In February 2020, the NDRC ordered a 5-percent rate cut for businesses and commercial users to support recovery from the COVID-19 crisis, projecting that it would save 59 billion yuan (U.S. $9.1 billion) for some 50 million customers by midyear. The cut was later extended through the end of 2020.

But the government had already reduced rates by about 10 percent annually in 2018 and 2019 in an effort to boost corporate profits and sagging economic growth.

The policies backed by Premier Li Keqiang were in keeping with fiscal stimulus measures, including reductions in taxes, fees and social security contributions.

Over time, the stimulus measures have compounded the effect on coal prices by promoting growth and increasing demand for China’s main fuel.

The cost of the first cut in electricity rates fell primarily on grid operators but the burdens from subsequent reductions have been borne by generating companies.

At the same time, the government supported increases in coal production to ease energy shortages. As economic growth rates rebounded from the record plunge in the first quarter of 2020, coal prices rose with recovery in demand.

Back to business

COVID-hit coal mines have struggled to keep pace with demand, putting more pressure on prices. A wave of deadly mine accidents also led to government safety inspections, slowing output down.

The NDRC responded by calling for more imports. But in December, it excluded coal shipments from Australia, China’s leading supplier, in an escalating row over human rights violations and foreign policy differences.

Analysts are divided over how much the political feud with Australia has affected China’s prices, but coal costs have set a succession of new highs since then.

The government’s reluctance to pass on the increased coal costs to consumers and end-users of electricity in the form of rate hikes reflects the “usual tension” between market forces and state control, Andrews-Speed said.

The China Electricity Council (CEC) has called for “further price reforms to create a market-based system that will allow fuel cost fluctuations to be fully reflected in end-user prices,” the Post reported in late July.

The conflict and cost-shifting have also been mirrored in the economy as a whole.

In August, China’s producer price index (PPI) climbed 9.5 percent from a year earlier to a 13-year high, the National Bureau of Statistics (NBS) reported, but the consumer price index (CPI) inched up only 0.1 percent.

The low CPI figure benefitted from falling pork prices and the heavy weighting of food in the index, while coal mining and washing was a main contributor to the PPI surge, a senior NBS statistician said.

But the wide disparity in factory gate and retail price growth reflects the government’s effort to contain this year’s boom in commodities, which has swept through sectors including crude oil, liquefied natural gas (LNG), iron ore, copper and coal.

In recent months, the government has resorted to a series of non-market tactics to keep inflation in check by pressuring producers to absorb higher input costs.

In July, the NDRC said it would “closely monitor” price changes and futures trading to “maintain market order,” threatening to crack down on violations such as hoarding, the official English-language China Daily said.

In June, the agency also issued new rules for publishers of private commodity indexes in an apparent attempt to discourage reporting of price increases and inventory levels.

The bankruptcy warnings suggest that there may be a limit to the government’s use of such coercive measures to restrain prices.

As coal inventories at power plants have dropped, generating companies have started restocking for winter earlier than usual, Reuters reported. The move seems likely to put further strains on supplies.

The crisis for coal-fired generators comes as environmental groups and climate activists are raising pressure on China to stop building new coal plants.

Although China has made major strides in developing renewable energy sources, it still relies on coal for about 60 percent of its electricity needs.

Despite international criticism, China’s provinces still plan to add 104.8 GW of new coal-fired generating capacity, Greenpeace said in August.

But the latest figures on China’s electricity consumption suggest that demand growth may be slowing down.

In August, power use rose just 3.6 percent from a year earlier. In the first eight months of the year, consumption increased 13.8 percent, the NEA said.

Electricity use in the secondary industrial sector including manufacturing was nearly flat in August with an increase of 0.6 percent from a year before, the NEA said.

China on Friday accused the United States of trying to undermine stability in Hong Kong, as the organizers of a now-banned candlelight vigil marking the Tiananmen massacre considered whether to disband when the group meets at the weekend.

The Hong Kong Alliance in Support of Patriotic Democratic Movements of China stands accused of acting as the agent of a foreign power, with leaders Chow Hang-tung, Albert Ho, and Lee Cheuk-yan arrested on suspicion of “incitement to subvert state power,” and the group’s assets frozen.

Chow was arrested on Sept. 8 and denied bail, while Lee and Ho are already serving jail terms linked to their activism, while four other Alliance members, Tang Ngok-kwan, 53, Simon Leung, 36, Chan To-wai, 57, and Tsui Hon-kwong, 72, have been charged with “failure to comply with a notice to provide information.”

In letters to members from jail, Ho and Lee called on the group to consider the safety of its members and partners.

“Dear friends,” the identical letters dated Sept. 17 and 18 read. “We believe that the best way forward is for the Alliance to disband on its own initiative, given the current climate.”

“We understand that the Alliance will hold an extraordinary general meeting on Sept. 25 to decide on this matter,” the two letter said. “We publicly call on all Alliance members to support its dissolution.”

Chow disagreed, saying she would prefer to “hang on until the bitter end,” even if it meant risking a longer prison term.

She said in a Facebook post on Sept. 23 that she had been warned by a pro-CCP informant that she could face more serious consequences if the group didn’t disband, although dissolution didn’t mean it wouldn’t face further persecution by the authorities.

China on Friday accused the United States of trying to destabilize Hong Kong by meeting with democracy campaigners, sanctioning Hong Kong and Chinese officials linked to police violence and a “national security” crackdown on dissent, and burning electronic candles on the anniversary of the June 4, 1989 massacre.

Listing dozens of meetings with pro-democracy figures including Democratic Party co-founder Martin Lee, former colonial-era chief secretary Anson Chan, and Umbrella Movement student leader Joshua Wong dating back to March 2019, China’s foreign ministry said the U.S. had “colluded with those who are opposed to China and attempt to destabilize Hong Kong.”

The list also cited every piece of U.S. legislation passed to support and assist Hong Kong protesters, including the Hong Kong Human Rights and Democracy Act of 2019, and the Hong Kong Autonomy Act, as well as then President Donald Trump’s Executive Order 13936 on Hong Kong Normalization, which suspended the city’s preferential treatment as a free port on the grounds that it could no longer be considered a separate jurisdiction from the rest of China.

It quoted Trump as saying on Oct. 7, 2019 that Hongkongers “are flying the American flag,” and referring to the protesters as “the great people over there,” along with the sanctioning of dozens of high-ranking Hong Kong and Chinese officials, including Hong Kong leader Carrie Lam, over the violent treatment of protesters during the 2019 anti-extradition movement and over the implementation of the national security law.

‘Meddling, interfering’

The U.S.’ vocal support for the now-shuttered pro-democracy Apple Daily newspaper and its jailed founder Jimmy Lai was also cited as evidence of “meddling in Hong Kong affairs and wantonly interfering in China’s internal affairs,” according to the 100-item list posted on the ministry of foreign affairs website.

It also cited official U.S. commemoration of the Tiananmen massacre by the People’s Liberation Army (PLA), which ended weeks of student-led protests on Tiananmen Square.

“On June 4, 2021, the U.S. Consulate General in Hong Kong lit up electric candles inside its the office window in support of the so-called candlelight vigil staged by those who are opposed to China and attempt to destabilize Hong Kong,” the list said.

The action was listed under “making unfounded charges against … law enforcement actions taken by Hong Kong police in an attempt to undermine Hong Kong’s prosperity and stability.”

The list also cited a ban on U.S. exports of police equipment to Hong Kong, including tear gas, pepper spray, rubber bullets, and stun guns, as well as an export ban on dual-use high-tech products to Hong Kong.

The accusations come as Hong Kong police targeted dozens of civil society groups, journalists, rights activists, and protesters under a draconian national security law imposed on the city by the ruling Chinese Communist Party (CCP) from July 1, 2020.

The law forms part of Beijing’s claims that recent waves of popular protest for greater democracy and against the erosion of Hong Kong’s promised freedoms were instigated by hostile foreign powers intent on undermining CCP rule and destroying social stability in Hong Kong.

Jimmy Lai and several senior journalists at the now-defunct Apple Daily face charges of “collusion with foreign forces” under the law, after the paper called in editorials for sanctions against Chinese and Hong Kong officials.

China’s list cited a July 7-11, 2019 visit by Lai to Washington, where he met with then vice president Mike Pence, then secretary of state Mike Pompeo, and other Trump officials.

“Jimmy Lai lobbied for U.S. intervention in Hong Kong affairs, and discussed with the U.S. side developments in Hong Kong surrounding the amendment bill and the so-called “autonomous status of Hong Kong”, for which he received positive response from the U.S. side,” it said.

Subversion charges

Friday’s list cited a July 14, 2020 statement by Pompeo supporting a democratic primary that led to “subversion” charges for 47 participants under the national security law, because it tried to maximize the number of pro-democracy candidates winning seats in Hong Kong’s legislature.

It also listed a July 31, 2020 statement by then White House Press Secretary Kayleigh McEnany voicing Washington’s opposition to the disqualification of opposition candidates from running for election in Hong Kong.

Joseph Cheng, former politics lecturer at Hong Kong’s City University, said the list could mean more sanctions are in the pipeline against U.S. individuals and organizations.

“Their criticism of U.S. support for democracy is that it interferes in the internal affairs of other countries,” Cheng said. “This list can be used to support further sanctions against U.S. enterprises or political figures.”

He said it would also likely be used as evidence in cases brought under the national security law.

“The list shows that Beijing … regards the charges and suppression of civil society groups and the pro-democracy camp in Hong Kong as justified because they are in cahoots with foreign powers,” Cheng said.

“This list could also form part of the evidence they bring against these groups and individuals [in court].”

Translated and edited by Luisetta Mudie.

A Chinese national who fled China after supporting the pro-democracy movement in Hong Kong to seek political asylum in the Netherlands says his father has been arrested by police in his home city of Chongqing.

Wang Jingyu, 19, who holds permanent residency in the United States, was arrested by United Arab Emirates police on April 5, en route to Istanbul, and eventually released after calling on the international community for help.

He is currently in the Netherlands, where he has applied for political asylum.

Wang said via his Twitter account on Sept. 12 and 13 that he been informed by Chongqing’s state security police that his mother Han Qing and his father Wang Bin had been detained.

One email said his father is being held under criminal detention for allegedly “planning to travel to Hong Kong to foment chaos.”

“On Sept. 12 I got an email from a public account belonging to the Chongqing state security police saying … that he is being held under criminal detention,” Wang told RFA in a recent interview.

“The next day, when I called the Chongqing police department, they told me that both of my parents had been detained,” he said. “This latest detention isn’t the first time my parents were detained.”

“My parents have been called in for illegal questioning and placed under surveillance at their home [for months],” he said. “I haven’t been able to get in contact with my parents at all.”

“I don’t know why [they have detained them now],” Wang said.

Wang was detained in absentia by police in his hometown, the southwestern Chinese city of Chongqing, after he cast doubts on state media reporting after thousands of Indian and Chinese troops faced off in June 2020 at three or four locations in the western Himalayas after Beijing’s forces intruded into Indian territory, according to Indian security officials and local media.

But China denied breaching the LAC near the Galwan River in India’s snowy and mountainous Ladakh region.

Indian and Chinese troops later disengaged from the southern and northern banks of Pangong Lake, in an operation begun on Feb. 10, 2021.

Wang left China while he was still in high school, after he was targeted for making comments in support of the 2019 protest movement in Hong Kong, he told RFA in an interview this week.

“I commented [on social media] that there must be a reason why the Hong Kong rioters, as they were described in the Chinese media, were attacking [the Hong Kong police],” he said.

“Then the school brought my parents in … and expelled me from the school. The reason they gave was my problematic political views, which were having a seriously negative impact on the image of the school,” he said.

Arrest in Dubai

Wang said he didn’t think about fleeing China until later, however, when his parents were notified that he could be arrested by the state security police.

“My parents used their connections to send me to Shanghai, where I could get a new passport, because my old passport had been confiscated by police,” he said.

“After I got the new passport, I traveled to Hong Kong from Shanghai.”

The State Department called his arrest in Dubai “a human rights concern,” and U.S.-based activists made representations to U.S. officials in a bid to stave off his forcible repatriation to China.

Wang was freed and dumped aboard an onward flight to Istanbul in a single outfit of clothing and flip-flops, holding nothing but his phone and a passport, just hours after The Associated Press began asking questions about his case, the agency reported on Thursday.

An official source in Chongqing told RFA that China expects its extradition partners — of which the UAE is one — to arrest people transiting through their airports.

Wang and his fiancee Wu Huan arrived safely in the Netherlands after a harrowing ordeal in which the pair were snatched from flights and hotels, illegally detained, and mistreated, all the while under the constant threat of repatriation to China.

Wu, who flew out to Dubai to help Wang, was herself kidnapped on May 27 by Dubai officials in the Bur Dubai Police Station Detention Center, where she was held for three days.

She was handed over to the Chinese consulate and illegally held by them until June 8, when she escaped and managed to board a flight to Ukraine.

Translated and edited by Luisetta Mudie.