China’s leaders have vowed to keep the lights on and production lines running in crucial sectors of industry, as northern parts of the country braced for colder weather amid a severe coal shortage and power rationing by local governments.
The National Meteorological Center warned on Wednesday that strong winds could lower the average temperature by as much as 14 degrees Celsius across China, with authorities ordering the start of mostly coal-fired central heating in the northeastern provinces of Jilin, Heliongjiang and Liaoning this week.
Premier Li Keqiang warned that the country’s economic climate is also ‘unstable,’ but vowed to protect the supply of power to manufacturers.
“The factors challenging the stable economic operations are increasing, while the external environment has plenty of uncertainties and instabilities,” Li said in an appearance at the Canton Fair.
He said mid- and downstream industries and business are facing a continued increase in operating costs, high commodity prices and elevated shipping costs, in addition to the energy crunch.
“But we are adopting a range of measures to tackle and conquer those challenges and difficulties, and we have relatively ample tools in our reserve toolbox to cope with the challenges,” he said, vowing that the government will make sure inflation isn’t allowed to gather momentum, while ensuring power supplies during the winter and next spring by raising a cap on the prices power suppliers are allowed to charge.
Li had also called at an emergency meeting on Saturday for China to move ahead with its carbon emission reduction goals in “scientific and orderly manner,” and to build greater self-reliance when it came to power generation, state media reported.
The State Development and Reform Commission on Tuesday expanded the range within which coal-fired power prices are allowed to fluctuate for non-intensive power users to 20 percent off base levels, while ordering local governments to ensure low-cost tariffs for residential and agricultural customers.
Supply-side issues
Current affairs commentator Si Ling said the government is hoping that the market will solve its supply-side issues that are leading energy generators to cut output.
“They are hoping that … the profit margins of coal companies and power generators will rise, so that they find some ways to source coal that the Chinese government hasn’t thought of,” Si told RFA.
He said the alternative was pretty bleak.
“If there is insufficient supply of electricity, this will be a devastating blow to manufacturers,” he said, citing both heavy industry and high tech chip foundries as major casualties of power shortages.
The SDRC has ordered local governments to “ensure the safe and stable supply of electricity” using its changes to on-grid prices, and by liberalizing tariffs for coal-fired power.
However, they must also “ensure that residential households, agriculture, and public welfare organizations have stable electricity prices,” the Oct. 12 directive said.
Authorities in Liaoning, the largest provincial economy in China’s northeast warned on Oct. 11 of worsening power shortages despite government efforts to boost coal supply and manage electricity use, with the energy crisis likely to last to the end of the year.
Liaoning, which has been hit by widespread power outages since mid-September, issued its second-highest alert level for power shortages for the fifth time in two weeks on Monday.
The drop in output from power plants followed tightening supply and soaring prices for coal, from which more than 70 percent of the region’s power is generated.
Shanxi province, where dozens of coal mines have been hit by flooding, and the Inner Mongolia region have ordered more than 200 of their mines to expand production capacity and prioritize coal supply to power plants in northeastern provinces, including Liaoning, Reuters reported on Monday.
Translated and edited by Luisetta Mudie.