China's energy crunch disrupts global supply chain

29 Sep '21

2 min read

Pic: Shutterstock

Factories in China have been forced to cut down or completely halt production amid nationwide power supply crisis. Rising demand and a steep increase in the prices of coal are some of the factors that are contributing towards the energy crunch. The crisis is likely to affect the global supply chain that is already reeling from container shortages, unusually high freight rates and rising raw materials costs.

Another major reason for the disruption is the increase in production of items to be exported in time for the upcoming holiday season, according to Chinese media reports.

The sudden increase in coal prices is said to have affected the electricity generation capacity in the country. Also, local governments across China have ordered power cuts to curb production in order to conserve energy and meet their emissions targets.

The energy crisis has hit the country’s economy as well, as organisations like Goldman Sachs, Nomura, Morgan Stanley, Fitch and China International Capital Corporation among others have predicted lower GDP growth.

However, the Chinese government is taking measures to ease off the crisis by trying to contain the surge in coal prices and increase the supply of coal to power plants to boost energy production, a leading Chinese newspaper quoted industry experts as saying. They also expect the country to achieve the right balance between energy supply, emission controls and economic growth.

Currently, measures to control energy usage have been imposed in provinces like Guangdong, Jiangsu and Zhejiang among others. Some residential areas in northeast China are also experiencing blackouts.

Fibre2Fashion News Desk (KD)

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