Why China’s power crunch is such a big deal
A general view shows the Wujing Coal-Electricity Power Station in Shanghai on September 28, 2021.
Hector Retamal | AFP | Getty Images
BEIJING — Local Chinese authorities have abruptly ordered power cuts at many factories in the last week, reflecting a system trying to react to a number of directives from Beijing, and macroeconomic developments.
While a few economists have cut their forecasts on China’s GDP growth as a result, others are still waiting to see the scale of the impact.
Here’s a broad overview on how the power crunch developed:
Coal supply drops, prices surge
Back in late 2020, China stopped buying coal from Australia, once the Asian giant’s largest source of imported coal. Political tensions between the two countries have escalated after Australia supported an investigation into how Beijing handled the coronavirus pandemic.
Meanwhile, historically cold weather that winter drove up demand for coal. Some cities reportedly…
