Major Chinese cities face rolling blackouts fueled by energy crisis

China faces an energy crisis as the lights start to dim in major cities across the country.

Fueled by a ban on high-quality Australian thermal coal and increased demand from manufacturers, electricity rationing has plunged 12 regions into semi-darkness.

Hardest-hit has been Yiwu in China’s eastern Zheijiang province with street lights switched off and factories forced to operate on a three-day week schedule. 

The coastal city of Wenzhou has also seen heating restrictions in offices and homes, while Changsha in Hunan province has limited electricity supplies, cutting power to elevators.

“The import curb is enough to change the industry landscape. Many local power plants depend on Australian coal due to its higher efficiency and now they are having trouble finding an alternative,” a director at energy group China Huadian Corporation told the Financial Times.

Breaking point

Relations between Australia and China have reached a breaking point after Canberra called for an independent inquiry into the source of the Wuhan coronavirus outbreak last year that triggered a global pandemic. 

The Australian government has also raised concerns about human rights violations against Muslim Uighurs in the enclave of Xinjiang and the dismantling of Hong Kong’s “One Country, Two Systems” policy.

In response, Beijing has launched a bilateral trade war, blocking Australian thermal coal and slapping punitive tariffs on wine and barley imports, as well as clamping down on beef and lobster shipments.

Yet this diplomatic saber-rattling has come at a price. Authorities in at least four Chinese provinces have told residents and businesses to cut electricity consumption, according to local government statements. 

“Some of the power plants will stop running soon due to the shortages of coal,” one market trader, who declined to be named because of the sensitive nature of the situation, told S&P Global Platts, adding that coal prices have surged.

Achilles heel

Electricity supply has always been the Achilles heel of the world’s second-largest economy. Even without power shortages, residential areas in leading cities usually limit pedestrian lighting to one side of the street.

An over-dependency on coal has produced chronic pollution and forced the ruling Communist Party government to invest heavily in renewables and gas-fired power stations. But the scale of the challenge is still immense.

The United States Energy Information Administration or EIA pointed out in September:

• Coal supplied about 58% of China’s total energy consumption in 2019, down from 59% in 2018. 
• The second-largest fuel source was petroleum and other liquids at 20%. 
• Hydroelectric made up 8% as did natural gas, while renewables accounted for 5% and nuclear power 2%.

“Despite structural changes [to the] economy during the past few years, China’s energy demand is expected to increase [with] government policies [supporting] cleaner fuel use and energy efficiency measures,” an EIA report stated.

Electricity shortfall

In the meantime, the CCP has moved quickly to quash social media reports of an electricity shortfall in provinces such as Hunan, Zheigiang and Jiangxi.

Zhao Chenxin, the secretary-general of China’s National Development and Reform Commission, denied that households were suffering power cuts. 

“Please believe that our ability to ensure stable energy supply is not a problem,” he told a media conference as reported by the official Xinhua News Agency on December 21.

Still, for many Chinese, his comments failed to shed light on what is rapidly becoming a gloomy picture.