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Tuesday, September 28, 2021

Electricity gave a strong jolt to China, people spending their nights in the dark; Big hit on the economy too

The power crisis in China has deepened. In many states, people are not only having to spend the night in the dark, but the shortage has increased so much that the economy is expected to be hit hard due to the halt of economic activities. Disruptions in the global supply chain can have an impact on other countries as well.
There is a severe power shortage in many provinces of northern China. Due to the closure of traffic lights, there is a scene of chaos on the roads. A city larger than Australia, Guandong is an industrial center. Here people have been advised to use natural light in homes and reduce the use of AC. There are already power cuts in factories here.
The problems faced by domestic consumers also show how fast the power crisis is growing in China, as it is usually here that when there is a shortage in supply, the first big industrial consumers are asked to reduce consumption. Nomura Holdings Ltd and China International Capital Corp have downgraded their growth forecast due to power shortage. Global supply chains are also expected to be affected by power cuts at factories.

There are two reasons for power cuts in China. Some provinces have ordered industrial cuts to meet emissions targets, while others face real power shortages as coal and natural gas costs skyrocket. China's state-run newspaper wrote in an editorial on Sunday that the lack of electricity would cause companies to increase the price of goods. It will bring unnecessary chaos to the economy and society.

Northern provinces such as Liaoning, Jilin and Heilongjiang faced blackouts over the weekend. There was chaos on the roads due to the closure of traffic lights. It is also being said in the Chinese media that this power shortage may last till March next year and people should also be prepared for water cuts.

Guandong's electricity administration on Sunday appealed to all sections of society to help in the power crisis. There are already massive cuts in factories. Now the employees in the offices have been told not to use the lift to go up to three floors. Shopping malls have been asked to reduce the use of lights installed in advertisement boards, while general public have been advised to keep AC above 26 degree Celsius while using natural light.

A report said that due to the power crisis, China's growth rate may decline by 0.1 to 0.15 percentage points. Nomura has already cut its full-year growth forecast to 7.7% from 8.2 percent. Now due to the power crisis, there is a possibility of further cuts.