Provinces in China including Zhejiang, Hunan and Jiangxi have issued rare orders limiting the usage of electricity, with Chinese media reporting the electricity shortage may last for the entire winter.

Chinese media have reported five main reasons behind the orders, with the first being the sharp fall in temperatures across China, forcing areas with weak coverage of the electricity network to face a temporary shortage.

Another reason was the resumption of domestic industrial production due to the increased reliance on Chinese products, as other countries were yet to control the COVID-19 pandemic, according to self-run Chinese media. China’s export value stood at US$268 billion in November, representing a 21.1% growth compared to last year. This was the highest growth since March 2018, according to statistics from the Chinese customs.

Chinese media also reported that the lack of coal was another reason for the power shortage. China has tried to switch to natural gas for electricity for environmental reasons, but as relations with Australia and the United States worsened, the price increased under sanctions. China switched back to coal but still required imports after producing 350 million tons in November.

China has stopped buying Australian coal, but replacements from Indonesia and Russia were poorer in quality. Coal from three places in China could rival Australian coal, but transport was inefficient at the Huanghua Port in Cangzhou and the Qinhuangdao Port, forcing electricity production at coastal areas to slow down.

The fourth reason was extreme regulations distorting the supply of coal, according to independent Chinese media reports. China’s regulator demanded the price of coal not to exceed 640 yuan (US$98) per ton, but with the lack of supply, upstream enterprises did not wish to sell their coal, causing downstream companies to have no coal supply despite increased production.

State-run tabloid Global Times chief editor Hu Xijin said the electricity orders were because some areas had to achieve carbon emission reduction goals by the end of the year. Hu also denied that the ban of Australian coal was one of the reasons for lack of electricity.

Economist Andy Kwan agreed that the limited usage of electricity was due to a bucket of reasons, including weather, increased production, low transport efficiency and rising cost.

China’s decision to stop buying Australian coal was creating a problem for itself, as other countries may not be able to supply the same type of coal and deliver quickly, Kwan said, and the lack of coal may only ease after this winter.

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