China’s economic boom leaves manufacturing centers lacking in strength

China’s rapid economic recovery has been so successful that it has caused power shortages in dozens of manufacturing and industrial centers in the south of the country.

Factories scattered in cities such as Guangzhou, Foshan and Dongguan which are known for global consumer production and high-tech Products, orders were issued to use less power and even shut down for one to three days a week to ease the shortage.

Klaus Zinkel, president of the European Chamber of Commerce in southern China, said about 100 of the organization’s companies had been affected and that further shortages could have a negative impact on foreign investment in the region.

“After the post-pandemic economic recovery, businesses are very busy and have a lot of orders . . . now some have been asked to close three days a week. It is an infrastructure issue that needs to be addressed immediately,” Zinkel said.

As other economies struggle to return to growth, record demand for energy from factories and industry has outpaced supply in Guangdong Province, where the cities are located. The problem has been exacerbated by rising temperatures as well as lower rainfall in Yunnan, on which Guangdong depends in part for hydropower.

Analysts said that Central government carbon emissions targets It also made local governments reluctant to expand their reliance on coal-fired power, forcing officials to ration electricity instead.

“With China’s carbon plan… local governments are very nervous about their use of coal and thermal power,” said Shan Ju, partner at Plenum China Research.

said Lara Dong, from data provider IHS Markit Restrictions on coal imports Local production was also a contributing factor to this shortage.

Factories are concerned that they will not be able to meet their orders in time after China Southern Power Grid said on Saturday that 21 cities and regions across Guangdong will be included in the rationing or restrictions on use. Companies have to limit their power supply or they will be cut off from their electricity.

Mike Wang, manager of an electronics factory in Dongguan suffering from the shortage, said employees were “sweating profusely” in 36 days as they were unable to operate air conditioners and fans without exceeding energy usage limits.

“I’m really worried now. I don’t know how to explain to clients [that their orders would be late]’, he told the Financial Times. He said the lack of power has hampered the efficiency of his plant by 20 to 30 per cent.

China has experienced one of the world’s fastest economic recovery from Covid-19, mainly driven by the manufacturing and manufacturing sectors. Its economy grew 18.3% in the first quarter of 2021 Compared to the same period last year, although the growth rate was boosted by a low base in early 2020.

From January to April, the total electricity consumption of a group of cities in Guangdong, across the border from Hong Kong and Macau known as the “Greater Bay Area,” increased about 30 percent year on year, the power company said.

Provinces across China are under pressure to reduce their energy intensity — carbon dioxide emissions per unit of GDP — as part of the Central government efforts To reach peak carbon emissions by 2030 and reach “carbon neutrality” by 2060.

Dong said there is a risk of further rationing as the province approaches an expected peak in demand in July or August.

Additional reporting by Qianer Liu in Shenzhen and Emma Zhou in Beijing

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