China's power crisis hampers its economic growth

 China, the biggest manufacturing country in the world, is facing an electricity crisis, forcing factories to reduce operations, power consumption, and leading to outright blackouts in some provinces, media reports said.

Millions of people are getting affected by what is being considered as one of the worst power crises in the country. The Hong Kong Post reported that 20 of the total 31 provinces are implementing energy-rationing, putting the industry sector of the world's second-largest economy in a fix.

Experts believe that the problem has emerged due to the expected rebound in demand in power from Chinese factories after a COVID-19-led slump.

The immediate cause is that China is still highly dependent on coal, which provides 70 per cent of the country's power generation, the Foreign Policy magazine reported.

However, the Foreign Policy report noted that the reasons for the crisis can also be traced back to a string of policy missteps and poorly thought-out market interventions after the beginning of the pandemic.

The energy crisis in China led to an industrial output decline in September for the first time since China started recovering from the COVID-19 lockdowns.

At the end of September, the country's manufacturing powerhouse Guangdong Province said it will widen the "peak-to-valley" price difference and hike peak electricity prices by 25 per cent for industrial users.

Chinese state media Global Times reported that this power shortage threatens to weigh down industrial production in the coming months.

The hike in peak electricity prices is for industrial users and will not apply to residential power use, said China South Grid. This comes as the change in prices in the southern economic powerhouse happened as a shortage of electricity struck China.

China's power grid operator had denied there was an energy crisis and promised to upgrade the national power grid and guarantee a normal power supply. The cuts and restrictions have been implemented piecemeal by local governments, often with scant warning and little explanation, sparking public anger, Radio Free Asia reported.

"China's energy supply capacity is currently sufficient to meet demand," State Grid Corp. said in comments reported by the Global Times. "China has no energy crisis," it said.

Despite China's denial, major international suppliers are bracing for impact on businesses already confronting delays caused by shortages and global shipping delays.

According to media reports, the shock is even leading experts to cut growth expectations for China.

Meanwhile, some sections of the Chinese media have also called for a balance to be struck between climate targets and allowing the power crisis to get out of control.