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Summary
- Many Chinese provinces have experienced power outages.
- China has banned the import of various goods from Australia, including coal.
- Coal prices have soared in China as domestic stock battles to balance the demand.
Power outages, which were thought to be a thing of the past, have recently made a comeback, becoming the new normal in China. The residents of the Hunan and Zhejiang provinces have criticised the issue highly, with the Chinese social media platform "Weibo" teeming with complaints.
Reportedly, people in these two Chinese provinces have been issued notices to efficiently use electricity along with other power operating restrictions and regulations.
The beleaguered provinces of Zhejiang and Hunan with a population of 57 million and 67 million, respectively, have been left shivering in the freezing cold, thanks to the outages.
The Government has ordered the offices in Zhejiang to use electric driven heaters only when the temperature falls below 3 degrees. Small-to-mid-size factories have been mandated to operate on an alternate basis beginning 13 December 2020 to 30 December 2020.
Due to power cuts, many residents in Hunan have had to climb even 20 floors via stairs. Likewise, Shanghai was forced to switch off air conditioners of its offices and shopping complexes along with non-essential outdoor lighting.
Even the iconic, entertaining laser show of the Huangpu River will be on an off-mode to compensate for the limited power supply.
Why has the "Power-Cut" situation arisen?
Almost a month ago, Chinese coal prices stood at CNY500 per tonne. However, recently, the prices hit CNY760 per tonne. The price spike has now brought limitations on electricity usage for a large number of residents.
The National Development and Reform Commission of the People's Republic of China (NDRC) has stated that there is enough coal supply to meet the requirements for complete winter and spring. On the flip side, the Ordos Coal Trading Centre has claimed that the prices are rising due to limited imports and increased dependency on domestic markets.
Must Read: China turns up the heat on trade war, bans Australian coal
As per the National Bureau of Statistics, China's coal imports, in general, have been in a descending direction. Total coal imports stood at 11.67 million tonnes in November 2020, representing a decline of 2.06 million tonnes from October 2020.
Why were imports less?
Last year, Australia counterbalanced around 57% of China's thermal coal supply, most of which was utilised in power stations for electricity generation.
However, a month ago, Beijing slapped a ban on Australian coal imports that resulted in 80 boats conveying more than $1.1 billion in boycotted mode, stuck off at Chinese ports.
China attributed the ban to detrimental environmental effects of coal. However, it was not just coal. Before that, China had also banned the imports of barley, lobster, wine, and timber from Australia.
Impact on Both Countries
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Beijing's choice to slap taxes on Aussie wine and grain along with other products including wood, coal and fish has seriously affected various producers and suppliers in the market.
It is a lose-lose situation for both the countries as China is struggling to fulfil its energy needs through coal, which is the second-biggest export industry for Australia. The Australian coal exports to China account for around $14 billion per year.
Also Read: Are We Prepared for a Trade War with China?
