The Chinese government’s efforts to reduce energy consumption and carbon emission in the country, and the rapidly surging coal prices, are the two major reasons behind China’s electricity crunch. The manufacturing hub of the world, the leading exporter of countless commodities, is now being forced to conserve energy by curbing production.
Local governments are also ordering power cuts in their respective province to meet energy conservation targets. China’s dedicated efforts for controlling carbon emission and climate change has affected its industries that export all around the globe. Chinese manufacturers warned that the forced electricity crunch will reduce the country’s economic output. This might lead to a possible increase in prices and a reduction in the GDP of China. This strategy adopted by the Chinese authority poses serious threats to the global supply chain.
How power cuts in China affects the global supply chain?
China is famous for its exports and its huge manufacturing sector. The industrial sector accounts for roughly 30% of the country’s GDP. China has been worlds largest exporter since the year 2014. Power cuts and production curbs in the country are bound to affect the global supply chain.
A Chinese economist named Lu Ting said, “Global markets will feel the pinch of a shortage of supply from textiles, toys to machine parts,”. Producers and shippers all around the world are struggling to meet demand for majority of commodities. Mobile phone industry might receive a strong blow as China developed important components. Companies like iPhone depended on the country for assembly operations.
How the energy crisis is affecting locals?
As China forces manufacturers and industrialists to curb production, the market will see an acute shortage of goods. These shortages would force the companies to raise prices of their goods for Chinese consumers which will in-turn speed up inflation.
Image Credits: Wikimedia Commons
Stay tuned with Artifex.News.