Factories in China have stopped operations due to power shortages and government mandates to meet energy and carbon reduction goals. Scores of Chinese companies have announced power rationing that could cause delay in filling orders and might hurt them financially.
China is facing a power squeeze from a shortage of coal supplies, tougher emissions standards and strong demand from manufacturers and industry that have triggered widespread curbs on usage, says Reuters.
Plants have been idled to avoid exceeding limits on energy use imposed by Beijing to promote efficiency. China has launched repeated campaigns to make its energy-hungry economy more efficient and clean up smog-choked cities.
Twenty provinces have implemented power cuts since mid-August, including the manufacturing hubs of Guangdong, Zhejiang and Jiangsu, putting pressure on companies' earnings, said a Reuters report. Some provinces used up most of their quotas for energy consumption in the first half of the year.
The situation is severe in Northeastern China where news reports and social media posts flagging problems in cities like traffic lights and 3G communications networks being down, fear of water supply disruptions and shops operating by candlelight.
Production of steel, aluminium and cement, as well as infrastructure construction, would be immediately affected by the power cuts and supply restrictions.
China is in the grip of a severe shortage of both coal and electricity as the economy has resumed strong growth after the coronavirus recession but coal mine output has failed to keep up, leaving generators short of fuel.
Rationing has been implemented during peak hours in many parts of northeastern China since last week, triggering state media reports of power supply disruptions in many cities and stoking concern on social media.
The disruption to China's vast manufacturing industries during one of their busiest seasons reflects the ruling Communist Party's struggle to balance economic growth with efforts to rein in pollution and emissions of climate-changing gases.
Manufacturers already face shortages of processor chips, disruptions in shipping and other lingering effects of the global shutdown of travel and trade to fight the coronavirus pandemic.
The crunch comes as global leaders prepare to attend a UN environmental conference by video link on October 12-13 in the southwestern city of Kunming. That increases pressure on President Xi Jinping's government, as the meeting's host, to show it is sticking to emissions and energy efficiency targets.
China is one of the world's biggest emitters of climate-changing industrial gases and consumes more energy per unit of economic output than developed countries.
The goverment is also aiming for the Winter Olympics in Beijing, and the nearby city of Shijiazhuang in February, a period when it will want clear blue skies.
Goldman Sachs and Nomura have revised down projections for Chinese economic growth this year as a result.
Beijing's unprecedented resolve in enforcing energy consumption limits could result in long-term benefits, but the short-term economic costs are substantial, Nomura economists Ting Lu, Lisheng Wang and Jing Wang said in a report Monday.
They said the impact might be so severe that they cut their economic growth forecast for China to 4.7 per cent from 5.1 per cent over a year earlier in the current quarter.
They cut their outlook for annual growth to 7.7 per cent from 8.2 per cent.
(With input from agencies)
