As Beijing faces power crisis, firms told to secure supplies

Fuel crunch shuts factories, threatens growth, global supply

China’s top state-owned energy companies have been ordered to ensure there are adequate fuel supplies for the approaching winter at all costs, a report said on Friday, as the country battles a power crisis that threatens to hit growth in the world’s number two economy.

The country has been hit by widespread power cuts that have closed or partially closed factories, hitting production and global supply chains.

The crisis has been caused by a confluence of factors, including rising overseas demand as economies reopen, record coal prices, state electricity price controls and tough emissions targets.

More than a dozen provinces and regions have been forced to impose curbs on energy usage.

Bloomberg News, citing people familiar with the matter who did not want to be named, reported that Vice Premier Han Zheng had told energy companies to make sure there is enough fuel to keep the country running and that Beijing would not tolerate blackouts.

Mr. Han, who supervises the nation’s energy sector and industrial production, was speaking at an emergency meeting this week with officials from Beijing’s state-owned assets regulator and economic planning agency, the people said.

“It is probably a strong signal about how concerned China is regarding keeping industry going, and more importantly, the winter that is just around the corner,” said Jeffrey Halley, senior market analyst at OANDA.

Coal-reliant economy

Nearly 60% of the Chinese economy is powered by coal, but supply in the world’s largest coal importer has been disrupted by the pandemic and squeezed by falling imports amid a trade tiff with Australia.

Data released on Thursday showed China’s factory activity contracted last month for the first time since February 2020, when the country was under lockdown.