Energy crisis hits Chinese economy

Energy crisis hits Chinese economy

The energy crisis is adversely affecting not only Europe but also Asia. China had to adopt power rationing as a short-term measure. 

The country is struggling to balance electricity supplies with demand. This is why the strictest power rationing helps the government ameliorate the current shortages and reach long-term emissions reduction goals. This has already hit the country's economy. Domestic production was the first to suffer. "China's power rationing is likely to continue into Q1 2022 as environmental policies collide with shortages of fuel and renewables," Jian Chang, chief China economist at Barclays, said. "We believe residential users will be prioritised through the winter, with ramifications for factory output."

Experts believe that the current restrictions on electricity use will significantly increase costs for Chinese exporters and slow down China's economic recovery. A widening power shortage, caused by the country's transition to clean energy, fast-growing industrial demand, and high commodity prices, have halted production at numerous factories. Among them are the world's largest companies such as Apple and Tesla.


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