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How China's power shortage impacts the global community

3 months 3 weeks 3 days ago Wednesday, June 30 2021 Jun 30, 2021 June 30, 2021 9:03 AM June 30, 2021 in News
Source: CNN
Power lines extend over Guangzhou, China

GUANGZHOU, China - In a world still recovering from the reverberating effects of the COVID-19 health crisis, one of the international community's wealthiest nations is struggling through a power shortage that may impact the global economy.

China's struggles are causing problems for its international partners, according to a recent CNN report.

The news outlet says Guangdong Province is one of several Chinese regions battling an electricity shortage caused by the threefold issue of extreme weather conditions, surging demand for energy, and strict limits of coal usage. 

CNN says the shortage could last for months.

Guangdong, which plays a major role in international trade, serves as a home base to popular manufacturers such as Procter & Gamble, Canon, and Volkswagen.

The region is responsible for $1.7 trillion, or more than 10%, of China's annual economic output.

Yet, as of late June, this key province has been rationing power for over a month.

This means Guangdong's industry-leading manufacturers have been forced to shut down for a few days per week. 

Other Chinese provinces that play a large role in international manufacturing and trade, such as Yunnan and Guangxi, are dealing with similar issues.

As China steers its way through the worst energy shortage the country has faced since 2011, its overseas partners are impacted. 

For example, Klaus Zenkel, chair of the European Union Chamber of Commerce in South China, said China's international partners are not pleased with the suspension of operations due to electrical outages. 

Zenkal said as many as 80 of the chamber's member companies might have been affected by the government's orders to suspend operations for a few days a week, adding that domestic manufacturers have been forced to stagger production, too. 

Some companies have even started renting expensive diesel generators to keep business going, he said.

According to CNN, the power rationing in the key metal-producing province of Yunnan has caused a decline in the supply of some types of metals, such as aluminum and tin.

The production cuts and prospect of missed delivery deadlines across China pose a threat to an already tight global supply chain. 

"It [the power shortage] might add to the shipping delays which can be felt around the globe," said Henning Gloystein, director of energy, climate and resources at Eurasia Group.

At this time, it remains to be seen how long China's energy shortage and ensuing manufacturing slowdown will continue.  

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