Dimmer city centers and stricter energy-saving enforcement in China suggest that electricity is at a premium in the world’s second-largest economy in the cold of winter.
That’s sparking speculation that the Commerce Ministry’s weeks-old ban on Australian coal imports, part of Beijing’s intensifying trade spat with Canberra, is or could in future impact power supplies.
China is hauling Australia over the coals for its leading role in the West’s Covid-19 blame game against China as the origin of the pandemic, as well as Canberra’s “iron curtain” policy to lock out Chinese tech giants such as Huawei from its 5G rollout.
At the same time, there have been initial indications of a looming electricity crunch in China. Last week, Shanghai’s municipal government issued a notice to owners and operators of major shopping malls and office towers, telling them to switch off their air-conditioning and unnecessary outdoor lighting in the evening.
Shanghai’s signature light and laser show along both banks of the Huangpu River will soon be suspended indefinitely, with the city’s Lujiazui financial district losing its glitter and glow at night.
Sources say that Shanghai’s deputy major in charge of the environment and energy supply looks out from his office window in the evening to police the order’s implementation and call out offenders whose buildings and malls still burn brightly.
Netizens have linked the unexplained delay of the commissioning of the city’s new metro lines to an electricity shortage, triggering a denial from Shanghai’s metro operator.
Household power supplies have not been affected, at least for now. Other cities such as Ningbo and Suzhou in the Yangtze River Delta, an economic powerhouse, have also reportedly dimmed their outdoor lighting.
On Tuesday, Shanghai’s official Jiefang Daily reported that the city’s leaders had inspected the Shanghai branch of State Grid electric utility corporation to coordinate arrangements to prioritize electricity supply to residential and industrial users.
The rumored power crunch may have something to do with the spike in demand from the manufacturing sector, where factory production has recently roared back to pre-Covid levels. China’s exports booked a record 21.1% year-on-year surge in November, according to the preliminary data from the Commerce Ministry.
On Monday, Xinhua noted in a feature on the robust growth in China’s manufacturing activities that electricity shortages must not jam the gears of the economy as it stirs back to life.
Against this speculative backdrop, questions have been raised about for how long Beijing will continue to boycott Australian coal.
Figures from Chinese Customs Administration revealed a 62% dive to 2.25 million tonnes in China’s import of Australian coal in October, down from September’s 5.87 million tonnes.
Beijing is already seeking alternative supplies to ensure stable electricity generation, particularly in the current dry season when hydropower plants are operating well below capacity.
On December 12, China’s National Development and Reform Commission (NDRC) reputedly delegated its approval process to regional governments to allow power producers to source coal from Mongolia, Indonesia and Russia to make up for any shortfalls.
Still, China’s soaring demand for coal is defying Beijing’s imperative to penalize Australia, a crunch that some suggest may force it to pare back its bans and sanctions.
Domestic mining and production also face bottlenecks as supplies from coal-rich Shanxi and Inner Mongolia are being held back by stricter safety and environmental protocols. This month, Beijing ordered Chongqing to halt mining for safety reviews after a string of fatal accidents in the western city. Domestic coal is also less pure and more polluting.
Meanwhile, Australia is digging in its position. Australian Prime Minister Scott Morrison reminded Beijing on Tuesday that boycotting Australia’s higher-grade coal would mean a “double whammy” to bilateral trade and China’s environment.
He added that the coal from his country was among the “greenest fossil fuel” China could import since Australian coal releases “50% less carbon dioxide” than China’s domestic alternative. Latest data from Canberra shows Australia exported A$13 billion (US$984 million) worth of thermal coal in the first ten months, of which A$4 billion was shipped to China.
Beijing may aim to dip into its massive coal reserves to dilute the impact of the ban on Australia. Earlier this month, the Economic Information Daily, published by Xinhua, quoted NDRC officials as saying that strategic reserve projects and facilities commissioned in 2020 could store 30 million tonnes of coal.
It is also reported that, as of December, Beijing has allowed many barges carrying Australian coal previously denied entry to offload at ports in Shanghai, Ningbo, Tianjin and Guangzhou.
The Transport Ministry noted last week that the “delay” in their entry was merely due to the “overcrowding” at major ports due to the huge consignments of export goods being processed.
The Australian newspaper noted in November that about 80 Australian coal ships had been “held up” off Chinese ports, as these ports were told to apply more red tape and checks before letting the ships to dock.
Beijing’s apparent softening comes amid talks in Australian media that the Morrison government will take a separate trade dispute over barley exports against China to the World Trade Organization.
Canberra could also in retaliation curb its exports of iron ore to China, a pillar source of supply for Chinese steelmakers and related sectors. Australia accounted for 60% of China’s iron ore imports in 2019.