Factories and homes in China hit by power cuts

Consumers worldwide face possible shortages of smartphones and other goods ahead of Christmas after power cuts to meet government energy use targets forced Chinese factories to shut down and left some households in the dark.

Twenty-three people were hospitalised with gas poisoning after ventilation in a metal casting factory in the northeastern city of Liaoyang was shut off following a power outage, according to state broadcaster CCTV.

Meanwhile, a components supplier for Apple’s iPhones said it had suspended production at a factory west of Shanghai under orders from local authorities.

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 reduce pollution and emissions of climate-changing gases.

“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.

The experts cut their economic growth forecast for China to 4.7% from 5.1% more than a year earlier in the current quarter. They cut their outlook for annual growth to 7.7% from 8.2%.

Global financial markets were already on edge about the possible collapse of one of China’s biggest real estate developers, Evergrande Group, which is struggling to avoid a default on billions of dollars of debt.

Manufacturers are already facing shortages of processor chips, disruptions in shipping and other ongoing effects of the global shutdown of travel and trade to fight the coronavirus pandemic.

Residents in the northeast of the country, where autumn temperatures are falling, report power cuts and have appealed on social media for the government to restore supplies.

The crunch comes as global leaders prepare to attend a UN environmental conference by video-link on October 12 and 13 in the southwestern city of Kunming.

This increases pressure on President Xi Jinping’s government to stick to emissions and energy efficiency targets.

The ruling party is also preparing for the Winter Olympics in the Chinese capital Beijing and the nearby city of Shijiazhuang in February, a period when it will want clear blue skies.

Scores of companies have announced power rationing could force them to delay filling orders and might hurt them financially.

Apple components supplier Eson Precision Engineering said on Sunday that it would halt production at its factory in Kunshan, west of Shanghai, until Thursday “in line with the local government’s power restriction policy”.

Eson said the suspension should not have a “significant impact” on operations.

Apple did not immediately respond to a question about the possible impact on iPhone supplies.

China’s energy consumption and industrial emissions have surged as manufacturers rush to fill foreign demand at a time when competitors elsewhere are still hampered by anti-coronavirus controls.

China’s economy is “more driven by exports than any time in the past decade”, but official energy use targets fail to take this into account, economists Larry Hu and Xinyu Ji of Macquarie Group said in a report.

Some provinces used up most of their official quotas for energy consumption in the first half of the year and are cutting back to stay under their limits, according to Li Shuo, a climate policy expert at Greenpeace in Beijing.

Meanwhile, utility companies are being squeezed by soaring coal and gas prices. This discourages them from increasing output because the government constrains their ability to pass on costs to customers, the expert said.

Prices have risen “past the range of what China’s electricity industry can bear,” he added.

China has launched repeated campaigns to make its energy-hungry economy more efficient and clean up smog-filled cities.

City skies are visibly clearer, but the abrupt way the campaigns are carried out disrupts supplies of power, coal and gas, leaving families in unheated homes and forcing factories to shut down.