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What's Ahead as China Faces its Worst Power Shortage in a Decade

Updated: Jul 1, 2021

CNN | June 30, 2021

China is in the middle of a huge power crunch as extreme weather, surging demand for energy and strict limits on coal usage deliver a triple blow to the nation's electricity grid. It's a problem that could last for months, straining the country's economic recovery and weighing on global trade.

Guangdong province has been rationing power for over a month. The restrictions have forced companies across the province to shut down for a few days per week. Some local authorities are warning that power rationing could last through the end of the year. At least nine provinces have said they are dealing with similar issues.

Between the post-pandemic commodities boom and severe weather, coal power plants are forced to curb output, while also hampering hydroelectricity. China is grappling with how to meet the push for a carbon neutral China by 2060, leading the coal mines to produce less, resulting in higher prices.

"It 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. Adding to the pressure is that Guangdong has already seen its incredibly busy container ports clogged by a Covid-19 outbreak. The shipping backlog could take months to clear and lead to shortages during the year-end holiday shopping season.

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