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posted by martyb on Friday October 15 2021, @12:05AM   Printer-friendly

Analysis | China’s Power Crisis Will Affect Industries Worldwide:

A villain is emerging in China’s efforts to rein in its energy prices: inefficient, power-hungry industry.

With flooding in the coal hub of Shanxi province driving prices up to 1,508 yuan ($234) a metric ton even as the government tries to kickstart extra production, further measures are clearly needed to prevent more generators cutting off their turbines and causing blackouts through the cold of northern China’s winter. That means a crackdown on the factories that still consume the lion’s share of electricity.

Industry makes up only 25% of grid demand in the U.S., but in China it’s fully 59% of the total — more than all the country’s homes, offices and retail stores put together. Cheap power has been an essential tool of development, and the government has traditionally encouraged major users with electricity tariffs that get cheaper the more you consume. With about two-thirds of the grid powered by coal, the cost of digging up the black stuff has determined how much industrial users pay for their power.

The problem is that coal isn’t getting any cheaper. After a sustained period of deflation prior to 2016, when a glut of dangerous and unregulated mines was closed down, annualized costs jumped 40% in 2017. They didn’t really fall again until Covid-19 struck, and they’ve since rebounded with a 57% increase from 12 months ago in August.

Such increases might be tolerable if end-users were turning this power into high-value goods — but all too often, that’s not the case. China now consumes more electricity per capita than the U.K. and Italy, but comes nowhere close in terms of economic output. Determined to hit President Xi Jinping’s targets on peaking emissions by 2030 and hitting net zero by 2060, Beijing’s policy makers have fixed on so-called “dual high” sectors — those whose energy consumption and carbon emissions are both elevated — as the culprits. These are many of the industries that have grown fastest in recent decades, such as cement, steel, base metals, oil refining, chemicals, and glass. They collectively account for more than half of China’s emissions.


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  • (Score: 2, Insightful) by Anonymous Coward on Friday October 15 2021, @12:38AM

    by Anonymous Coward on Friday October 15 2021, @12:38AM (#1187167)

    It's time to decouple our economies from ccp.

  • (Score: 1, Insightful) by Anonymous Coward on Friday October 15 2021, @12:49AM (4 children)

    by Anonymous Coward on Friday October 15 2021, @12:49AM (#1187168)

    We need to fix our own problems FIRST before we hypocritically tell China or any other nation to fix theirs AND then do whatever it takes to HELP China or any other nation fix their problems too if we have to!

    Cause fixing the blame or pointing at the problems only shows us what is a priority, at some point, then, we must act with solutions for the planet.
    AND that excludes the GREENWASHING shell game going on.
    You know, REAL solutions.

    Good Luck humans.,,time is running out.
    TikTok TikTok

    • (Score: 0) by Anonymous Coward on Friday October 15 2021, @01:23AM

      by Anonymous Coward on Friday October 15 2021, @01:23AM (#1187180)

      I volunteer you to go to China and "help" them solve problems. President Xi waits breathlessly.

    • (Score: 2, Interesting) by Anonymous Coward on Friday October 15 2021, @01:45AM (1 child)

      by Anonymous Coward on Friday October 15 2021, @01:45AM (#1187185)
      Decoupling from China iis the only way to fix the geopolitical imbalance short of nuclear war. China's housing sector is tanked, and they were a large part of both the year-on-year economic gains and polution/energy consumption.

      Much of China will be uninhabitable within 30 years if we don't decarbonize the economy, which means that a lot of China's manufacturing becomes "stranded assets", same as a lot of the fossil fuels that are going to have to stay in the ground.

      China will have to look north for cooler ground, so expect them to start picking fights with Russia. Because it's not like the countries they're turning into client states with their belt and road strategy will be any better.

      India, Africa, the Middle East will be mostly uninhabitable. We overpopulated the planet, so we plundered it like a plague of locusts, and now the planet will start the process of eliminating half the world's population. Karma's a bitch, but you can be sure it will "get it done" since we refused to do what was necessary.

      So do you really think that moving production from one shithole to another is viable any more? Or should we just cut back on overproduction of shit from 3rd world countries? Because they're not going to be around for long anyway.

      • (Score: 0) by Anonymous Coward on Friday October 15 2021, @06:53PM

        by Anonymous Coward on Friday October 15 2021, @06:53PM (#1187345)

        Buy your 50 year supply of popcorn for the almighty catastrophe of sea level rise in Asia.

    • (Score: 0) by Anonymous Coward on Friday October 15 2021, @01:41PM

      by Anonymous Coward on Friday October 15 2021, @01:41PM (#1187264)

      >> We need to fix our own problems FIRST before we hypocritically tell China or any other nation to fix theirs

      That's right... Impeach Biden!

  • (Score: 2, Funny) by fustakrakich on Friday October 15 2021, @12:57AM

    by fustakrakich (6150) on Friday October 15 2021, @12:57AM (#1187170) Journal
    --
    La politica e i criminali sono la stessa cosa..
  • (Score: 4, Insightful) by Runaway1956 on Friday October 15 2021, @01:20AM (9 children)

    by Runaway1956 (2926) Subscriber Badge on Friday October 15 2021, @01:20AM (#1187179) Journal

    Industry makes up only 25% of grid demand in the U.S.

    Well, duh, people like Mitt Romney made fortunes exporting American industry over the past few decades. We have a lot less industry today.

    but in China it’s fully 59% of the total

    Double down on the DUH! While our traitorous scum were exporting industry and technology, China was importing all of it, and more. Yeah, energy usage goes with industry!

    inefficient, power-hungry industry.

    There is no hint in the article how efficience is measured. Does it take x joules of energy to produce a ton of steel in the US, and 3x joules in China? Where do they get the idea that industry is inefficient? Not one shred of evidence in this "analysis" supports such a claim. Sorry, but this is no analysis, it's just a political statement saying industry is bad, and China is bad, and coal is bad. The authors and editors need to start over, and present some real data to support their preconcieved conclusions.

    • (Score: 1, Interesting) by Anonymous Coward on Friday October 15 2021, @01:46AM

      by Anonymous Coward on Friday October 15 2021, @01:46AM (#1187186)

      Where do they get the idea that industry is inefficient?

      The economy is inefficient in terms of government expenditure to gdp - large infrastructure costs, endemic corruption, and government subsidies to entire industries. China offered a deal where the more energy a company uses, the cheaper the unit price. The result was China opening more steel mills (etc) than it needed and undercutting established world players. The mills were built with foreign investment and had already been "restructuring their debt" for a decade because China's state subsidized overproduction drove prices down. This story repeats for their entire ponzi scheme "economy".

    • (Score: 1, Insightful) by Anonymous Coward on Friday October 15 2021, @02:05AM (6 children)

      by Anonymous Coward on Friday October 15 2021, @02:05AM (#1187189)
      I guess you've missed the news about Evergrande, China's biggest property developer, defaulting on bonds. It's a Chinese rerun of the global financial crisis, but with additional constraints. There's whole cities of empty highrise buildings, and more that are only half built, without the necessary funding to complete them unless they default on their international debt obligations.

      Construction was a large part of the "Chinese miracle", but it's just as rotten as the US/UK property boom. Now that the boom is bust, there's bi need for as much cement and steel, but there just isn't enough coal to meet even diminishing demand. Factories are working by candlelight, ffs.

      And even if China could meet the reduced demand, there's bot enough port capacity at the nations they sell to to meet demand. Covid reduced demand for truckers domestically, many went into other work, and the capacity simply isn't there any more.

      Labour shortages are baked in for the next decade. So we're going to see continued increases in domestic wages, which means that consumers will actually be able to afford shit that isn't dependent on Chinese wage slaves.

      • (Score: 2, Interesting) by khallow on Friday October 15 2021, @07:29AM (3 children)

        by khallow (3766) Subscriber Badge on Friday October 15 2021, @07:29AM (#1187225) Journal
        Hyperventilate much?

        I guess you've missed the news about Evergrande, China's biggest property developer, defaulting on bonds. It's a Chinese rerun of the global financial crisis, but with additional constraints. There's whole cities of empty highrise buildings, and more that are only half built, without the necessary funding to complete them unless they default on their international debt obligations.

        Sure, if there's anything we've learned about the financial crises of the past century or more, there's a lot of hidden connections and correlations that can fail when something big goes down. So sure, this thing could be a lot bigger than it appears. We'll see. But it's going to be a primarily Chinese problem in a primary growing economy. I think they'll get through it.

        Construction was a large part of the "Chinese miracle", but it's just as rotten as the US/UK property boom. Now that the boom is bust, there's bi need for as much cement and steel, but there just isn't enough coal to meet even diminishing demand. Factories are working by candlelight, ffs.

        Ultimately, they'll just have to produce more power. I think they have that figured out one way or another.

        And even if China could meet the reduced demand, there's bot enough port capacity at the nations they sell to to meet demand. Covid reduced demand for truckers domestically, many went into other work, and the capacity simply isn't there any more.

        Sounds like someone needs to hire more truckers - another problem solved by the internet hivemind! Seriously, there's not much point to angsting about things that are easy to reverse like not having enough truckers for a brief period of time.

        Labour shortages are baked in for the next decade. So we're going to see continued increases in domestic wages, which means that consumers will actually be able to afford shit that isn't dependent on Chinese wage slaves.

        But they'll probably continue to buy Chinese wage slave shit so that they have more money for the other shit that isn't so dependent - comparative advantage [wikipedia.org] in other words.

        Sure, the present economic turmoil in China has the potential to balloon into something far uglier, but it probably won't. I think the fundamental economy of China remains and there's a lot of useful stuff it is doing once you get past the silly stuff like ghost cities and pathological levels of infrastructure building.

        In my view, labor shortages are baked in for the next century or so. This will be the golden age for human labor globally. You heard it here first. The countries that will benefit the most will be the ones that more pay attention to their economies rather than entertaining various sorts of corruption and entitlement spending. China might learn from this episode and come out stronger for it or they might not. We'll just have to see.

        • (Score: 0) by Anonymous Coward on Friday October 15 2021, @07:36AM

          by Anonymous Coward on Friday October 15 2021, @07:36AM (#1187226)

          lawl ok bud

        • (Score: 0) by Anonymous Coward on Friday October 15 2021, @06:58PM (1 child)

          by Anonymous Coward on Friday October 15 2021, @06:58PM (#1187347)

          > corruption and entitlement spending

          lol

          Yes those things we paid for. Back in your cess pool, dirtbag.

          • (Score: 1) by khallow on Saturday October 16 2021, @03:32AM

            by khallow (3766) Subscriber Badge on Saturday October 16 2021, @03:32AM (#1187433) Journal

            Yes those things we paid for. Back in your cess pool, dirtbag.

            I remain mystified by your attempt at communication. What are you saying?

      • (Score: 3, Insightful) by Phoenix666 on Friday October 15 2021, @02:35PM (1 child)

        by Phoenix666 (552) on Friday October 15 2021, @02:35PM (#1187284) Journal

        That's an apt point. Remember, Japan's hard-charging economy in the 80's was hobbled by over-valued real estate; when that bubble popped it took down the rest of the country with it and it has never really recovered. The Japanese government should have let the banks who were behind it fail, but instead propped them up; so they have carried the malaise for decades now. China will probably do the same. The US has also done the same by putting the bailout burden on taxpayers and never holding any of the culprits accountable.

        There are some differences between Japan and the US vis-a-vis China that have saved them from dissolving. Japan and the US have had social cohesion and civil society to buffer economic shocks. the US, too, as the world's reserve currency, could externalize the repercussions of its profligate spending to other nations. China has been one of those other nations, and they bought up US debt for their own strategic reasons. Meanwhile, Japan and the US have lost a great deal of the social cohesion and civil society that saw them through crises before. And when China stumbles and stops buying US debt, because it can't, things will quickly fall apart everywhere.

        The US and Europe need to de-couple from China and get their fiscal house in order. Engaging China has not advanced the cause of democracy there, but rather has done enormous harm to people in Europe and the US. It has also done a great deal to set the stage for a catastrophic war with Beijing by giving them the technology, means, and strategic reach to make their bid for global supremacy. If living under a totalitarian socialist dictatorship is not a prospect to relish, then taking strong measures now is urgent.

        --
        Washington DC delenda est.
        • (Score: 0) by Anonymous Coward on Friday October 15 2021, @06:53PM

          by Anonymous Coward on Friday October 15 2021, @06:53PM (#1187344)
          From Who Owns the US National Debt? [thebalance.com]:

          Current Foreign Ownership of U.S. Debt

          In July 2021, Japan owned $1.3 trillion in U.S. Treasurys, making it the largest foreign holder of the national debt. The second-largest holder is China, which owns $1.1 trillion of U.S. debt. Both Japan and China want to keep the value of the dollar higher than the value of their currencies. That helps keep their exports to the U.S. affordable, which helps their economies grow.

          Despite China's occasional threats to sell its holdings, both countries are happy to be the biggest foreign holders of U.S. debt. China replaced the UK as the second-largest foreign holder in 2006 when it increased its holdings to $699 billion.9

          The UK is the third-largest holder with $539.5 billion. Its holdings have increased in rank as Brexit continues to weaken its economy. Ireland is next, holding $320 billion. Switzerland, Luxembourg, Cayman Islands, Brazil, Taiwan, and France round out the top 10.10

    • (Score: 2) by Username on Friday October 15 2021, @08:11AM

      by Username (4557) on Friday October 15 2021, @08:11AM (#1187232)

      You forgot another conundrum, How will electric prices in china affect american industry? Are our coal mines in pennsylvania powered by chinese electricity? Probably meant commercial, shit we buy and resell from china.

  • (Score: 0) by Anonymous Coward on Friday October 15 2021, @02:10PM

    by Anonymous Coward on Friday October 15 2021, @02:10PM (#1187272)

    Now they pay the price.

  • (Score: 0) by Anonymous Coward on Friday October 15 2021, @03:02PM

    by Anonymous Coward on Friday October 15 2021, @03:02PM (#1187288)

    you have to offload a ship before it can be used again ...

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