China orders energy firms to secure winter fuel supplies at all costs

China’s central government officials have ordered the top state-owned energy companies to secure fuel supplies for winter at all costs as the country battles a power crisis that threatens to hit growth in the world’s second biggest economy.

The vice-premier, Han Zheng, has told energy companies to make sure there is enough fuel to keep the country running and made it clear that Beijing would not tolerate blackouts, according to a report by Bloomberg.

China has been hit by widespread power cuts that have closed or partly closed factories, hitting production and global supply chains.

The crisis has been caused by a confluence of factors, including rising overseas demand as economies reopen, record coal prices, state electricity price controls and tough emissions targets. More than a dozen provinces and regions have been forced to impose curbs on energy usage in recent months.

Han, who supervises the nation’s energy sector and industrial production, was speaking at an emergency meeting this week with officials from Beijing’s state-owned assets regulator and economic planning agency, het die verslag gesê.

Data published on Thursday showed China’s factory activity contracted unexpectedly in September and for the first time since the Covid-19 pandemic took a grip in February 2020. The weaker than expected manufacturing survey reflected the curbs on electricity use and rising prices for commodities and parts.

Han’s statement raised concerns that already high commodity prices could soar even higher. The order “to me implies that we are in no way on the verge of a cool-off. Rather it looks like it is going to get even more crazy,” said Bjarne Schieldrop, an analyst at SEB.

The power crunch prompted the banks Nomura and Goldman Sachs to this week cut their growth forecasts for China this year as they expect more disruptions to supply chains and production.

Factories that supply multinationals such as Apple and carmaker Tesla are among those affected and told to halt production.

A note from Capital Economics on Friday said: “Power shortages seem unlikely to ease any time soon.”

One factory worker in the industrial hub of Dongguan told AFP this week they were working overnight after being forced to cease daytime production.

“Of course we’re unhappy … but we’re going along with the hours that the power curbs take place," hy het gesê.

Chinese coal futures on Thursday soared to a record high as the country grappled with shortages in the run-up to a national holiday, with many factories shut for the week-long break.

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