China doesn’t have enough power
And it’s sending shockwaves
Through the global economy
Welcome to China Uncensored, I’m Chris Chappell.
Last month, I told you about the impending collapse of Chinese real estate giant Evergrande
and how it could devastate the global economy.
Some have been calling it China’s Lehman Brothers moment.
The collapse of Lehman Brothers in New York is of course what sparked the 2008 financial crisis.
Well now there’s an even bigger crisis.
China’s power crunch dwarfs any troubles with Evergrande, according to investors.
You see back in August, the Chinese Communist Party ordered basically every region in China
to drastically cut back on their energy consumption.
China's National Development and Reform Commission set strict energy quotas.
“Almost half of China’s regions missed energy consumption targets
set by Beijing and are now under pressure to curb power use.”
And that’s bad news for Jiangsu, Zhejiang, and Guangdong provinces.
These are in China's industrial heartland, which makes up a third of China’s economy.
But how bad is this?
“A new threat to the world's second largest economy. Goldman Sachs, the latest analysts
to cut China's latest GDP forecast as recent power cuts. This video on social media showing
a family including two children stuck in an elevator after a sudden power outage.”
That’s right, “Some building managers have turned off elevators. Some municipal pumping
stations have shut down, prompting one town to urge residents to store extra water
for the next several months, though it later withdrew the advice.”
And the worst part? This might affect Christmas.
More after the break.
Welcome back. So yes, China’s power shortage has led local governments
to cut power to their communities. Sometimes trapping families in elevators.
But the real bad news is, this might threaten Christmas for us here in America.
You see, Christmas is all about the presents. And if we don’t buy enough
cheap crap, Santa Claus won’t come!
That’s the real reason the Elf on the Shelf is watching you.
The problem is, everything is made in China. And to meet state-mandated energy quotas,
factories are reducing production. Local officials in Guangdong said that “Many
firms are trying to reduce demand by working two or three days per week.”
“In Jiangsu, a province...with an economy almost as big as Canada’s,
steel mills have closed and some cities are turning off street lights.
In nearby Zhejiang, about 160 energy-intensive companies including textiles firms were
shuttered. While in Liaoning in the far north, 14 cities have ordered emergency power cuts.”
So why is there a power shortage?
Well, Chinese leader Xi Jinping has put quotas in place. Is it because he’s trying
to make good on his promise to have China’s carbon emissions peak no later than 2030?
Well, you know how much the Chinese Communist
Party cares about keeping its international promises.
Xi has said they won’t even start cutting coal consumption till 2026.
But the Beijing Winter Olympics are coming up!
And “China’s energy crisis is partially of its own making
as President Xi Jinping tries to ensure blue skies at the Winter Olympics in Beijing next February.”
Although that might not be such a big deal since they’re banning foreign spectators from coming.
But the real reason for the energy crunch is Chinese factories are in huge demand right
now as the global economy starts to kick into gear after all the pandemic lockdowns.
“​​Swelling orders for the smartphones, appliances, exercise equipment
and other manufactured goods that China’s factories churn out has driven the rise.”
And the reality is China still mostly depends on coal for energy.
This surge in energy demand means a surge in the price of coal. This year,
thermal coal in China has gone from $104 dollars per ton to $265 dollars per ton.
“But Chinese regulators have not let utilities raise rates enough to cover the rising cost
of coal. So the utilities have been slow to operate their power plants for more hours.”
Yay state price controls!
Ok, so if the price of coal is increasing because of a coal shortage,
and utilities don’t want to operate at a loss, why doesn’t China try to fix its coal shortage?
Well, they are trying to fix it. Sort of. I’ll explain after the break.
Welcome back. So China is trying to fix its coal shortage. But it’s not that easy.
China has told its top energy firms to secure supplies for the winter at all costs.
Which likely means that global coal and gas prices are going to continue to skyrocket,
as China competes for supply.
And coal mines in China have been told to produce
more coal, even if they’re already over their quotas.
“[China] controls coal production under a quota system
that caps annual output of mines in order to manage supply.”
Guess that worked a little too well this time.
And in a sign of just how serious this issue is, China’s energy shortage is even
forcing the Chinese regime to loosen its year-long grudge against Australia.
Remember, the Chinese Communist Party has been trying to punish Australia economically
ever since Australia called for an investigation into the origins of Covid-19.
Their punishment was mostly
banning Australian imports to China. And a big import was Australian coal.
But the power crunch has gotten so bad, that “China is releasing Australian coal from bonded
storage, despite a nearly year-long unofficial import ban on the fuel.”
That’s a million metric tons of Australian coal that had been sitting in Chinese ports for a year.
That sounds like a lot, but it’s only the equivalent of
one day’s worth of China’s coal imports.
So unless they’re going to start importing more Australian coal,
the Chinese regime is still in trouble.
But even if China is able to ease the coal shortage over the next few months,
it’s already having a tremendous effect on the global economy.
According to Nomura , basically the Japanese Goldman Sachs,
“The power curbs will ripple through and impact global markets. Very soon the global
markets will feel the pinch of a shortage of supply from textiles, toys to machine parts.”
Already it's affecting Western companies operating in factories in China, like Apple and Tesla.
And this is affecting a lot of smaller Chinese companies, too.
Many have already had to curb or stop production.
“While they may be overlooked by major foreign investors that don’t cover these firms,
the end result could be a shortage of everything from textiles to electronics components
that could snarl supply chains and eat into the profits of a host of multinational companies.”
So our addiction to cheap made-in-China goods could end up imploding the global economy.
And stop Christmas from coming.
It’ll also have an impact on food. Some of the worst hit provinces are Jilin,
Liaoning, and Heilongjiang. About half of China’s corn and soybeans are grown here.
According to Bloomberg, “The crisis is stoking concern that China will have a tough time
handling crops from corn to soy to peanuts and cotton this year
after some plants were asked to suspend or cut output to conserve electricity.”
The only way any of us is going to survive this looming crisis
is if we all band together in common goodwill and charity and love for our fellow man.
This is seriously going to be the worst Christmas ever.
Speaking of generous giving, it’s not easy making a show that criticizes the Chinese Communist
Party. We experience loads of demonetization and censorship from YouTube and Google,
and not many advertisers are brave enough to work with us. So we rely on support from viewers
like you who want to join us in exposing the Chinese Communist Party to the world,
by contributing on the crowdfunding websites Patreon or Locals. As a thank you to them,
whom I call the China Uncensored 50 Cent Army , I answer their questions on the show.
Today’s question comes from:
Arpanet-at-Cern on Patreon. “Hey Chris, hypothetical scenario, but if you could ask
Xi Jinping 3 questions that he would have to answer honestly, what would they be?”
I’ve been trying to get an interview with Xi Jinping for years.
Including that time I tried to snag him while he was staying at the Waldorf Astoria in New York.
And got kicked out and banned for life. So if I had to ask him just three questions,
what would they be? That’s a tough one. One, I’d ask if former Chinese leader and Xi’s biggest
rival Jiang Zemin is still alive or if his brain has been implanted in some kind of robot toad.
Two, I’d ask what he really wants as dictator. Xi got where he is by playing his cards very close
to his chest. So far he’s been acting out the Party’s long term strategy for defeating the West.
But what does Xi himself really want?
And three, who’s your waifu—as in, which anime character do you have a crush on?
Thanks for your question and your support, Arpanet-at-Cern.
And if you’d like to join us in the fight to expose the Chinese Communist Party to the world,
you help us by liking and sharing this video,
or you can join the China Uncensored 50 Cent Army over at patreon.com/chinauncensored
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You get different perks with each, so check them out!
Once again I’m Chris Chappell. See you next time.