China has started to have power shortages again. There have been a few different reasons mentioned in the reports i read, and all of them are somewhat concerning.
1. Coal prices have been going up, and the authorities, concerned with fighting inflation, have been holding down prices.
This is the problem that was occurring a few years ago, and it doesn’t seem like they’ve come up with any credible way to deal with the supply/demand imbalance despite the fact that there were two years of slow growth to make up the difference. Holding down prices is a short term solution at best (contributing to the problem at worst), and discredits any attempt to reduce power consumption to cut down pollution.
2. More power plants were built inland, but heavy industry didn’t follow it there.
The attempt to move heavy industry inland has a longer history than high coal prices, and while I believe that there has been some success in areas such as Wuhan, these power shortages seem to suggest that developing is occurring slower than the government thought it would.
3. Low rainfall leading to a shortage of hydropower
Isn’t china facing a water shortage in general?
There are no easy solutions to any of these issues, and attempts at easy solutions, like price controls, will just make the problem worse in the long run.
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