BEIJING: In a new development, China is suffering from one of the worst blackouts in the past few decades. Though the Chinese economy is currently trying to recover from the effects of the coronavirus pandemic, but it appears that its attempts have come to a grinding halt. Power generation in China during the wintertime has not been able to keep up with demand. There are several factors why China is currently facing shortages in energy supply. One of the major factors is the fact that China has decided to ban coal imports from Australia after they asked for an independent inquiry into the origins of the COVID-19 virus.
Australian coal was not the only thing that Beijing decided to ban. Back in May, China imposed an 80% tariff on Australian barley and added restrictions on the import of Australian beef.
China has also formally threatened Australian wine with higher tariffs and shipments of Australian lobsters have also been experiencing delays. All these developments are taking place because Beijing did not like the fact that Australia wished to learn the truth about the COVID-19 virus that has devasted the world, its economy and claimed millions of lives worldwide.
China's ban on Australian coal has spectacularly backfired as office towers and shopping malls across major Chinese cities have gone dark. Even during the festive season when the streets are supposed to be full of lights and people, they have once again gone dark and lifeless.
Scenes from China are reminiscent of the lockdown seen in the country during February and March when the pandemic was at its worst. But this time, the closures are not caused by the pandemic, but due to lack of power. As per a report in Asia Times, small and medium businesses in the eastern Zhejiang province have reverted to work from home arrangements. Local governments are attempting to ration the little power they have by prioritising residential users. China’s industrialised coastal provinces have also had to suffer and factories have started to let their employees go home in the afternoon and even asked some of them to work from home. Factory owners have been sent into a panic by the Chinese government’s new emergency plan for “electricity rationing and staggered supply” which lists some industrial zones.
As per media reports, the local government in Zhejiang province hastily sent out its order about energy conservation and power cuts. The local cadres were hard-pressed to distribute notices about the blackouts to local businesses and residents who will be affected.
As per the order by the provincial government, all energy rationing measures will stop on December 31, unless there is another directive. Some other areas in China that have been affected are Jiangsu, Henan, Hubei, Hunan, Jiangxi and Inner Mongolia. China’s second-largest state-owned media house, China News Service, has revealed that the central province of Hunan, which is home to 70 million residents, is experiencing a shortfall of 10-20 million kilowatt-hours. As per a report in the New York Times, workers in Hunan have been forced to climb dozens of flights of stairs due to elevators being shut down in a bit to save power. A coal shortage in the mining hub - the Hunan province, is hard to imagine but that is exactly what is happening. A shortfall of coal from other sources has caused the demand to skyrocket with buyers lining up their trucks in front of coal mines and fighting for access.
A hit to Chinese business is the least of China’s worries and the blackouts along with the power rationing have left residents feeling anxious about being left in the cold during the winter. Following the blackouts, Chinese officials have scrambled to justify the blackouts and are trying to cover the fact that the blackouts have not been caused by China’s abrupt ban on Australian coal. To overcome the crisis, Chinese officials have also ordered residents to ration power everyday between 10:30 am to noon and then from 4:30 pm to 8:30 pm. Also, residents have been told not to use their electric stoves and ovens and power supplies to office buildings are halted during the weekends. Officials in Jiangxi province have set peak hours when energy usage will be limited. In the city of Wenzhou, residents have been given instructions to only turn on heating once the temperature falls below 3 degrees Celsius.
New York Times has quoted Zhang Shaobo, a store owner in the city of Yiwu, who recounted, "driving home from work a few days ago, I saw several car accidents. All you can do is drive more slowly." To meet surging domestic demands, officials have begun to ease coal import restrictions from countries other than Australia.
Despite the crippling energy shortages, the Chinese government and the Chinese Communist Party (CCP) have not lifted the ban on Australian coal. As per Bloomberg shipping analysis data, more than 60 Australian vessels carrying coal were waiting in Chinese waters by November because they were not allowed to offload their cargo.
China’s trade sanctions against Australia are now leading to adverse consequences for China. While several Australian goods have been targetted, Beijing’s insatiable demand for Australian iron ore is as high as ever. Prices for Australian iron ore have gone up and as per a report in the Daily Mail, the prices are estimated to remain high for years to come. Exports to China have also hit a new record high. Australia is responsible for 60% of China’s iron ore imports. On the energy supply front, China produced a total of 3.48 billion tons of coal in the first 11 months of 2020, this is up 2% from 2019. On the other hand, China imported only 260 million tons of coal and this is down 11% from the same period in 2019. This deficit has played a significant role in China’s ongoing energy crisis.
Despite China's restrictions on Australian goods, Australia has not retaliated in kind. Foreign Affairs reporter Stephen Dziedzic asked some Australian officials this same question and the reply he got was that “we don’t want to get in the sandpit with China and start flinging stuff about.” What this means is that Australia does not want to play dirty like China and that if Australia imposes tariffs without justification then Australia would lose global support. While China has banned Australian coal, but Australian iron ore is something that China needs. If Australia stopped supplying China with iron ore then many of China’s larger steel mills would be forced to stop operations. On the other hand, economists and trade experts suggest that Australia has already found alternative buyers of Chinese coal. Consequently, the differential tariff tactic of China seems hardly to yield anything.
China in the past few months has received backlash over its initial handling of the coronavirus outbreak, and its attempts to hide its origins. To change the narrative, the CCP has been trying to manipulate the world and change the narrative. Geopolitical analysts suggest that Australia took a bold step by not giving in to Chinese pressure and has demanded an independent probe into the COVID-19 pandemic. Differential tariff and discrimination have been a major contributor to China’s current energy crisis. The strategy has impacted Chinese industries severely, especially those dependent on continuous power supplies. The industries that were trying to recover from the damage done by the pandemic have been dealt a mighty blow.