{"id":123532,"date":"2021-11-30T11:48:42","date_gmt":"2021-11-30T11:48:42","guid":{"rendered":"https:\/\/fin2me.com\/?p=123532"},"modified":"2021-11-30T11:48:42","modified_gmt":"2021-11-30T11:48:42","slug":"chinas-energy-crunch-is-hitting-factories-hard","status":"publish","type":"post","link":"https:\/\/fin2me.com\/business\/chinas-energy-crunch-is-hitting-factories-hard\/","title":{"rendered":"China&#39;s energy crunch is hitting factories hard"},"content":{"rendered":"<p><cite>Hong Kong (CNN Business)<\/cite>China&#8217;s economy is finally getting some good news: Its big factories are staging a recovery as a power crunch that held back production starts to ease because of a big jump in coal supply. <\/p>\n<p>A government survey of manufacturing activity increased to<strong> <\/strong>50.1 in November from 49.2 in October, according to data released by the National Bureau of Statistics (NBS) on Tuesday. It was the first reading above 50 \u2014 indicating expansion rather than contraction \u2014 in three months. It was also the first time since March that the index increased over the prior month.<br \/>\nBeijing on Tuesday attributed the improvement to &#8220;recent policy measures&#8221; that have strengthened energy supply and stabilized soaring costs. <\/p>\n<ul><\/ul>\n<p>&#8220;In November, power shortages eased and prices of some raw materials dropped significantly,&#8221; said Zhao Qinghe, senior statistician for NBS, in a statement.<\/p>\n<ul><\/ul>\n<p><img decoding=\"async\" alt=\"China tells mines to produce &amp;#39;as much coal as possible&amp;#39;\" class=\"media__image\" src=\"\/\/cdn.cnn.com\/cnnnext\/dam\/assets\/211019223045-china-open-pit-coal-mine-1019-restricted-large-169.jpg\"><br \/>\nChina has grappled with the power crunch for months,<strong> <\/strong>as extreme weather, surging demand for energy and strict limits on coal usage delivered a triple blow to the nation&#8217;s electricity grid. <\/p>\n<p>The problem came to a head in September, when companies were told to limit their energy consumption in order to reduce demand for power. Supply was cut to some homes, reportedly even trapping people in elevators.<br \/>\nThe energy crunch, along with surging raw material costs, resulted in a sharp drop in industrial output for September and October. To combat the problem, authorities have relaxed their efforts to cut carbon emissions and ordered coal mines to ramp up production.<br \/>\nThe result was notable. China \u2014 which uses more than half the world&#8217;s coal supply and is already the largest emitter of carbon \u2014 set a new daily record for coal production in mid-November, according to statistics from the National Development and Reform Commission (NDRC).<br \/>\nThe agency&#8217;s &#8220;strong interventions&#8221; mitigated the &#8220;overall power shortage&#8221; and eased cost pressures on some industries, analysts from Citi wrote in a Tuesday research report. The power woes had pushed up the cost of aluminum, steel and other raw materials, rippling through industries like carmaking and construction.<\/p>\n<h3>Stress still to come?<\/h3>\n<p>But there may be some continued stress on industrial output in the coming months, resulting from China&#8217;s preparation for the upcoming Winter Olympics, a continuing crisis in real estate, and the potential impact of the new Omicron variant of the coronavirus.<br \/>\nThe Citi analysts said that the production of raw materials \u2014 which causes high levels of air pollution \u2014 may be limited in northern China as the government tries to &#8220;ensure blue skies for [the] Beijing Winter Olympics.&#8221;<br \/>\nThe downturn in China&#8217;s property sector poses another risk.<br \/>\nTuesday&#8217;s data showed<strong> <\/strong>while new orders received by factories rebounded somewhat<strong>, <\/strong>that gauge still did not enter expansion territory, suggesting that domestic demand remains weak.<br \/>\n&#8220;The major challenge now is the significant pressure that the property downturn puts on the aggregate demand,&#8221; the Citi analysts said. Real estate  \u2014 and related industries \u2014 account for as much as 30% of Chinese GDP.<br \/>\nTuesday&#8217;s data also showed<strong> <\/strong>that<strong> <\/strong>non-manufacturing PMI, which measures the performance of services and construction industries, reached 52.3 in November, slightly weaker than October&#8217;s 52.4.<br \/>\nAnalysts say the Omicron variant might be a concern going forward, especially for the services industry.<br \/>\nThe newest variant of the coronavirus has been labeled of &#8220;concern&#8221; by the World Health Organization because of its seemingly fast spread in South Africa and its many troubling mutations. While specific details of the new variant have yet to be made clear, several countries have scrambled to impose travel bans.<\/p>\n<ul><\/ul>\n<p>China, though, has long pursued a &#8220;zero Covid&#8221; approach, and maintains what are already among the strictest border restrictions in the world.<br \/>\n&#8220;Looking ahead, most of the weakness in services should reverse in December unless \u2014 obviously a big caveat with the emergence of Omicron \u2014 there are new outbreaks,&#8221; wrote<strong> <\/strong>economists with Capital Economics in a Tuesday research report. &#8220;In that case, the authorities would turn to more stringent controls to contain it.&#8221;<br \/>\nSource: <a href=\"https:\/\/edition.cnn.com\/2021\/11\/30\/economy\/china-pmi-economy-intl-hnk\/index.html\" target=\"_blank\" rel=\"noopener\">Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Hong Kong (CNN Business)China&#8217;s economy is finally getting some good news: Its big factories are staging a recovery as a power crunch that held back [&#8230;]<\/p>\n","protected":false},"author":3,"featured_media":123531,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - 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