Han Jun, the governor of China’s northeastern province of Jilin, on Monday, called for more coal imports from Russia, Mongolia, and Indonesia to resolve the ongoing power shortages which had crippled a large portion of the country’s industrial sector. Jilin is one of the worst-hit provinces by the power shortage. Han said his government would deploy teams to secure supply contracts in the neighbouring province of Inner Mongolia. The National Development and Reform Commission flagged ten Chinese regions, including Jilin, that they had to cut energy use after exceeding the planned levels in the first half of 2021.
China’s crackdown on high power consumption has affected the country’s aluminium, steel, fertiliser, and petrochemical sectors. Goldman Sachs estimated that the power crisis had affected 44% of China’s industrial activity. In a separate report, Morgan Stanley reported that 7% of aluminium production capacity and 29% of cement production in China were impacted by the policy.
The power curb, along with concerns around Evergrande’s debt crisis, has prompted forecasters to cut their China GDP growth projections. Goldman lowered its China’s GDP growth forecast for 2021 from 8.2% to 7.8%, citing significant downside pressures from energy shortages and deep industrial production curbs. Nomura cut China GDP growth forecasts from 5.1% to 4.7% for the third quarter of 2021 and from 4.4% to 3.0% for the fourth quarter. Nomura’s full-year 2021 forecast was lowered from 8.2% to 7.7%.
