Fears of a worldwide shortage of new smartphones at Christmas as Chinese factories are hit with power cuts aimed at meeting Beijing’s anti-pollution drive
- Several huge manufacturing plants were forced to suspend production as they were close to exceeding China’s new energy limits
- The restrictions were put in place to reduce pollution, as China aims to kerb its massive greenhouse gas production
- Production plants were shut down, including those producing parts for Apple’s iPhones, while thousands of homes also lost power amid the cuts
- A report by Rhodium Group suggested that China emitted 27% of the world’s greenhouse gases in 2019
Global shoppers face possible shortages of smartphones and other goods ahead of Christmas after power cuts to meet official energy use targets forced Chinese factories to shut down and left some households in the dark.
Several factories producing parts for Apple’s iPhones were forced to suspend production under orders from local authorities as energy limits were exceeded, including a key factory west of Shanghai just days after the launch of the tech giant’s iPhone 13.
The Chinese government recently introduced the limits in an attempt to force their vast manufacturing industry to operate more efficiently and reduce emissions.
This disruption during one of their busiest seasons reflects the ruling Communist Party’s struggle to balance economic growth with efforts to rein in pollution and emissions of climate-changing gases.
It comes as tech manufacturers already face shortages of processor chips, disruptions in shipping and other lingering effects of the global shutdown of travel and trade to fight the coronavirus pandemic.
China is the largest contributor to global emissions, emitting more greenhouse gases than the rest of the developed world combined.
A report by Rhodium Group suggested that China emitted 27% of the world’s greenhouse gases in 2019.
Several factories producing parts for Apple’s iPhones were forced to suspend production under orders from local authorities as energy limits were exceeded
The shutdowns came during one of China’s busiest seasons for manufacturing as global demand for tech mounts in the run up to Christmas
Steam billows out of the cooling towers at a coal-fired power station in Nanjing in east China’s Jiangsu province on Monday, Sept. 27, 2021. Global shoppers face possible shortages of smartphones and other goods ahead of Christmas after Chinese factories suspended production
Economists and an environmental group say manufacturers used up this year’s quota faster than planned as export demand rebounded from the coronavirus pandemic.
‘Beijing´s unprecedented resolve in enforcing energy consumption limits could result in long-term benefits, but the short-term economic costs are substantial,’ Nomura economists Ting Lu, Lisheng Wang and Jing Wang said in a report Monday.
They said the impact might be so severe that they cut their economic growth forecast for China to 4.7% from 5.1% over a year earlier in the current quarter.
The unprecedented shutdowns were not carried out without issue – 23 people in the city of Liaoyang were hospitalised with gas poisoning after ventilation in a metal casting factory was shut off following a power outage, according to state broadcaster CCTV.
Meanwhile, residents of China´s northeast, where autumn temperatures are falling, reported power cuts and appealed on social media for the government to restore supplies.
Global financial markets already were on edge about the possible collapse of one of China´s biggest real estate developers, Evergrande Group, which is struggling to avoid a default on billions of dollars of debt.
The crunch comes as global leaders prepare to attend a UN environmental conference by video link on October 12-13 in the southwestern city of Kunming, increasing pressure on President Xi Jinping’s government to show it is sticking to emissions and energy efficiency targets.
The ruling party also is preparing for the Winter Olympics in the Chinese capital, Beijing, and the nearby city of Shijiazhuang in February, a period when it will want clear blue skies.
China is one of the world’s biggest emitters of climate-changing industrial gases and consumes more energy per unit of economic output than developed countries, but thousands of Chinese companies have announced power rationing could force them to delay filling orders and might hurt them financially.
Apple components supplier Eson Precision Engineering Co. Ltd. said Sunday it would halt production at its factory in Kunshan, west of Shanghai, through Thursday ‘in line with the local government´s power restriction policy’, and insisted it wouldn’t have a ‘significant impact’ on operations.
Apple didn’t immediately respond to a question about the possible impact on iPhone supplies.
China’s energy consumption and industrial emissions have surged as manufacturers rush to fill foreign demand at a time when competitors elsewhere still are hampered by anti-coronavirus controls.
Apple components supplier Eson Precision Engineering Co. Ltd. said Sunday it would halt production at its factory in Kunshan, west of Shanghai, through Thursday ‘in line with the local government´s power restriction policy’, and insisted it wouldn’t have a ‘significant impact’ on operations
Several factories producing parts for Apple’s iPhones were forced to suspend production under orders from local authorities as energy limits were exceeded, including a key factory west of Shanghai just days after the launch of the tech giant’s iPhone 13
China´s economy is ‘more driven by exports than any time in the past decade,’ but official energy use targets fail to take that into account, economists Larry Hu and Xinyu Ji of Macquarie Group said in a report.
Some provinces used up most of their quotas for energy consumption in the first half of the year and are cutting back to stay under their limits, according to Li Shuo, a climate policy expert at Greenpeace in Beijing.
Utility companies, meanwhile, are being squeezed by soaring coal and gas prices. That discourages them from increasing output because the government limits their ability to pass on costs to customers, said Li.
Prices have risen ‘past the range of what China´s electricity industry can bear,’ Li said.
China has launched repeated campaigns to make its energy-hungry economy more efficient and clean up smog-choked cities.
City skies are visibly clearer, but the abrupt way the campaigns are carried out disrupts supplies of power, coal and gas, leaving families shivering in unheated homes and forcing factories to shut down.
State Grid Corp., the world’s biggest power distributor, issued a pledge to ensure adequate supplies.
Meanwhile, state media say local governments have signed long-term coal contracts to ensure adequate suppliers, despite China pledging just this weekend that they will no longer create any new coal plants overseas.
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