Companies like Apple and Tesla could have problems with their production before the main shopping season at Christmas. The widening power shortage in China has been affecting manufacturers in the major industrial centers on the east and south coast of the People’s Republic for weeks. In order to meet the stricter energy consumption guidelines, several major suppliers Apple and Tesla have suspended production in some plants.
The Apple supplier Unimicron Technology has stopped production in three of its Chinese branches. The company justifies this with the “policy of local governments to limit electricity”. Concraft Holding, which makes speaker parts for iPhones, is suspending production for five days. The production losses also affect the suppliers of the electric car manufacturer Tesla. Like the entire automotive industry, the company is struggling with semiconductor bottlenecks.
Effects on industry and households
At least 15 Chinese companies said in stock market reports that their production was interrupted due to electricity restrictions. More than 30 companies listed in Taiwan have stopped operating their offices in China to comply with power restrictions, reported Reuters. The steel, aluminum and cement industries are also severely affected by the production restrictions. Likewise manufacturers of chemicals, dyes, furniture and soy flour.
But private households, especially in northeast China, are also suffering from the power shortage. In Liaoning Province, power shutdowns by industrial companies were extended to residential areas last week. Huludao City urged residents not to use high-energy devices such as water heaters or microwaves during peak periods. Residents of cities like Changchun in Jilin Province reported to state media that the power outages occurred earlier and lasted longer. The region is the center of Chinese automobile production. On Monday, China’s state Network operators obliged to ensure the basic supply and avoid power outages.
Several factors come together
The power shortage is causing uncertainty at a time when the economy is confronted with China’s tech crackdown and the uncertain future of Evergrande’s financially troubled real estate giant. The electricity crisis in the country was caused by scarce coal supplies, which can be attributed in part to a revival in industrial activity as the economy recovers from the coronavirus pandemic. In addition, the People’s Republic is boycotting coal deliveries from Australia for political reasons.
Strong demand has driven coal prices to record highs. Several provincial authorities have tightened the enforcement of energy consumption guidelines in recent months in order to meet climate targets. China, the world’s largest energy consumer and emitter of greenhouse gases, has set itself the goal of reducing carbon dioxide emissions to zero by 2060.