Energy crisis in China: Guangdong province increases electricity prices for industries by 25%

China suffers more and more effects following the energy crisis in the country For days. Since this Friday, Guangdong province, a manufacturing hub in the south, will increase electricity prices by 25% during peak hours.

Tao Feida, deputy general manager of China Southern Power Grid customer service center, told the state broadcaster Video surveillance What the measure only applies to industrial users, not to households or non-industrial companies.

This way they will be three hours a day in which the increase will apply to electricity: from 11 a.m. to 12 p.m. and from 3 p.m. to 5 p.m.

Cheng renli, deputy general manager of China Southern Power Grid control center in Shenzhen, also pleaded for companies to use energy during office hours. lower consumption to avoid a drop in productivity.

From what has been said by South China Morning Post, this rise in electricity prices may help offset supply shortages, as the record cost of thermal coal has reduced the profitability of power companies which, in turn, they are unwilling to produce electricity as long as prices remain limited to tariffs regulated by Xi Jinping’s regime.

As part of the call planned economy of Beijing, provinces are allowed to raise or lower electricity prices up to ten%. Increases above this percentage are uncommon, generally provoke delicate negotiations between local governments and Beijing. But in the context of the current crisis, the authorities have reached a consensus.

The National Development and Reform Commission (CNDR), the country’s economic planner, announced, for example, that it would allow electricity prices to reflect offer and the demand. However, he has yet to reveal details of the reforms expected prices.

In the case of Guangdong, the price increase had been expected for weeks. Last Sunday China South Power Grid called on residents and businesses to save energy in response to power shortages in the southern region.

In order to save as much energy as possible, Guangzhou and Shenzhen regions will not hold light shows to celebrate China’s National Day on October 1. Likewise, the power supply to streetlights will be reduced, according to state media.

Bo ZhuangAn analyst at Loomis Sayles Investments Asia, Guangdong’s measures are likely to trigger a wave of electricity price hikes in other provinces in the coming weeks.

“It may not be a national policy, but at least more than half of the country [se moverá] increase prices “Zhuang said, adding that China’s coal import policy, as well as the global coal shortage, are some of the major factors leading to rising energy costs.

“Local governments are also fighting [por el carbón] between them”, he noticed.

The coal shortage affects much of the world, but China is one of the countries most affected for his great dependency coal-fired electricity.

For its part, the energy crisis in China has caused a wave of unprecedented power outages in the country, while local factories were forced to reduce production, which threatens slow down an economy plagued by the housing and debt crisis.

Although energy problems have been recorded for a long time, they have increased in the last week. For this reason, Already 20 of the 31 provinces and mainland regions have been forced to cut electricity intermittently, causing factory closures and power outages in thousands of homes.

The capital Beijing even launched in the last hours a plan to energy rationing in front of this situation. A situation that was common in the 2000s, when blackouts were routine, but what later stabilized over the past ten years.

In the midst of this crisis, Industrial activity in China contracted in September for the first time since February 2020, while the containment decreed by the coronavirus has paralyzed the economy, they revealed official data published on Thursday.

China’s economy quickly recovered from the crisis triggered by the pandemic last year, but momentum has weakened in recent months, and Its large manufacturing sector has been hit by rising costs, production bottlenecks and electricity rationing.

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