China is suffering from its worst energy crisis in 20 years.
Emergent measures, including putting a limitation on power transmission, have been arranged, but did not bring much of an effect. The energy crisis is serious enough that industrial production is stumbling.
The Financial Times reported that the output of automobile production for July in China was 170,000 due to an energy shortage and shrinking consumer confidence, dropping by 20 percent from June.
The major cause for the insufficient energy is that the expansion of energy production is slower compared to the quickly growing economy, and cannot meet up with it.
Currently, the energy supply in Shanghai, Jiangsu, and Zhejiang, where factories are concentrated, is at least 30 percent short of total demand.
The N Company, a Korean metalworking firm in Zhejiang, is troubled by trying to meet its delivery dates because energy transmission was limited four days a week. A huge electric generator is being run inside the company, costing an additional 20 to 30 million won per month, worsening profitability.
In recent research, the Korea International Trade Association pointed out that the largest worry for Korean firms in China was the energy crisis.
The Asian Wall Street Journal reported that the electricity was suddenly cut off in Hangzhou, Zhejiang, and that hotel customers were locked in the elevators and restaurants were unable to open during lunchtime.
Ripple Effect-
Chinese official news agency Shinhwa reported recently that from the energy crisis, businesses that require a large amount of energy are falling back and an industrial adjustment is underway.
There are many areas in which energy transmission was limited for over 100 days during the past five months, and the burden is being borne by the businesses in the industrial zone at the Yangtze River, which have to spend much energy.
In the case of Zhejiang, gross domestic product (GDP) increased annually by 13.1 percent during the past 20 years, but the businesses that consume much energy lead the growth. Accordingly, Chinese authorities have started considering energy efficiency as a top priority industrial policy. Shinhwa News Agency pointed out that new factories consuming much energy would probably be impossible to open.