Electricity shortage resolved: China’s industry is growing vigorously

China’s industry increased its production in November more significantly than expected. The retail sector also grew. In addition, the problem of electricity shortages in the country seems to have been resolved.

Companies in China no longer have to expect that the electricity will suddenly be cut off due to a shortage, as in the past few months. One of the reasons for this is that the electricity market has been further liberalized, says Jörg Wuttke, President of the European Chamber of Commerce in China.

“De facto, we currently have no electricity shortage in all of China,” said Wuttke. For the energy-intensive industries in the country there have been price increases of up to 55 percent. “Many have left. And when the big energy-intensive companies leave, they leave enough space for the others, of course.” Due to the increased prices, it is no longer worthwhile for some energy-intensive industries to produce in China – for example fertilizers.

The background to the power shortage was that the energy demand was high due to increased demand, but there was not enough coal. China continues to generate most of its electricity with climate-damaging hard coal. Now more coal seems to be available again.

Persistent supply chain problems

Chinese companies continue to struggle with interrupted supply chains and corona restrictions at home and abroad. Some goods cannot be finished because raw materials or individual parts are missing – or entire factories are temporarily closed.

As the Chinese statistical office has now announced, industrial production in the People’s Republic grew by 3.8 percent in November compared to November 2020. That is more than experts expected. The retail sector was also able to grow in November, albeit less than expected by analysts. Retail sales rose 3.9 percent in November compared to the same month last year.