You may have heard that China is rationing electricity recently. This has caused problems for many manufacturers and factories.

Sixteen of mainland China’s 31 provincial-level jurisdictions are rationing electricity as they race to meet Beijing’s annual emissions reduction targets. The price of thermal coal, used for power generation, has been soaring all year and hit new highs in recent weeks.

What are the reasons that cause this situation?

- High coal prices. The most important and obvious reason is the rapid increase in coal prices. China’s curbs on coal mining for environmental and safety reasons, as well as heavy rain in Indonesia, disrupted coal production, pushing up its price. Given China’s tight control on electricity prices, for many power plants, the high coal prices mean it’s unprofitable or even loss-making to operate. Moreover, due to political disputes, China decided to stop importing coal from Australia last October, which causes a further shortage of coal supply.

- The power demand is rising. China has been experiencing a strong recovery in exports, intensified by seasonal orders for Christmas, prompting factories to extend their work hours and increase power consumption.

- Climate goals. This is a more minor reason compared to other factors that are driving the power crisis.

How is it affecting manufacturers and the home appliances industry?

To the south, factories have been cut off from electricity for more than a week. The lucky ones are rationed three to seven days of the power of time. The power rationing has created long delays in global chains that rely on Chinese factories.

China is reforming its energy grid so power plants have more flexibility in how much they can charge. Some of those higher power costs will be passed from factories to global consumers.

The home appliances industry is a high energy consumption industry. Luckily, the area where our factory is located is not heavily restricted. But we still face the risk of power rationing shortly.

Therefore, we highly suggest that if you have any demand for our product, place your order as soon as possible. Visit our official website: www.smad.com.cn