Factories in China Closing Due to Power Shortage... POSCO Factory Also Temporarily Suspended (Comprehensive)

Power Restrictions in About Half of 23 Provinces
Including Industrial Hubs Jiangsu, Zhejiang, Guangdong
Concerns Over Supply Shortages in Textiles and Machinery Parts
Apple and Tesla Factories Also Halt Operations
POSCO Stainless Steel Plant Temporarily Suspended
UK Faces Energy Crisis with Oil Hoarding
Turning to Small Modular Reactors

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] As the COVID-19 pandemic continues, signs of an energy crisis are emerging worldwide due to heatwaves and cold spells caused by climate change, as well as eco-friendly policies.

In particular, China, known as the "world's factory," is facing its worst power shortage in a decade, posing a threat to the global economy. As some Chinese factories enter partial shutdowns, analysts predict supply shortages across various sectors, from global textiles to machinery parts.

According to Bloomberg on the 27th (local time), half of China's 23 provinces are experiencing power restrictions imposed by government authorities. The hardest-hit areas are Jiangsu, Zhejiang, and Guangdong provinces, which are industrial cities accounting for one-third of China's annual Gross Domestic Product (GDP).

In Jiangsu Province near Shanghai, steel mills have closed, and some cities have turned off streetlights. In neighboring Zhejiang Province, about 160 companies have shut down, and 14 cities in Liaoning Province have reportedly ordered emergency blackouts.

China's power crisis is attributed to a combination of soaring coal and gas prices and the Chinese government's strict carbon emission reduction targets. Especially, President Xi Jinping is pushing strongly for decarbonization ahead of the Beijing Winter Olympics in February next year.

The industrial sector in China is taking a direct hit. According to the Nihon Keizai Shimbun, suppliers for Apple and Tesla halted some production plants in China on Sunday the 26th. Yunnan Aluminium also reduced production under pressure from the Chinese government.

Nomura Securities forecasted, "China's power restrictions will send shockwaves through the global market, causing supply shortages across all sectors from textiles and toys to machinery parts."

Due to the power shortage in China, POSCO's stainless steel production plant in the country has also temporarily suspended operations. A senior official from the Korean Embassy in China stated, "Due to power usage restrictions imposed by China, POSCO's stainless steel plant in Jiangsu Province temporarily halted operations," adding, "Normal operations are expected to resume in early October."

The official added, "Power issues are occurring in 9 to 10 provinces in China, but it is judged that there is no discrimination against foreign companies," and said, "We will respond actively."

There is also analysis that China's energy crisis will become another trigger for the Chinese economy, which has faced various pressures after last year's V-shaped economic rebound.

Larry Hu, a China economy expert at Macquarie Group, said, "Chinese authorities are willing to accept slower growth for the remainder of this year to meet carbon emission targets," adding, "While the GDP target of over 6% can be easily achieved, considering the strong growth in the first half, meeting the emission targets will not be easy."

In the UK, as signs of an energy crisis such as oil hoarding appear, the government is turning its attention to nuclear power.

According to the Associated Press on the 26th (local time), due to a shortage of truck drivers to transport oil, queues of vehicles are forming at gas stations nationwide to refill fuel tanks. About 30% of gas stations operated by British Petroleum (BP) across the UK have run out of fuel.

The UK's energy crisis is worsening due to a combination of soaring international gas prices, carbon emission reduction obligations, and a shortage of truck drivers caused by Brexit (the UK's withdrawal from the European Union).

The UK government is turning to nuclear power to solve the energy shortage and achieve carbon neutrality in the long term. According to The Times on the same day, Kwasi Kwarteng, the Secretary of State for Business, is expected to approve support for Rolls-Royce's small modular reactor (SMR) project. The Rolls-Royce consortium plans to build 16 mini nuclear power plants in central England, which they say will create over 4,000 jobs by 2050. They have secured ?210 million (approximately 339 billion KRW) in investment and are requesting matching funds from the government.

Initially, the government was negative about new nuclear power plants due to rising construction costs, but it has shifted its stance, recognizing the need for small nuclear reactors to achieve the 2050 carbon neutrality goal and ensure energy security.

Rishi Sunak, the UK Chancellor of the Exchequer, stated, "Nuclear power must play a major role in the UK's future energy policy, and we cannot rely solely on wind and solar power." The new nuclear power plant planned in the UK aims to be operational by the mid-2030s, with a generation capacity sufficient to supply electricity to about 6 million households.

This content was produced with the assistance of AI translation services.