Bloomberg "Global Stagflation Concerns Due to China's Power Shortage"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] As China experiences a power shortage that continues to impact industrial production activities, concerns are emerging about the possibility of stagflation?a global economic condition characterized by slowing growth and rising prices.

Bloomberg reported on the 8th that "China's energy crisis is affecting all sectors, from iPhone manufacturing to dairy production," noting that the power shortage not only lowers China's economic growth rate but could also trigger a domino effect across global supply chains.

Lewis Quiz, head of Oxford Economics, expressed concern, saying, "If production disruptions caused by the power shortage continue, especially affecting export goods production, it could become another problem factor on the global supply side."

Craig Botham, an economist at Pantheon Macroeconomics, also stated, "This appears to be a stagflation shock not only for China but for the global manufacturing sector," adding, "Since China is deeply connected to global supply chains, price increases are appearing widely."

Bloomberg noted that many Chinese factories reduced operations during the National Day holiday (October 1?7), and attention is now focused on whether the power shortage will recur as operating rates increase after the holiday.

There are also forecasts that if the energy shortage worsens, production disruptions could occur ahead of the year-end Christmas shopping season. Some industries are already experiencing power shortages.

The manufacturing sector, in particular, is taking a significant hit. iPhone assembler Pegatron (He Shuo, 和碩) has reduced electricity usage by more than 10%, and ASE (Riyueguang, 日月光), the world's largest semiconductor back-end manufacturer, reportedly halted production for several days.

[Image source=EPA Yonhap News]

Toyota, which produces over one million vehicles annually in China, has also been affected by the power shortage.

Meanwhile, according to China's state-run media Global Times, the Chinese government is striving to address the issue by encouraging increased domestic coal production and boosting imports of coal from Russia and Indonesia.

In Heilongjiang Province, bordering Russia, the power transmission line in the Heihe area that receives Russian electricity has increased its operation hours from 5 to 16 hours per day since the 1st of this month.

Additionally, during the National Day holiday, Suifenhe in Heilongjiang Province imported over 5,000 tons of Russian coal daily via rail.

Chinese authorities reportedly released Australian coal stored in port warehouses into the market after the import ban. In Jilin Province, imports of coal from Russia, Indonesia, and Mongolia are increasing.

[Image source=EPA Yonhap News]

Lin Bochang, head of the China Energy Economics Research Center at Xiamen University, stated, "After halting Australian coal imports, demand has been met with coal from Indonesia, Russia, and China," but also noted, "There is still a possibility of resuming Australian coal imports."

He added, "(The recent increase in coal imports) is a temporary and supplementary measure due to shortages caused by rising prices," and explained, "Imported coal accounts for less than 10% of China's total coal consumption."

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