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China’s Coal Supply Crisis Means High Prices, Blackouts | Voice of America




TAIPEI – As the cost of coal climbs during China’s bitterly cold winter, what is an economic and uncomfortable ordeal for many citizens could turn into a burning political issue for one man: President Xi Jinping.

Coal prices in China have risen just as temperatures plummeted in December, as demand was already rising due to China’s economic recovery from the coronavirus pandemic. Fossil fuels, mainly coal, provide nearly 70% of China’s electricity.

But even those with cash to burn couldn’t afford coal, according to local media, and in a country where thermal coal fuels power plants, the darkness of winters has taken on new depths. Thermal coal, also known as steam coal or simply coal, “differs from coking coal, which has a higher energy content and is mainly used in the manufacture of metals rather than in the generation of electricity. “. according to Robeco, an asset management company.

Power cuts and blackouts began to hit swathes of China in early December, dampening even top-tier cities such as Beijing and Shanghai. Hunan, Jiangxi and other industry-led provinces have imposed mandatory “energy saving initiatives” for “the orderly use of electricity. In Zhejiang Province, an economic powerhouse, the Yiwus City “The electricity restriction orders meant that local businesses had electricity for one five days.

Several factors are at play, including Beijing’s reduction of foreign coal to protect domestic production capacity and crackdown on corruption in the domestic coal industry that has disrupted provincial and local governments, stoking anti-Xi sentiment.

Since China is the world’s largest importer of coal, the result is insufficient coal stocks, a faltering power supply and a blow to Xis’ prestige, even though Zhao Chenxin, secretary general of the National Development Commission and Reform, which directs energy policy, told citizens in December, in general, please believe that our ability to ensure a stable energy supply is not a problem.

In 2019, China’s coal production exceeded 3.745 billion metric tons, nearly half of the world’s total production. It is the largest producer of coal in the world, and Inner Mongolia accounts for more than one billion metric tons, making it the largest producing province.

The government’s target price for domestic coal is between $ 77 and $ 88 per metric ton, according to the International Energy Agency (OUCH).

As of December 4, 2020, coal was costing $ 99.23 per metric tonne, a 38% increase since the price fell to $ 72 in late April and early May, at the worst of the pandemic, according to Reuters.

FILE – In this photo from November 28, 2019, a coal storage facility is seen in Hejin, central China’s Shanxi Province.

Two months later, on February 3, the coal cost around $ 98.52, according to Xinhua, a government-controlled outlet.

While the price may drop due to lower demand during the Lunar New Year holiday February 12-18 and slightly warmer weather, analysts expect the price to continue rising after the holidays in due to the double whammy of increased demand and declining stocks, according to Xinhua.

China’s import ban on Australian coal intensifies crisis After months of import restrictions after Australia called for an international investigation into the origins of the coronavirus responsible for COVID-19, first detected in China, Beijing announced a ban on imports of Australian coal on December 14.

A the Wall Street newspaper Analysis on February 10, buyers in China had to pay high premiums for imports from further afield, in addition to prices which have risen 84% since mid-year.

The China Coal Transportation and Distribution Association, which represents importers, said: It has been difficult to replenish low coal stocks and shortages, while demand is unchanged.

China imported between 70 and 80 million metric tonnes of Australian coal each year, according to the General Administration of Customs of China. China consumes around 4 billion tonnes of coal per year.

Tung Li-wen, CEO of the Foundation for Asia-Pacific Peace Studies, said China’s coal shortage was the result of internal problems rather than import restrictions.

“Coal imported from Australia represents less than 2% of the Chinese coal market, and Australian coal is not essential in the Chinese coal market. Most importantly, China itself is the largest producer and owns the largest coal reserves, ”he told VOA.

Shanxi ranked first in coal production in China 10 years ago, as did Inner Mongolia in the past 10 years, he said. Even these two places claim to have a coal shortage, so it’s not a purely economic issue.

Tung said the Chinese government’s crackdown on corruption in the coal industry has also made Shanxi and Inner Mongolia “hard-hit areas.”

The crackdown on corruption in the coal industry in Inner Mongolia began in January 2020, and investigators said they were looking back to 2000.

FILE – In this November 28, 2019, a photo shows smoke and steam rising from a coal processing plant in Hejin, central China’s Shanxi Province.

As of February 2020, nine people were under investigation, including senior local officials and leaders of the coal industry, according to Chinese government media Xinhua.

Local governments, unhappy with the interference of senior provincial and national officials, began to frost Xis’ image.

Wang Chih-sheng, general secretary of the elite China Asia-Pacific Exchange Association, said the current reduction in electricity has raised suspicion among many that Beijing is losing control of the local governments that mark their territory. and declare their autonomy.

This would give anti-Xi groups an opportunity to cast a bad image of Xi in this year Two sessions in March, the annual plenary sessions of the National People’s Congress and the National Committee of the Chinese People’s Political Consultative Conference, the two organizations responsible for making national-level political decisions.

The goal may not be to bring down Xi all at once, but if they can take advantage of China’s energy or electricity crises, then further weaken Xi’s political credibility, or cause unrest in the groups. Xi’s policies, I think that’s probably what some people are expecting, Wang said. It is a blow to Xi’s political prestige at one level.

Luo Cing-Sheng, CEO of Taiwan International Strategy Society, said anti-Xi groups could take this opportunity to express their displeasure.

They would resist just a bit to teach Xi a lesson, he said. Basically, it’s a negotiation process.

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