The world’s largest exporter’s electricity shortage caused by soaring coal prices is set to cause further headaches for global trade.
The timing of the energy crisis is amplifying its impact, with the shipping industry already facing congested supply lines that are delaying deliveries for the end-of-year holiday period.
Factories in China have been told to prepare for continued power supply disruptions, as President Xi Jingping begins to wean off the country’s dependence on coal.
Months of shortages have cut power to households in China’s north-east and caused outages at factories across the country.
Among record demand for Chinese exports, the problem places further pressure on Australian importers.
Senior officials in Guangdong say almost 150,000 companies have been hit by shortages in the last month.
Louis Kujis, Senior Asia economist at Oxford Economics says the problem will branch out of just China.
“If the electricity shortages and production cuts continue, they could become yet another factor causing global supply-side problems, especially if they start to affect the production of export products,” he says.
The shortage is thought to further exacerbate China’s economic slump, in which the country fell to its slowest economic growth of the year this week, with growth domestic product growing 4.9 per cent.