10/01/2021, 13.28
CHINA
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EU, US companies sound alarm over Beijing's blackout crisis. Taiwan ready to take advantage

Sudden power outages threaten production and undermine the confidence of foreign investors. Europeans blame extreme measures adopted by  provinces to meet the environmental targets set by the central government. Action plans requested from the authorities. Taipei: many companies active in China could see production move to the island nation.

 

 

Beijing (AsiaNews) - European companies operating in China had already raised the alarm in May. Now just as their U.S. counterparts,  they are in trouble  because of continuous - and often sudden - power outages that affect 16 of the 31 Chinese provinces, according to the EU Chamber of Commerce in China in a note issued today.

Not only factories, energy suspensions have affected strategic structures such as ports and even private homes. The blocks to electricity supplies are due to environmental controls that local governments must carry out to meet the targets of "decarbonization" set by the central government: last year Xi Jinping announced that China will achieve zero pollution emissions by 2060. In the first half of the year, only 10 provinces reached the targets set by the National Reform and Development Commission.

The crisis has also been affected by limits on the supply of coal - still the country's main source of energy production - and the exponential rise in price- which has forced some provinces to increased electricity tariffs by 10%, a move supported by US companies. European companies demand that electricity prices reflect market dynamics and not planned decisions.

The EU Chamber of Commerce also points out that the country's alternative energy systems (wind and solar) are "unstable" and cannot compensate for the quotas produced by hydropower and coal-fired plants.

European and U.S. companies ask the government to maintain a balance between energy security and targets on cutting polluting emissions. The EU Chamber criticizes the extreme measures taken by provincial governments to meet national environmental standards, which are considered arbitrary, as well as lacking transparency, consistency and legal basis.

According to European businesses, energy disruptions endanger their operations in the country; create immediate risks - especially in the chemical and pharmaceutical sectors - and undermine investor confidence in the medium and long term. 

European companies fear that the energy crisis could worsen with the arrival of winter. This is why they are asking the authorities for a precise plan of action, which for example would exempt sustainable companies from sudden energy rationing.

The combination of energy blackouts, the rising cost of raw materials, public anti-monopoly campaigns and the spread of the Delta variant of Covid-19 is starting to have an impact on the Chinese economy. Yesterday, the National Bureau of Statistics revealed that the index of manufacturing activities dropped from 50.1 points in August to 49.6 in September: a level below 50 signals an economic contraction.

However, there are those who are ready to take advantage of China's energy problems. Yang Chin-long, governor of Taiwan's central bank, said yesterday that if limits on electricity distribution in China lead to a reduction in domestic exports, Taipei could gain new orders from abroad previously covered by Chinese production. According to Yang, companies active in China may also decide to shift production to the island.

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