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China Factories Face Forced Cuts to Production

An increasing number of Chinese factories have recently been subjected to power rationing and forced cuts to production.

Last month, China’s economic planning agency – the National Development and Reform Commission – flagged nine provinces that had increased their emissions intensity over the first half of 2021. The agency’s subsequent “dual-control” plan – put in place to restrict energy-intensive activities and consumption – ordered provincial governments to ration electricity consumption and control emissions.

This comes as the country seeks to meet President Xi Jinping’s target for carbon emissions to peak by 2020, and to achieve carbon-neutrality by 2060.

Provinces affected include the highly industrial areas of Jiangsu, Zhejiang and Guangdong, which all received ‘red ratings’ for missing consumption targets. These provinces are also home to the key Chinese ports of Ningbo, Guangzhou, Nansha, Yantian and Shekou.

Amidst the chaos of peak season, the rations and cuts could increase delays in receiving shipments at ports. It is not yet clear how long rationing could continue, however any extension past the end of September could cause significant challenges moving forward.

With coal prices at record highs, it has also become unprofitable for many power plants to operate, which has created supply gaps in some provinces. Emergency power cuts affected 14 cities in Liaoning following grid supply shortfalls.

Power curbs have also affected agriculture, forcing the shutdown of plants in Jiangsu and Tianjin.

Throughout the peak season, and against a backdrop of ongoing disruption and unprecedented challenge, our global supply chain experts are working hard to identify the right solutions for customers. As a starting point, we highly recommend you check your Q4 production schedules with suppliers in the impacted regions. Should you like to discuss your current and future planning, please don’t hesitate to get in touch: hello@ligentia.global

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