China power crunch spreads, shutting factories and dimming growth outlook | Hacker News Reader

China power crunch spreads, shutting factories and dimming growth outlook

reuters.com

Our factory (we are in Zhuhai) has had 2-3 days per week of reduced power consumption mandates for the last few months. This last week it has gotten serious. Nearby factories in Dongguan and Zhongshan have been reporting 3-5 day periods of mandated inactivity. It has begun to affect orders for components. I have begun to receive queries from others regarding the power availability in our city versus theirs. A friend running a larger operation has - at significant cost - rented a 500kVa generator to keep his machines moving. It has to be run solid 50 hours per week on average.

Frankly it's quite manageable at the moment, but it certainly stacks up the concerns for the few foreign businesses left here: COVID-related visa restrictions have largely axed the foreign workforce, the HK situation has affected cross-border banking, and the lack of freedom of movement across borders combined with the closure of many businesses supporting the foreign community has made living here increasingly untenable for many. Don't forget the global shipping crisis, chipageddon, and cross-border political crap like customs demanding spec sheets for screws if you post things from Australia. It's... not ideal, but China has never been easy.

Is this a byproduct of China punishing Australia for asking for an investigation of the Covid-19 origin?

Yes, at least in part: https://www.scmp.com/economy/china-economy/article/3147774/c...

Good to see the CCP having their silly past decisions come to haunt them.

If only we could expect the haunting to motivate change. The pressures that move CCP members are incredibly opaque.

Are your refering to Australia coal? The imported coal accounts a small percentage of all coal China burnt for power generation.

They needed 3 billion tonnes, of which 2.7 billion was produced locally. 300m was imported, 30m of which was from Australia. Per the article, their coal needs are going to increase by 10% year-by-year. They're investing in other mines and expanding production, but that's going to take 2-3 years. In the meantime, they're facing an acute shortage, partly due to banning Australian coal.

The prime suspect is actually the grid, and generation capacity itself.

It's a recurring phenomenon every few years.

China doesn't have district heating in Shanghai, and further south, despite climate at around Shanghai latitudes being quit cold. This leads to everybody using electric heaters.

It's like the Texas electricity crisis in USA, except it happens every relatively cold winter in China.

I just looked it up because I was curious. Shanghai average temps seldom reach below freezing [1]. The average January low is 36 degF.

Is it really that big of a problem, then? If so, couldn't the government regulate use of electric heating? It's not like water pipes bursting is a huge risk.

[1] https://www.climatestotravel.com/climate/china/shanghai

That's pretty warm! That's similar weather to Atlanta, I would have imagined it's much colder in Shanghai. Average January low in New York City is 26F.

Unfortunately it seems Asian, which I am also have lower tolerance for cold. I and my family could barely endure below 15 degree Celsius.

Asia has some of the coldest inhabited parts of the world !

Responding to your child, echelon, because replies ran out ...

Shanghai is one of those edge climates where it's not quite cold enough to do something about the cold, but just cold enough to be uncomfortable and deploy a band-aid fix.

So they don't make real investments in climate control and everyone is cold and/or wears sweaters in the office and/or deploys electric heaters ...

The Shanghai forecast this week is a high of around 30C and low of 20C.

Indeed, completely missed that.

So... early winter is not the cause this year. Even quite far up north, it's quite warm this year.

Still an interesting point as not many people know Shanghai has quite cool winters (and even 10C outside needs some heating indoors).

I just did a double take as it’s still late summer/early fall so still relatively warm.

I'd say if they have power shortage already, then the situation may turn even more dire when the cold strikes.

Or perhaps a byproduct of the increase in the price of oil.

https://www.npr.org/2021/10/01/1042209223/why-covid-is-affec...

Seriously? China is pretty petty.

I think generally speaking humans are petty and nation to nation 'punishments' and reactions generally look petty just by default ... short of war.

Good or bad choice I'll leave that to everyone else to decide (wouldn't cost China much to just do ... nothing) but I think it's human nature to some extent.

Sometimes it can be advantageous to appear petty and unstable.

https://en.wikipedia.org/wiki/Madman_theory

As far as I can see, the answer is negative. The shortage of electricity this time is believed to result from two factors. On the one hand, the price of coal has increased a lot recently, but the electricity price is only allowed to float by at most 10%. Power generation is now a money-losing business. As a result, there is no motivation for power plants to produce more electricity. On the other hand, the goverment wants to achieve carbon neutrality by 2060, so local goverments at all levels are assigned some KPIs. Because of the return of manufacturing caused by COVID-19 in the first half of the year, many places used up their entire year's worth of emission credits early, so they had to forcibly cut off production.

Wonder if this: https://www.bbc.com/news/world-asia-china-58026038 (China nuclear: Taishan reactor shut down over damaged fuel rods) is also a factor......

Impact of lack of single reactor is negligible for whole grid.

Depends on the grid - some countries get almost 10% of their power from single reactors. Of course, bigger countries have this less

This is quite a stretch. People commenting "in part", of course in part it is, but is also being ango-centric and ignoring real reasons, banning Australia' import is quite an superficial and insiginicant contributor. The global coal price has been on the rise, that's irrespective if China has the ban or not. Even it does, it's still a quite small percentage in terms of total energy supply. I'd rather not argue on this. Find some significant or likely significant reasons, otherwise we are just focusing on logically indefensible but insignificant aspects of things (80% sure there is a term for it)

lol they have better ways of flexing without shooting themselves in the foot. not everything they do is based on foreign policy.

One of the things this article doesn't mention is the upcoming Olympics.

Xi wants blue skies at the Winter Olympics and what the emperor wants, the emperor will try to get.

https://www.bloomberg.com/news/articles/2021-08-10/china-aim...

This isn't a new phenomenon. China has done this before major international and political events in the past. This isn't even the first Olympics they've tried this with.

https://www.nytimes.com/2008/07/29/sports/olympics/29china.h...

https://www.scmp.com/news/china/policies-politics/article/20...

I wonder if we are going to face a paper shortage as alluded to in the article. The US shut down most of the paper factories due to outsourcing to China.

We learned too late that it is possible to use the output of papermills as high value bio based feed stocks for other parts of the global supply chain.

Could this be the kind of external force required to help reduce unnecessary paper waste (junkmail, statements, etc.)?

China is the largest paper consumer in the world (100mm metric tons), followed not far behind by the US(70mm metric tons). Japan is 3rd at 25mm.. That seems to suggest we have a lot of room for reduction.

Does it? The US population is ~2.5x Japan's. 25x2.5 = 62.5

Japan isn't really a society I see as absurdly wasteful. So we're using maybe 10% more paper per capita? Less paper per GDP.

Have you ever bought any snack from Japanese origin? They are usually in three layers of plastic packaging.

They also seem to absolutely love everything stationery.

I hate packaging. It frustrates me so much that I don't buy my two favorite Japanese candies because I refuse to throw out so much trash just for one of those (admittedly amazing) kiwi gummies that most of you are probably familiar with.

But I have the same issue with buying starbursts, hi-chew, jolly ranchers... I only buy candy if it's not individually wrapped. I just can't.

I would gladly trade all of our junk mail and ugly flyers for handwritten notes on nice stationary... We could at least comprehend the resource use as being social and not merely an exercise in fetching mail and shredding it.

Paper shortage? We just got through our wood and lumber shortage - the lumber mills being shut down before Covid. Lumber prices shot up as a result and the raw wood industry responded accordingly and generated too much wood. Surely paper mills have or will turned back on, esp considering the raw commodity prices have dropped. Or who knows, maybe we’ll do something genius and ship our wood to China for processing

> Surely paper mills have or will turned back on, esp considering the raw commodity prices have dropped.

It's hard to resurrect industries that have closed shop. The staff (without whose experience you can't make it work anyway) will have left towards retirement, other employment or have migrated away entirely, the supplier relationships need time to re-establish (particularly if the industry in question was the sole or biggest client), and often enough at least the equipment and sometimes even the buildings / real estate will have been sold away to the cheapest bidder (aka, China).

And everyone knows that the crunch will be sort of temporary, so why go through the trouble of dealing with all of the above when there are no guarantees that the government or someone else will keep the investment above water once the crunch passes?

It's pretty uncommon for industries to simply "close shop" altogether, though - 'turning off' is just as hard as 'turning on'. As long as some portion of paper production remains locally, even if only for specialty products, it should be comparatively easy for that industry to expand as demand increases

> it should be comparatively easy for that industry to expand as demand increases

Not by much, because the industry that remains has to get new machines, train new workers and re-establish/expand supply lines... and particularly the logistics problem is going to be hard to solve. Truck drivers are in demand but few are willing to enter an industry that's doomed to be replaced by autonomous trucks and rail.

Wisconsin used to have a number of paper mills. They are gone. From what I remember, the buildings and equipment were sold decades ago. There is no "turning back on". You'd have to rebuild entire plants (or possibly entire companies.) Assuming you can even get equipment and the necessary capital together, there isn't enough time to build anything before the supply problems are fixed.

Edit: Oh. And the people to staff them.

My understanding is a lot of paper plants converted over to cardboard, because there has been a lot more demand for it. Here's some random Bloomberg article I found that backs that up, but I read a different one a year or so ago that went quite a bit into the motivations. What I recall is the writing paper industry was in a bad shape due to reduced mail, but cardboard was booming because of online shopping.

https://www.bloomberg.com/news/articles/2021-09-24/paper-sho...

> Skyrocketing demand for boxes and packing materials during the pandemic has slashed paper production across North America, and it couldn’t have come at a worse time for retail companies.

> ...

> With some mills converting to cardboard to meet the spike in e-commerce deliveries and others shutting down altogether, more than 2.5 million metric tons of North American printing and writing paper capacity—or nearly one-fifth of 2019 levels—has come offline since the start of last year. That’s according to Kevin Mason, managing director for ERA Forest Products Research, a financial research company that specializes in paper and forest products. Normally, printers would look abroad for supply but soaring logistics costs and other markets’ own booming packaging demand have limited that option. U.S. imports of paper and paperboard by volume fell 9.7% last year. Now supplies of certain grades are so tight that some commercial printers can’t get the paper they want “at any price,” Mason said.

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Edit: I'm pretty sure this is the article I originally read about this: https://www.nytimes.com/2019/03/22/business/cardboard.html

> It was Sept. 21, 2017, and the paper mill that had employed Mr. Strick, his father and his grandfather was shutting down after 128 years. Demand for the glossy white paper that the mill produced for brochures was plummeting as advertising continued its flight to the internet...

> Then something unexpected happened: Amazon and China, two forces that are often blamed for destroying American employment in retail and manufacturing, helped Mr. Strick get his job back.

> “No one is shocked when a paper mill closes anymore,” said Kyle Putzstuck, the president of Midwest Paper Group, which bought the Combined Locks mill soon after it was shuttered. “The shocking thing is when one reopens.”

> The reason for the revival has to do with the millions of packages that Amazon and other online retailers ship around the world — specifically, the humble cardboard used to construct them. Over the past five years, e-commerce has fueled demand for billions more square feet of cardboard....

> The mill’s new owners, who called themselves Midwest Paper Group, eventually agreed that it should be in operation. Across the country, failed white paper mills were being converted to brown to feed the cardboard-box boom, and Midwest followed suit.

> We just got through our wood and lumber shortage

Prices have started to drop but I would hardly say we "got through" the shortage. Just last week I was talking to the owner of a lumber yard asking when cedar would be readily available again, and he was skeptical that it ever would be in steady supply again. He mentioned looking to get out of the industry since he wasn't too sure it had much of a future left for him.

Hopefully he's wrong, but I'll remain skeptical of a return of the lumber industry to what it was.

Maybe this will accelerate the transition away from coal for China. That would be pretty awesome.

China just announced at the UN General Assembly that they will no longer be selling / setting up coal power plants to 3rd world countries. They are moving this way : )

Maybe they want that cheap fuel for their own expanding domestic usage.

Honestly, that's a great outcome. At least if the coal plants are physically in China then China can, basically at its leisure, replace them with the solar panels that they themselves make. I definitely picture China as 100% nuclear, hydro, and solar/wind kind of 10-20 years from whenever they decide it's time. They have the manufacturing capacity and knowledgebase to do it, and seem to have the will to follow through.

tldr; I for one would prefer coal plants under Chinese jurisdiction than coal plants funded by the Chinese in other countries where they have less ability and pressure to replace them.

If the reason is to reduce competitive demand for cheap fuel by preventing poorer countries to have access to the most cost effective coal technology, so that China can have cheaper energy [which is just my conjecture], I don't think it is a great outcome at all.

China has a horrible environmental track record, they cause more carbon pollution than the developing world combined, and despite being a rich country they are still massively increasing their carbon outputs.

The fact they are a communist dictatorship doesn't inspire any confidence that they might one day suddenly start to value the environment any more than they do now. They will move away from coal as soon as it become economically advantageous to do so and no sooner, which is not all that different to how poorer countries will deal with their coal generation.

> They will move away from coal as soon as it become economically advantageous to do so and no sooner, which is not all that different to how poorer countries will deal with their coal generation.

The incentives are aligned, the solar panels are made in China, by Chinese companies, and as it turns out another domestic industry (construction) is collapsing so they need a new, major domestic economic boost. I predict it will be renewable power, it's both in their interest and boosts their international profile.

I don't agree that China has that bad a track record, they seem to be very willing to take dramatic actions if they feel it is in their self interest (recently, bitcoin for instance).

I think it is in their self-interest to phase out coal for domestically manufactured solar since it will juice their economy, give their entire economy a generational advantage over legacy systems, and help protect their domestic food production.

Same as the incentives for other countries to move to solar when it becomes cheaper. We're talking about buying coal power station technology (and likely construction and quite possibly operation) from China, or buying solar generation from them.

> I don't agree that China has that bad a track record, they seem to be very willing to take dramatic actions if they feel it is in their self interest (recently, bitcoin for instance).

Oh they definitely have a horrible track record on carbon pollution (as well as a lot of other things like ocean plastic pollution, over fishing, endangered animal trade, illegal CFC emissions, and all sorts of horrible things. They are by far the biggest carbon polluter on the planet, larger than the entire western world combined, and yet they still plan to vastly increase carbon pollution and demand concessions in international carbon agreements. They're horrible.

Surely better than debt financed coal plants in other countries... right? At least China definitely has the domestic manufacturing base required to replace with solar or nuclear.

And I do think the incentive is stronger for them from an economic standpoint.

Consider the extreme case where they build enough coal plants to entirely power their electrical grid at the capacity they want.

Now they get a chance to install new solar facilities, manufacture those solar panels, deconstruct the coal plants, and on top of it get kudos internationally for shutting down coal? I think it's a lot more incentive than just the cost of installation, it's totally different since they make the panels too.

Same way that coal mining companies want there to be more coal plants in the US... China is the country with all the sun mining companies, and seems intent on keeping it that way.

No, I'm saying it's not better that a relatively wealthy country like China continues to increase its usage in the cheapest and dirtiest fuel rather than much poorer countries.

As resources start collapsing, more and more major world powers will begin to keep their own resources for themselves.

China didn't say they were targeting a net reduction in building coal, only that they weren't going to be building coal for anyone else.

This is likely due to the projected increase in demand for coal in China and a realistic assessment about how resource constrained they are.

And to be clear, while collapse of fossil fuels, something people have been concerned about for decades, will be better for the planet, it will still mean a rapid decline in our standard of living and essentially the collapse of modern industrial society.

Renewables are rapidly winning versus the cost/benefit of fossil fuels.

China also announced a partnership with Australia that would replace existing coal trade agreements between China and Australia with a massive solar farm in the Australian desert and planning for the worlds largest planned high voltage DC corridor between continents.

ETA Link: https://en.wikipedia.org/wiki/Australia%E2%80%93ASEAN_Power_...

It's also a geopolitical issue. Natural gas imports can be blockaded. China has additional domestic coal capacity they can tap, if they get into a tight spot.

Other energy solutions (green energy, nuclear) will take time and effort to develop.

Despite all of the announced 'bans', how much underground Crypto mining is still occurring in China? Even at the level of small rigs in apartments running 24/7?

If its still a sizeable level, could China use its international influence to push further crypto bans overseas, in order to depress prices and make PoW mining less attractive, and thus save electricity?

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