China's growing power crisis threatens global supply chain disruption


China’s power crisis has reportedly started to spread from factory floors to people's homes. The crisis is beginning to impact supply chains globally, as companies in one of the world's leading exporting hubs are bound to reduce production capacity to preserve electricity.

Producers and shippers are scrambling to satisfy the demand for everything from apparel to toys for the year-end holiday shopping season as they deal with supply chains that have raised raw material costs, long waits at ports, and shipping container shortages.

Chinese manufacturers worry that severe measures to reduce electricity usage would reduce output in economic powerhouses like Jiangsu, Guangdong, and Zhejiang provinces, which account for about a third of the country's GDP, and perhaps raise prices.

Reportedly, the country’s State Grid Corporation has said that it would take all possible measures to avoid power outages to satisfy basic residential demands.

The local governments are imposing power outages to avert falling short of meeting their energy and carbon reduction goals, which has in turn lead to some residents facing lack of electricity.

Clark Feng, Sales Manager at Vita Leisure Co., stated that power cuts in Zhejiang where their firm is based have led to severe setback to businesses. Fabric makers in the province have already started rising prices owing to production halts.

Mr. Feng says that their firm already had trouble shipping items internationally, and now with the manufacturing capacity limited, it's going to be a complete disaster. They have already had to cope with a lot of uncertainty, and now there's another one. It will be more difficult to fulfill requests, particularly during the holiday season.

Reportedly, the power outages follow recent port delays in China, which wreaked havoc on global supply lines. After a Covid outbreak, one of the world's busiest portions of Ningbo port was shut down for weeks last month, while Yantian port, located in Shenzhen, was closed in May.

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