By David Stanway

SHANGHAI (Reuters) – As a severe power crunch roils China’s northeastern industrial heartland, senior officials face mounting pressure from alarmed citizens to ramp up coal imports thick and fast in order to keep lights on, factories open and even water supplies flowing.

With electricity shortages sparked by scant coal supply crippling large sections of industry https://www.reuters.com/world/china/chinas-power-crunch-begins-weigh-economic-outlook-2021-09-27, the governor of Jilin province, one of the hardest hit in the world’s no.2 economy, called for a surge in coal imports, while a power company association said supply was being expanded “at any cost”.

Social media and news organizations reported that the absence of electricity in northeastern China had caused disruptions to traffic lights, elevators, and mobile phones. It also caused factory shut-downs. Jilin utility warned that power outages could affect water supplies, and apologized to the public for creating alarm.

Dalian, Shenyang and Dalian are two of the most populous cities in China. The disruptions have occurred at factories belonging to suppliers to companies such as Apple (NASDAQ.) and Tesla. Jilin is one of more than 10 provinces that have been forced to ration power https://www.reuters.com/world/china/what-is-behind-chinas-power-crunch-2021-09-27 as generators feel the heat of soaring coal prices that they can’t pass on to consumers.

Han Jun, Jilin’s governor, spoke to power companies on Monday. The province has a population close to 25,000,000 people. He said that “multiple channels” were needed in order to ensure coal supply. China needs to source more coal from Russia, Mongolia, and Indonesia.

According to the official WeChat account of the province, he said that the provincial would urgently send special teams to ensure supply contracts are secured in Inner Mongolia.

Goldman Sachs’ (NYSE:) estimate that up to 44% China’s industrial activities have been negatively affected by power outages. It could cause a one-percentage points decline in annualised GDP Growth in the third quarter as well as a two percentage point fall in December from October through December.

The company published a note on Tuesday saying that the 7.8% GDP growth projection for China in 2021 was down from 8.2%.

‘AT ANY COST’

The power crunch has taken hold https://www.reuters.com/world/china/what-is-behind-chinas-power-crunch-2021-09-27 as a shortage of coal supplies, toughening greenhouse has emissions standards and strong demand from manufacturers and industry have pushed coal prices to record highs and triggered widespread curbs on usage.

Since last week, many areas of northeastern China have been experiencing rationing during peak hours. This has triggered state media reports about power shortages and raised concern from many social media users.

Many shops shut down early in the north, while others in the region operated at night. Weibo’s (NASDAQ:) Chinese service is also concerned about water. A public utility from Jilin informed users that they could face power shortages anytime.

Han, the governor of Jilin, urged businesses to fulfill their “social responsibility” and overcome “the difficulties” caused in part by rising coal prices.

China Electricity Council is the nation’s supplier of electricity and said Monday that companies using coal to power their plants were “expanding [their procurement channels] at all costs” in order ensure power supply for winter.

China should increase coal supply and production, while also protecting safety and the environment. To increase power plant inventories in time for winter, it was necessary to sign more long-term and medium-term agreements.

David Fishman is a China energy policy analyst and manager at Lantau Group. He said the shortages were caused by flaws within China’s pricing system.

He said, “It’s about the coal generators being unable to run their plants profitably in most cases.”

Although policymakers have warned China that it should build more coal-fired plants to meet power shortages in the 2021-2025 timeframe, current plant utilisation rates are still low. This suggests they do not have economic incentives to maximize output.

Fishman said that in the short-term, only two relief strategies make sense: digging coal from the ground (which is bound to prove unpopular) or making end-users spend more money for their power.