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Relationship with Australia, GDP outlook


A worker dismantled a number of coal carts at Mentougou’s coal mine west from Beijing in December 2019. Many mines across China have closed in recent years as China struggles to lower carbon emissions.

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China should increase its coal supply in order to avoid an economic slowdown. But Beijing’s cold relations with Australia might make this difficult according to Mizhuo investment bank.

It is also the 2nd-largest country in the world. facing a power shortage owing to a combination of factorsThese are the facts. These include extreme weather and an escalating demand for Chinese products, along with a push by the nation to lower carbon emissions. set out by President Xi Jinping

China is a major industrial country and one of the largest carbon dioxide emitters on Earth. While the majority of electricity in China is generated from coal-fired power, August saw a 10 year low in inventory at major power plants.

China is unambiguously in dire need of as much coal to prevent a [fourth-quarter]”Slowdown because of the tyranny that rolling power scarcitys,” Vishnu Varathan of Mizuho’s economics and strategy department for Asia, Oceania and the Pacific, said in Monday’s note.

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Varathan stated that Indonesia is in a good position to reap the benefits of demand spillover. However, its capacity to fulfill shipments could be problematic.

China has to be cautious about procuring coal rapidly due to logistics constraints and government regulations. Varathan explained that this means that a “stuttering in economic activity” and associated kinks within the regional supply chains may have to be avoided.

Inflationary Pressure

Some banks already have this capability. downgraded China’s growth prospects due to the power crunch

Varathan stated that many observers are concerned about the “significant amount of shock to energy prices.”

According to Kevin Xie (senior Asia economist, Commonwealth Bank of Australia), China’s current power crisis could cause a rise in the prices of many exported goods, which could increase consumer inflation in advanced countries.

In a last week note, Xie stated that limiting electricity supplies will reduce economic growth and exacerbate the slowdown in China’s residential construction industry.

Electricity rationing will most affect energy-intensive industries. He said that the combined percentage of affected provinces’ industrial sectors with power rationing amounts to about 14% of Chinese GDP.

Beijing policymakers are yet to give any hint as to whether or not they intend to make any changes. China will resume imports of Australian coal. Media reports last week saidIndian companies bought about 2,000,000 tons of Australian coal, at a discount price than the Chinese had been selling.