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Today’s issue of China.Table slightly focuses on power and climate. Because at the end of October, the world’s eyes will be on Scotland: The UN member nations will be gathering in Glasgow for the 26th UN Climate Change Conference. A lot is at stake. At the end of February, after evaluating 48 national climate plans, the UN Climate Change Secretariat concluded that substantial improvements were required to meet the projected 1.5-degree goal. COP26, as the UN conference is also known, must therefore produce efficient results.
China’s president will in all likelihood not attend COP26 and will send climate envoy Xie Zhenhua in his stead. The UN conference happens at a critical juncture for the People’s Republic: The global power crisis is hitting China particularly hard. The government is ramping up coal-fired power generation following power outages across the country. At the same time, President Xi is announcing a massive solar and wind power program. How long can China continue to rely on both at the same time – and still reach carbon neutrality by 2060? Christiane Kuehl has taken on this question.
The power shortage is not only being felt in China. The shortage also has a direct impact on global supply chains. The already battered chip industry has been hit once again. Nico Beckert spoke with various chambers of commerce and industry associations. They say: Companies are still utilizing their stocked supplies. With the upcoming Christmas season, however, the situation is getting worse day by day.
China’s CO2 trading, which started this year, was seen as a means to get a grip on the People’s Republic’s emissions. However, trading has not really taken off yet, as our cooperation partners explain in today’s Sinolytics.Radar.
Will Xi Jinping travel to Glasgow or not? Over the weekend, British newspapers reported that the Chinese president will not attend the UN Climate Change Conference COP26 in person. But according to Xi’s climate envoy Xie Zhenhua, the decision was still open on Tuesday: “We are still waiting for information from the foreign ministry,” South China Morning Post quoted him as saying. At the very least, however, Xie, an experienced climate diplomat, will travel there in person. This will allow for an informal discussion, which is invaluable at such conferences. Xie stressed that China is working to make the climate conference a success. However, China’s zero-covid strategy stands in the way of a large delegation.
But even if President Xi won’t fly to Glasgow, China’s role at the summit on October 31 will be of great significance: Only if the People’s Republic, the currently largest emitter of carbon dioxide, is prepared to make further concessions, will effective climate protection be possible.
At the climate summit in Glasgow, all signatory states to the 2015 Paris climate agreement are expected to ambitiously tighten their climate targets. The agreement calls for global warming to be limited to below 2.0 degrees, and if possible, even down to just 1.5 degrees compared to pre-industrial times. On several occasions, US climate envoy John Kerry held negotiations with his Chinese counterpart Xie Zhenhua over additional pledges by China. In just under two weeks, we will see what this diplomacy is worth.
China’s well-known pledge is the so-called 30·60 goal: China’s carbon dioxide emissions are to peak by 2030 at the latest. Until then, the CO2 intensity of the economy should continue to decrease. From 2060 on, China plans to maintain a carbon-neutral economy. Coal consumption is to drop from 2025 on. In cooperation with Chinese scientists, the International Energy Agency (IEA) has drawn up a roadmap to China’s carbon neutrality (China Table reported).
China has not yet announced any new climate goals beyond 30/60. But Xi is declaring new plans in bite-sized pieces. At the UN Convention on Biological Diversity in Kunming a few days ago, he surprised the global community with projects for a massive expansion of renewable energies (RE). 100 gigawatts of capacity for wind power and solar power are to be built in China’s deserts. According to Bloomberg New Energy Finance, that is more than India’s current solar and wind capacity – and four times the capacity of the Three Gorges Dam on the Yangtze River.
Xi’s announcement supports unconfirmed reports that China is planning a 400-gigawatt project in the desert, according to BloombergNEF. This mega project could consist of a network of smaller plants. In recent days, for example, the northwestern Chinese provinces of Qinghai and Gansu have announced new RE projects with a combined capacity of 24 gigawatts. These are part of the program announced by Xi, according to BloombergNEF.
Such piecemeal announcements are typical for China: Beijing does not announce plans that it cannot fulfill with certainty. For example, construction of the announced 100-GW plant in the desert of western China has already begun. And it’s going well according to Xi – so it was high time to make it official. He reiterated that China would announce a series of additional plans that would ensure a reduction of emissions from 2030, but did not specify when.
A few days before Xi’s speech, Premier Li Keqiang indicated that China currently has other concerns in light of the current power crisis. China’s green transition must be founded on a stable power supply, Li stressed at a meeting of the National Energy Commission. He called for a thorough assessment of the power crisis before new short-term climate goals could be set.
Coal is the big conflict topic – not just for China itself, but also in the negotiations with the West. A few weeks ago, Xi announced that China would no longer build or finance coal-fired power plants overseas (China.Table reported). He thus fulfilled a key demand of his nation. Shortly before, during the virtual climate summit with US President Joe Biden back in the spring, Xi had pledged to reduce coal consumption by 2025 and to strictly control any increase until then.
But in light of the power crisis, these promises now stand in question. Beijing has just ordered all provinces to boost coal production to restore power supplies. “The crisis is certainly leading the government to redouble efforts both to increase and secure fossil fuel supplies and boost clean energy,” expects Lauri Myllyvirta, a China expert at the Centre for Research on Energy and Clean Air. “Where the balance settles will only become apparent over the next months.”
Western countries are pushing China to start cutting emissions before 2030. Such a pledge in Glasgow has not been made any more likely by the power crisis. But Beijing-based BloombergNEF analyst Jonathan Luan gives the all-clear: “Short-term increases in coal and coal-fired power production don’t necessarily contradict China’s long-term decarbonization goals.” Public support for leading politicians advocating renewables at least “shows they believe clean energy contributes to China’s energy security,” Luan says. Despite blackouts.
Whether the short-term coal plans contradict China’s goals is a matter of interpretation. After all, China’s commitments still allow for an increase in coal consumption until 2025. But the higher the share of coal in the energy mix is in 2030, the more difficult it will be to achieve carbon neutrality in 2060. It currently accounts for between 60 and 70 percent. It will be a huge challenge for China, that much is clear.
Side stages are much easier to handle. Right after the UN Convention on Biodiversity, China held a three-day UN summit on transportation. There, Xi announced that he would work for a more sustainable transport system worldwide. Beijing wants to establish a global innovation and knowledge center for a transport system that uses the earth’s raw materials responsibly. The transport sector is important for climate protection, as it contributes around a quarter of carbon dioxide emissions. China is a leader in electromobility. But even this is only truly sustainable if electric cars are powered by renewable energy sources rather than coal-fired electricity.
There will be much to debate in Glasgow. Preparations for the meeting are taking place mainly behind the scenes. The other day, Xi made a final phone call to German Chancellor Angela Merkel. Xi had pushed for the meeting to discuss COP26, South China Morning Post reported, citing a European diplomat. However, the details of this conversation are unknown. Suspense continues; a successful conference resulting in many actual commitments is vital for all of us.
More than half of all Chinese provinces are currently rationing access to power. The power crisis affects millions of people, who sometimes sit in the dark for hours and cannot charge their mobile phones. In some cities, people were stuck in elevators and traffic lights failed.
The economy is also groaning under the power shortages. In the industrialized province of Guangdong alone, almost 150,000 companies were affected by the energy crisis in September. Companies complain that they are only informed of the shutdowns at far too short notice. In some cases, they only received the news via app in the evening that the power will be switched off the next morning. The energy crisis frequently brings production to a standstill. More and more companies fear repercussions for supply chains. And manufacturing costs could rise even more in the future.
Ioana Kraft of the EU Chamber of Commerce in Shanghai told China.Table that the “just-in-time” supply chains of some companies have been disrupted by the power crisis. Supplying their customers was another issue, she says. Due to power cuts, a French industrial gas company was not able to meet demand. It had to restrict distributions to the chip industry, Kraft reports.
Some companies now make do with diesel generators, says Kraft. But in certain areas, that is hardly enough. In addition, authorities make no distinction between individual companies. Energy-efficient companies are just as affected by the power cuts as companies that pay less attention to sustainability.
Other companies still manage by utilizing their stocked supplies. For four to eight weeks, this is a viable option, says Kraft. However, if the energy crisis continues, as many experts expect (China.Table reported), things could get tight after that. Then the power shortages could also increasingly affect global supply chains, Kraft explains.
Klaus-Juergen Gern from the Kiel Institute for the World Economy also fears that there will be “further production cutbacks soon”. This could also have an impact on Christmas sales. This is because production would normally be ramped up in the coming weeks. It was likely that “the high foreign demand cannot be fully met”. Supply bottlenecks for Europe‘s manufacturing sector could deteriorate.
The power crisis is also affecting producer prices. In September, prices for energy resources and industrial commodities already increased by more than ten percent (China.Table reported). As factories with high power demand are repeatedly forced to cut back their production, commodity prices are about to increase further. Stefan Gaetzner, the chief representative of the Federation of German Industries (BDI) in Beijing, fears “price increases or even supply shortages of raw materials“.
Another factor is the liberalization of electricity prices in China. This could also have an impact on producer prices in the future. Recently, China’s authorities ruled that the price of coal-fired power was allowed to rise by up to 20 percent above the basic level set by the government. Before the reform, the price of electricity was only allowed to increase by ten percent. Coal-fired power plants had curtailed their production because they could not operate economically due to high coal prices. The price reform is intended to halt this development. Currently, producer prices are not yet passed on to consumers. However, this could happen in the near future when the costs of the energy crisis add up.
But it’s not just electricity prices that are climbing. The price of coal has gone through the roof in recent weeks. The forward price for fuel on the Zhengzhou Commodity Exchange rose to more than ¥1,830 (€245) on Tuesday, hitting a new high. Prices have increased by a third since the end of September. At the beginning of this year, prices were still below ¥800. High coal prices could also render the liberalization of electricity prices ineffective.
Lauri Myllyvirta, an energy expert at the Centre for Research on Energy and Clean Air, says that with coal prices “at 1,500 yuan a tonne, the fuel cost per kilowatt-hour is 0.6 to 0.7 yuan whereas the benchmarks are generally less than 0.4 yuan per unit.” According to Myllyvirta, the government’s revised, wider price band is only a “modest sweetener at most” for power plant operators. It remains to be seen whether electricity prices will soon increase even further, or power plant operators will be encouraged to swallow the bitter pill of missing profits.
According to Reuters calculations, coal production in China is also rising very slowly. In September, production was at 11.14 million tons per day. In the second half of October, according to Chinese authorities, it was only 11.2 million tons per day. However, the National Development and Reform Commission (NDRC) announced plans to increase coal production by six percent. To achieve this, 153 abandoned coal mines are set to resume operations.
China’s provinces are reacting very differently to the power crisis. In Jiangsu, power is expected to return more frequently soon. Local authorities also assure that the situation will ease in November for the region northeast to the city of Shenyang. In Guangdong, however, the administration announced that rationing could continue. Klaus Zenkel of the EU Chamber of Commerce tells China.Table that the provincial government in Guangdong is providing additional capacity for power generation using diesel generators. However, local companies remain concerned about customers potentially bailing out. The extent of the impact of supply delays also remains uncertain.
The situation could be further intensified by the weather. According to researchers at the United States National Oceanic and Atmospheric Administration, a La Niña event could occur in the coming months. This weather phenomenon causes winter temperatures in the Northern Hemisphere to drop. Over the past ten days, temperatures have already begun to drop below normal throughout many regions of central and eastern China. As a result, Chinese banks expect a continued increase in prices for coal and gas.
Many analysts, therefore, agree that the power crisis will continue to last till winter (China.Table reported). The longer the crisis continues, the greater the consequences for international supply chains and the interconnected global economy could become.
Sinolytics is a European consulting and analysis company that focuses entirely on China. It advises European companies on strategic orientation and specific business activities in China.
For high-ranking party officials in the People’s Republic of China, the will to change scenery is a matter of course. Anyone who wants to make a career in the Communist Party must be prepared to rotate from one province to the next at moment’s notice. Wherever the powerful organizational department of the Central Committee wants them to be.
This post-rostering is a continuous process within the huge apparatus with more than 90 million members. That is why it rarely arouses as much interest as the recent transfer of Wang Junzheng from Xinjiang to Tibet. The 58-year-old is considered an irritant in the West. He is one of four CCP officials sanctioned earlier this year by the European Union, as well as the United States, Canada, and the UK. These sanctions prevent Wang from entering the EU or doing business there.
As security chief in Xinjiang, Wang was considered one of the key figures in the internment of more than one million Uyghurs. While he did not personally order the internment, he continued it consistently since the beginning of his tenure in February 2019. Numerous human rights violations against members of the Muslim minority in the region fall under his direct political responsibility.
The Chinese government reacted indignantly and retaliated with sanctions against EU officials and institutions. The fact that Wang Junzheng, of all people, has now been appointed as the highest cadre in Tibet hardly seems coincidental, but rather like Beijing’s symbol of defiance to other nations. After all, the human rights situation in Tibet has been under a critical eye for many years now. Tibetans complain about repression and arbitrary prosecution by local authorities.
Human rights activists see the appointment as a deliberate message from China to Western countries. “Promoting the security chief of Xinjiang to party chief in Tibet is a deliberate affront to all those who have sanctioned Wang Junzheng,” says Margarete Bause, a longtime member of the German Bundestag’s Human Rights Committee. But Wang’s appointment “is also a dramatic sign to all Tibetans that the systematic oppression of their people will intensify.” It can therefore be interpreted as a warning to Tibetan resistance forces.
The promotion to party leader in a region with such a highly tense security situation offers Wang Junzheng the opportunity to prove himself capable of higher tasks. Those who keep order as cadres in Tibet or Xinjiang also demonstrate that they are willing to pull out all the stops to defend the Communist Party’s monopoly on power.
The most prominent example of those who have made a career far from the glittering coastal metropolises in one of China’s crisis regions is the former head of state Hu Jintao. In 1988, he was given the post of party secretary in Tibet. A year later, he was responsible for the violent suppression of protests and imposed martial law. In 2002, he took power in the country.
Should Wang Junzheng’s fulfill his duty in Tibet in compliance with the will of party headquarters, the chances of advancing to the Politburo will certainly not get smaller. In any case, Wang has already had enough change of scenery. Prior to his assignment in Xinjiang, the social science graduate and Marxism expert was, among other things, party secretary in the northeastern Chinese city of Changchun. Here, Volkswagen assembles its vehicles.
Before that, Wang was already mayor and party chief in the tourist stronghold of Lijiang in Yunnan in southern China. He was later appointed vice-governor of central China’s province of Hubei. A short time later, the Organization Department made him party Secretary of Xiangyang. As such, he rose to the Standing Committee of the provincial party leadership.
However, things have not always gone entirely smoothly for Wang Junzheng. During his time in Changchun from 2016 onwards, the city made national headlines. A local company had used expired substances for the production of rabies vaccines and discredited the entire pharmaceutical industry of the People’s Republic. The damage to the country’s image also became a domestic political problem. After all, China’s authoritarian-ruled population expects at least care and protection from the party if it is not granted a number of civil rights. But the scandal has at least not cost Wang Junzheng his chance to make a name for himself in Tibet. grz
It always begins at Athens’ historic Panathinaiko Stadium: Here, China picked up the Olympic flame for the second time on Tuesday. This time it’s destined for the Winter Games, which starts in Beijing in February. Until then, the fire will make its way back to the People’s Republic. It remains to be seen whether this journey will remain without any incidents. Pro-Tibet activists already held protests during the torch lighting ceremony.
Today’s issue of China.Table slightly focuses on power and climate. Because at the end of October, the world’s eyes will be on Scotland: The UN member nations will be gathering in Glasgow for the 26th UN Climate Change Conference. A lot is at stake. At the end of February, after evaluating 48 national climate plans, the UN Climate Change Secretariat concluded that substantial improvements were required to meet the projected 1.5-degree goal. COP26, as the UN conference is also known, must therefore produce efficient results.
China’s president will in all likelihood not attend COP26 and will send climate envoy Xie Zhenhua in his stead. The UN conference happens at a critical juncture for the People’s Republic: The global power crisis is hitting China particularly hard. The government is ramping up coal-fired power generation following power outages across the country. At the same time, President Xi is announcing a massive solar and wind power program. How long can China continue to rely on both at the same time – and still reach carbon neutrality by 2060? Christiane Kuehl has taken on this question.
The power shortage is not only being felt in China. The shortage also has a direct impact on global supply chains. The already battered chip industry has been hit once again. Nico Beckert spoke with various chambers of commerce and industry associations. They say: Companies are still utilizing their stocked supplies. With the upcoming Christmas season, however, the situation is getting worse day by day.
China’s CO2 trading, which started this year, was seen as a means to get a grip on the People’s Republic’s emissions. However, trading has not really taken off yet, as our cooperation partners explain in today’s Sinolytics.Radar.
Will Xi Jinping travel to Glasgow or not? Over the weekend, British newspapers reported that the Chinese president will not attend the UN Climate Change Conference COP26 in person. But according to Xi’s climate envoy Xie Zhenhua, the decision was still open on Tuesday: “We are still waiting for information from the foreign ministry,” South China Morning Post quoted him as saying. At the very least, however, Xie, an experienced climate diplomat, will travel there in person. This will allow for an informal discussion, which is invaluable at such conferences. Xie stressed that China is working to make the climate conference a success. However, China’s zero-covid strategy stands in the way of a large delegation.
But even if President Xi won’t fly to Glasgow, China’s role at the summit on October 31 will be of great significance: Only if the People’s Republic, the currently largest emitter of carbon dioxide, is prepared to make further concessions, will effective climate protection be possible.
At the climate summit in Glasgow, all signatory states to the 2015 Paris climate agreement are expected to ambitiously tighten their climate targets. The agreement calls for global warming to be limited to below 2.0 degrees, and if possible, even down to just 1.5 degrees compared to pre-industrial times. On several occasions, US climate envoy John Kerry held negotiations with his Chinese counterpart Xie Zhenhua over additional pledges by China. In just under two weeks, we will see what this diplomacy is worth.
China’s well-known pledge is the so-called 30·60 goal: China’s carbon dioxide emissions are to peak by 2030 at the latest. Until then, the CO2 intensity of the economy should continue to decrease. From 2060 on, China plans to maintain a carbon-neutral economy. Coal consumption is to drop from 2025 on. In cooperation with Chinese scientists, the International Energy Agency (IEA) has drawn up a roadmap to China’s carbon neutrality (China Table reported).
China has not yet announced any new climate goals beyond 30/60. But Xi is declaring new plans in bite-sized pieces. At the UN Convention on Biological Diversity in Kunming a few days ago, he surprised the global community with projects for a massive expansion of renewable energies (RE). 100 gigawatts of capacity for wind power and solar power are to be built in China’s deserts. According to Bloomberg New Energy Finance, that is more than India’s current solar and wind capacity – and four times the capacity of the Three Gorges Dam on the Yangtze River.
Xi’s announcement supports unconfirmed reports that China is planning a 400-gigawatt project in the desert, according to BloombergNEF. This mega project could consist of a network of smaller plants. In recent days, for example, the northwestern Chinese provinces of Qinghai and Gansu have announced new RE projects with a combined capacity of 24 gigawatts. These are part of the program announced by Xi, according to BloombergNEF.
Such piecemeal announcements are typical for China: Beijing does not announce plans that it cannot fulfill with certainty. For example, construction of the announced 100-GW plant in the desert of western China has already begun. And it’s going well according to Xi – so it was high time to make it official. He reiterated that China would announce a series of additional plans that would ensure a reduction of emissions from 2030, but did not specify when.
A few days before Xi’s speech, Premier Li Keqiang indicated that China currently has other concerns in light of the current power crisis. China’s green transition must be founded on a stable power supply, Li stressed at a meeting of the National Energy Commission. He called for a thorough assessment of the power crisis before new short-term climate goals could be set.
Coal is the big conflict topic – not just for China itself, but also in the negotiations with the West. A few weeks ago, Xi announced that China would no longer build or finance coal-fired power plants overseas (China.Table reported). He thus fulfilled a key demand of his nation. Shortly before, during the virtual climate summit with US President Joe Biden back in the spring, Xi had pledged to reduce coal consumption by 2025 and to strictly control any increase until then.
But in light of the power crisis, these promises now stand in question. Beijing has just ordered all provinces to boost coal production to restore power supplies. “The crisis is certainly leading the government to redouble efforts both to increase and secure fossil fuel supplies and boost clean energy,” expects Lauri Myllyvirta, a China expert at the Centre for Research on Energy and Clean Air. “Where the balance settles will only become apparent over the next months.”
Western countries are pushing China to start cutting emissions before 2030. Such a pledge in Glasgow has not been made any more likely by the power crisis. But Beijing-based BloombergNEF analyst Jonathan Luan gives the all-clear: “Short-term increases in coal and coal-fired power production don’t necessarily contradict China’s long-term decarbonization goals.” Public support for leading politicians advocating renewables at least “shows they believe clean energy contributes to China’s energy security,” Luan says. Despite blackouts.
Whether the short-term coal plans contradict China’s goals is a matter of interpretation. After all, China’s commitments still allow for an increase in coal consumption until 2025. But the higher the share of coal in the energy mix is in 2030, the more difficult it will be to achieve carbon neutrality in 2060. It currently accounts for between 60 and 70 percent. It will be a huge challenge for China, that much is clear.
Side stages are much easier to handle. Right after the UN Convention on Biodiversity, China held a three-day UN summit on transportation. There, Xi announced that he would work for a more sustainable transport system worldwide. Beijing wants to establish a global innovation and knowledge center for a transport system that uses the earth’s raw materials responsibly. The transport sector is important for climate protection, as it contributes around a quarter of carbon dioxide emissions. China is a leader in electromobility. But even this is only truly sustainable if electric cars are powered by renewable energy sources rather than coal-fired electricity.
There will be much to debate in Glasgow. Preparations for the meeting are taking place mainly behind the scenes. The other day, Xi made a final phone call to German Chancellor Angela Merkel. Xi had pushed for the meeting to discuss COP26, South China Morning Post reported, citing a European diplomat. However, the details of this conversation are unknown. Suspense continues; a successful conference resulting in many actual commitments is vital for all of us.
More than half of all Chinese provinces are currently rationing access to power. The power crisis affects millions of people, who sometimes sit in the dark for hours and cannot charge their mobile phones. In some cities, people were stuck in elevators and traffic lights failed.
The economy is also groaning under the power shortages. In the industrialized province of Guangdong alone, almost 150,000 companies were affected by the energy crisis in September. Companies complain that they are only informed of the shutdowns at far too short notice. In some cases, they only received the news via app in the evening that the power will be switched off the next morning. The energy crisis frequently brings production to a standstill. More and more companies fear repercussions for supply chains. And manufacturing costs could rise even more in the future.
Ioana Kraft of the EU Chamber of Commerce in Shanghai told China.Table that the “just-in-time” supply chains of some companies have been disrupted by the power crisis. Supplying their customers was another issue, she says. Due to power cuts, a French industrial gas company was not able to meet demand. It had to restrict distributions to the chip industry, Kraft reports.
Some companies now make do with diesel generators, says Kraft. But in certain areas, that is hardly enough. In addition, authorities make no distinction between individual companies. Energy-efficient companies are just as affected by the power cuts as companies that pay less attention to sustainability.
Other companies still manage by utilizing their stocked supplies. For four to eight weeks, this is a viable option, says Kraft. However, if the energy crisis continues, as many experts expect (China.Table reported), things could get tight after that. Then the power shortages could also increasingly affect global supply chains, Kraft explains.
Klaus-Juergen Gern from the Kiel Institute for the World Economy also fears that there will be “further production cutbacks soon”. This could also have an impact on Christmas sales. This is because production would normally be ramped up in the coming weeks. It was likely that “the high foreign demand cannot be fully met”. Supply bottlenecks for Europe‘s manufacturing sector could deteriorate.
The power crisis is also affecting producer prices. In September, prices for energy resources and industrial commodities already increased by more than ten percent (China.Table reported). As factories with high power demand are repeatedly forced to cut back their production, commodity prices are about to increase further. Stefan Gaetzner, the chief representative of the Federation of German Industries (BDI) in Beijing, fears “price increases or even supply shortages of raw materials“.
Another factor is the liberalization of electricity prices in China. This could also have an impact on producer prices in the future. Recently, China’s authorities ruled that the price of coal-fired power was allowed to rise by up to 20 percent above the basic level set by the government. Before the reform, the price of electricity was only allowed to increase by ten percent. Coal-fired power plants had curtailed their production because they could not operate economically due to high coal prices. The price reform is intended to halt this development. Currently, producer prices are not yet passed on to consumers. However, this could happen in the near future when the costs of the energy crisis add up.
But it’s not just electricity prices that are climbing. The price of coal has gone through the roof in recent weeks. The forward price for fuel on the Zhengzhou Commodity Exchange rose to more than ¥1,830 (€245) on Tuesday, hitting a new high. Prices have increased by a third since the end of September. At the beginning of this year, prices were still below ¥800. High coal prices could also render the liberalization of electricity prices ineffective.
Lauri Myllyvirta, an energy expert at the Centre for Research on Energy and Clean Air, says that with coal prices “at 1,500 yuan a tonne, the fuel cost per kilowatt-hour is 0.6 to 0.7 yuan whereas the benchmarks are generally less than 0.4 yuan per unit.” According to Myllyvirta, the government’s revised, wider price band is only a “modest sweetener at most” for power plant operators. It remains to be seen whether electricity prices will soon increase even further, or power plant operators will be encouraged to swallow the bitter pill of missing profits.
According to Reuters calculations, coal production in China is also rising very slowly. In September, production was at 11.14 million tons per day. In the second half of October, according to Chinese authorities, it was only 11.2 million tons per day. However, the National Development and Reform Commission (NDRC) announced plans to increase coal production by six percent. To achieve this, 153 abandoned coal mines are set to resume operations.
China’s provinces are reacting very differently to the power crisis. In Jiangsu, power is expected to return more frequently soon. Local authorities also assure that the situation will ease in November for the region northeast to the city of Shenyang. In Guangdong, however, the administration announced that rationing could continue. Klaus Zenkel of the EU Chamber of Commerce tells China.Table that the provincial government in Guangdong is providing additional capacity for power generation using diesel generators. However, local companies remain concerned about customers potentially bailing out. The extent of the impact of supply delays also remains uncertain.
The situation could be further intensified by the weather. According to researchers at the United States National Oceanic and Atmospheric Administration, a La Niña event could occur in the coming months. This weather phenomenon causes winter temperatures in the Northern Hemisphere to drop. Over the past ten days, temperatures have already begun to drop below normal throughout many regions of central and eastern China. As a result, Chinese banks expect a continued increase in prices for coal and gas.
Many analysts, therefore, agree that the power crisis will continue to last till winter (China.Table reported). The longer the crisis continues, the greater the consequences for international supply chains and the interconnected global economy could become.
Sinolytics is a European consulting and analysis company that focuses entirely on China. It advises European companies on strategic orientation and specific business activities in China.
For high-ranking party officials in the People’s Republic of China, the will to change scenery is a matter of course. Anyone who wants to make a career in the Communist Party must be prepared to rotate from one province to the next at moment’s notice. Wherever the powerful organizational department of the Central Committee wants them to be.
This post-rostering is a continuous process within the huge apparatus with more than 90 million members. That is why it rarely arouses as much interest as the recent transfer of Wang Junzheng from Xinjiang to Tibet. The 58-year-old is considered an irritant in the West. He is one of four CCP officials sanctioned earlier this year by the European Union, as well as the United States, Canada, and the UK. These sanctions prevent Wang from entering the EU or doing business there.
As security chief in Xinjiang, Wang was considered one of the key figures in the internment of more than one million Uyghurs. While he did not personally order the internment, he continued it consistently since the beginning of his tenure in February 2019. Numerous human rights violations against members of the Muslim minority in the region fall under his direct political responsibility.
The Chinese government reacted indignantly and retaliated with sanctions against EU officials and institutions. The fact that Wang Junzheng, of all people, has now been appointed as the highest cadre in Tibet hardly seems coincidental, but rather like Beijing’s symbol of defiance to other nations. After all, the human rights situation in Tibet has been under a critical eye for many years now. Tibetans complain about repression and arbitrary prosecution by local authorities.
Human rights activists see the appointment as a deliberate message from China to Western countries. “Promoting the security chief of Xinjiang to party chief in Tibet is a deliberate affront to all those who have sanctioned Wang Junzheng,” says Margarete Bause, a longtime member of the German Bundestag’s Human Rights Committee. But Wang’s appointment “is also a dramatic sign to all Tibetans that the systematic oppression of their people will intensify.” It can therefore be interpreted as a warning to Tibetan resistance forces.
The promotion to party leader in a region with such a highly tense security situation offers Wang Junzheng the opportunity to prove himself capable of higher tasks. Those who keep order as cadres in Tibet or Xinjiang also demonstrate that they are willing to pull out all the stops to defend the Communist Party’s monopoly on power.
The most prominent example of those who have made a career far from the glittering coastal metropolises in one of China’s crisis regions is the former head of state Hu Jintao. In 1988, he was given the post of party secretary in Tibet. A year later, he was responsible for the violent suppression of protests and imposed martial law. In 2002, he took power in the country.
Should Wang Junzheng’s fulfill his duty in Tibet in compliance with the will of party headquarters, the chances of advancing to the Politburo will certainly not get smaller. In any case, Wang has already had enough change of scenery. Prior to his assignment in Xinjiang, the social science graduate and Marxism expert was, among other things, party secretary in the northeastern Chinese city of Changchun. Here, Volkswagen assembles its vehicles.
Before that, Wang was already mayor and party chief in the tourist stronghold of Lijiang in Yunnan in southern China. He was later appointed vice-governor of central China’s province of Hubei. A short time later, the Organization Department made him party Secretary of Xiangyang. As such, he rose to the Standing Committee of the provincial party leadership.
However, things have not always gone entirely smoothly for Wang Junzheng. During his time in Changchun from 2016 onwards, the city made national headlines. A local company had used expired substances for the production of rabies vaccines and discredited the entire pharmaceutical industry of the People’s Republic. The damage to the country’s image also became a domestic political problem. After all, China’s authoritarian-ruled population expects at least care and protection from the party if it is not granted a number of civil rights. But the scandal has at least not cost Wang Junzheng his chance to make a name for himself in Tibet. grz
It always begins at Athens’ historic Panathinaiko Stadium: Here, China picked up the Olympic flame for the second time on Tuesday. This time it’s destined for the Winter Games, which starts in Beijing in February. Until then, the fire will make its way back to the People’s Republic. It remains to be seen whether this journey will remain without any incidents. Pro-Tibet activists already held protests during the torch lighting ceremony.