A new threat is brewing in China – to the entire global economy

The problems of the largest Chinese developer Evergrande were recently discussed by the whole world.

Analysts predicted a powerful economic crisis.

Now we are talking about energy.

There is not enough electricity in the PRC, factories have stopped, they have to save on heating.

What does this threaten Russia and other states – RIA Novosti found out.

Energy collapse

More than ten provinces in China, including industrial centers, power outages.

Many businesses have stopped, including component suppliers Tesla, Samsung and Apple.

They turn off the heating, traffic lights do not work on the streets.

Residents are asked not to use boilers and microwaves during peak hours.

Problems with electricity in the PRC – since the summer.

In July, due to the abnormal heat, energy consumption was at a record.

Now, with the cold weather approaching, the Department of Energy has ordered coal and gas suppliers to prepare for the winter jump.

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However, there are difficulties with fuel. Blue is a pretty penny. Hard is not easy to find.

But the Chinese economy is still hostage to coal, which provides more than 55 percent of energy generation.

An important supplier, Australia, fell out after Canberra accused Beijing of “hiding reliable information” about the coronavirus.

As a result, coal imports fell. From January to August, 198 million tons were imported into the country, which is ten percent less than in the same period last year.

They are looking for new partners all over the world.

Thus, the southeastern province of Zhejiang resumed deliveries by rail from Kazakhstan, but this is several times more expensive than by sea.

A new threat is brewing in China - to the entire global economy
A new threat is brewing in China – to the entire global economy

They even bought coal for the first time in the United States.

India also lacks fuel. There, coal accounts for over 70 percent of electricity generation.

At the same time, China is actively reducing greenhouse gas emissions. Xi Jinping in an online speech at the UN General Assembly said that the country is no longer going to build coal-fired power plants.

“The PRC suffers from a power shortage against the backdrop of a new green policy of the authorities – prices for raw materials and electricity have risen and are unstable,” says Ivan Belkin, General Director of Label Home Inc., “The situation is serious. Many brands are suspending production, even saving on air conditioners in workshops and offices “.

And then – all over the world

More recently, analysts have been actively discussing the crisis of the largest Chinese construction company Evergrande, which has found itself on the verge of default due to huge debts.

Risks due to energy problems are now being assessed. Almost half of the Chinese industry was affected, according to Goldman Sachs. Therefore, the forecast for GDP growth in 2021 was reduced from 8.2 to 7.2 percent.

Bank of America predicts 7.7, but only four in 2022.

The UK-based Russell Group, a modeling and risk analysis firm, estimates that China’s energy cap has disrupted $ 120 billion in global trade flows. Most of all, this affected microcircuits, which are still in short supply on the world market. And they are necessary in the production of cars, gadgets, computers.

Consumer electronics and light industry were affected. Companies are now in a hurry to stockpile goods ahead of the New Year’s sales, and this is very inappropriate for them.

China has been booming since the 1980s.

However, in recent years, the growth rate has been declining. “Power outages, the debt crisis in the construction industry, the outbreak of the delta strain – all this leads to a slowdown in production, the closure of enterprises,” says Mark Goikhman, chief economist of the TeleTrade information and analytical center.

At the same time, the PRC is one of the largest consumers of raw materials and exporters of a wide variety of goods, including food.

A new threat is brewing in China - to the entire global economy
A new threat is brewing in China – to the entire global economy

“The rise in energy prices in China stimulates their general rise in prices. This not only whips up global inflation, but also contributes to a decrease in profitability and a slowdown in the economy in other countries – in particular, in Europe,” the expert continues.

There are significant risks for the banking sector, securities and capital markets.
For Russia, the Chinese problems promise an additional increase in domestic inflation. Economic growth will slow down due to a decrease in energy exports and a decrease in production. And the negative on the financial markets will hit the demand for risky assets – including oil futures and the ruble.

But there is a downside to everything. Difficulties in China can contribute to the emergence of other foreign counterparties, markets, opportunities.
“It is worth paying attention to our own production.

Where there is demand, there will be supply. The main thing is to provide it and develop it, “says Ivan Belkin.

At the moment, China is actively buying Russian electricity. Therefore, it is important to support this industry and create more favorable conditions for it.
According to analysts, much depends on the promptness of the Chinese authorities.

In their arsenal there are many proven and effective tools: stimulating the real sector, financial assistance to banks, increased

no demand for real estate through mortgages.

It remains to be hoped that the crisis will be stopped next year. Otherwise, the entire world economy will suffer.

Source: BBC

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