Major storms in China are causing huge transport problems and preventing coal reaching power stations leading to power shortages, but the weather is only worsening a long term problem in the fast growing economy.
Demand continues to significantly outstrip supply and analysts said the problem is made worse by the fact that the cost of coal is rising but electricity prices are capped.
There have been power outages because of a weather related shortfall of nearly 40 gigawatts; that is 5.6% of China’s total generating capacity. Government disaster relief officials estimate direct economic losses so far at 1.7 billion euros.
The power shortages illustrate the difficulties facing Beijing which is making efforts to clamp down on enterprises which use lots of energy and cause pollution. It plans to try to restrict investment in those sectors particularly so called “low end” plants making steel, construction materials and chemicals.
Another effect of keeping a tight grip on investment this year should be to curb inflation. Beijing is worried about the social impact of rising inflation, which is near an 11-year high and earlier this month imposed price caps on key food items, fertiliser and bottled gas.