Data | From incessant blackouts to manufacturing slump - China's power crisis explained

In August 2021, the gap between the growth in electricity generation and consumption widened considerably in China

Despite China having relatively fewer COVID-19 cases and fewer movement restrictions, its economy has slowed down in 2021. Moreover, the pace of contraction quickened over the last two months. The major reason for this downturn seems to be the incessant power cuts and blackouts that have significantly impacted the output of manufacturing units. The power crisis was due to . As economies opened up, the demand for finished goods surged, pushing China’s factories to produce more. This increased the demand for electricity, which China was not able to meet. Also, as coal prices surged, thermal power plants in China could not operate sustainably and reduced their supply. Moreover, due to tight emission norms following a resolve to reduce greenhouse gases, mining output has been restricted and factories have been asked to scale back to achieve targets.

The graph shows the manufacturing purchasing managers’ index (PMI) of China. A PMI that is above 50% shows that the manufacturing economy is expanding; if it is less than 50%, it shows that the manufacturing economy is shrinking.