Daily Management Review

China's energy crisis threatens to worsen global deficits


Many businesses and factories in China have been forced to shut down or transfer to a two-day work week, resulting in lower output quantities. As The New York Times points out, this situation will result in more disruptions in the supply of Chinese goods as well as a rise in their pricing.

Around 20 Chinese provinces are experiencing power outages, and 16 provinces have implemented electricity rationing. Nearly 150,000 businesses in Guangdong province, China's largest industrial region, are plagued by power supply difficulties, and rationing may last for months, according to several business owners.

In the run-up to winter, Chinese authorities have prioritized energy supplies to firms manufacturing high-cost commodities and to residential structures.

According to ING analysts, supply disruptions from China "will persist for much of 2022, leading to higher prices for popular goods, reduced production and a slower manufacturing recovery." As Gary Grant, head of The Entertainer, which buys toys from China, pointed out, "goods that should have been manufactured now could have been expected to come from us in February. But because of these production disruptions, delivery times are lengthening by 60-90 days, so we will definitely have shortages of products that are in demand in early summer."

The cost of goods from China will increase by 10-12%, he said. Owners of clothing retail chains expect next spring and summer collections to be seriously affected.

source: thetimes.co.uk