Several major Chinese cities have reportedly gone dark as authorities have limited power usage, citing a shortage of coal. Prices of the commodity in the country have also shot up due to the reported crunch. The reports also follow rising trade tensions between Beijing and Canberra, leading some analysts to tie the coal shortages and blackouts to the unofficial ban on Australian coal.
Relations between the two nations soured last year after Australia supported an international inquiry into China’s handling of the coronavirus pandemic. Coal is just one in a growing list of Australian goods that China is targeting, as a result of their escalating dispute.
Last year, China told its power plants to limit the amount of coal imports from other countries to keep a lid on prices. Beijing reportedly lifted those restrictions later, but didn’t remove curbs on coal imports from Australia. China also reportedly gave state-owned utilities and steel mills verbal notice to stop importing Australian coal.
China is the world’s largest coal consumer and its greatest source of coal imports was Australia. Coal is the energy source that the world’s second largest economy predominantly relies on — even as it has committed to a renewable energy plan. China is the second-biggest buyer of Australia’s thermal coal, a variety used to generate power.
Prices of coal in China have shot up as a result of the shortage and research firm Wood Mackenzie predicts they will remain high during the peak winter demand period. “China’s thermal coal market is in chaos, with prices rocketing after daily price index releases were suspended on 3 December,” research firm Wood Mackenzie said.
Some cities, primarily those in southern China, have imposed limits on off-peak electricity usage for factories since mid-December, according to a report last week by the South China Morning Post. In the tech hub of Shenzhen, there have been week-long blackouts in different areas, the report said.
Chinese authorities have not tied the blackouts to tensions with Australia or the coal restrictions. They instead attribute the restrictions on power use to exceptionally high demand and routine maintenance.
Last month, China signed a deal with Indonesia to buy $1.5 billion worth of thermal coal.