Some local governments in China are rationing power to factories, homes and hospitals--and even shutting down traffic lights--in a scramble to fall into line with Beijing's unyielding energy-efficiency targets that also underscores the challenges in finding apt and lasting measures.
Some local governments in China are rationing power to factories, homes
and hospitals--and even shutting down traffic lights--in a scramble to fall
into line with Beijing's unyielding energy-efficiency targets that also
underscores the challenges in finding apt and lasting measures.
The efficiency targets, part of the Chinese government's five-year plan for the
economy, call for a reduction in energy intensity, or the amount of energy used
relative to economic output, by 20% over the 2006-2010 period. The target is
aimed at limiting
China
's
reliance on expensive natural resources, much of which are imported, and is
also central to reducing
China
's
emissions of greenhouse gases and other pollutants, because
China
's
primary source of power is coal.
By the end of last year,
China
had
cut energy intensity by 15.6%. In the first quarter of the year, energy use
soared as massive stimulus funds flooded into the economy, spurring an
infrastructure and housing boom. Premier Wen Jiabao vowed to use an "iron
hand" to ensure that the five-year target is met, and has followed with
other statements calling for the closure of outdated, inefficient manufacturing
capacity.
"It's clear that they are frantic to meet this 20% energy target,"
said Arthur Kroeber, managing director of GaveKal Dragonomics, an economic
research firm in
Beijing
.
Wang
Tao
,
China
economist for UBS, said the target "is a big 'face' issue" for the
government, which would be loath to acknowledge failing on such a prominent
goal.
The central government has long had difficulty getting local officials to
comply with environmental-protection measures, because the local officials were
judged primarily on economic growth and employment in their regions. But the
recent pressure on energy targets appears to have gained traction, in part
because local officials are being judged on it in annual performance reviews,
according to analysts.
In
Changzhou
, a
city of several million people in the wealthy coastal
province
of
Jiangsu
near
Shanghai
, the
local government issued a strict rotation of rolling blackouts for thousands of
factories that required them to shut down five days for every nine they
operate.
A person answering the phone at the Jiangsu Pangu Cement Group in
Changzhou
said
production had been affected by the "open nine, close five" policy
set by the city government.
The cuts are happening in other regions, too. An employee at the Zhejiang
Leomax Group Special Cement Co., in
Zhejiang
province also in eastern
China
, said
it had experienced sporadic cuts, too.
Other local governments have gone even further. In Anping, a city in
Hebei
province near
Beijing
,
local officials rationed power to hospitals and homes and have turned off
traffic lights that aren't solar powered. "All these measures are aimed at
fulfilling Premier Wen's commitments on emissions reduction," said an
official of the general office of the Anping Development and Reform Bureau.
But the local blackouts clearly aren't what the central government intended. The
National Development and Reform Commission,
China
's
main economic-planning agency, issued a statement Monday on its website
rebuking Anping officials, saying their measures weren't consistent with
Beijing
's
policy.
The measures have drawn particular attention in the steel sector, with a number
of small producers being temporarily halted. Credit Suisse estimates that
China
's
steel output could be reduced 5% in the coming months by power restrictions. Speculation
about the impact has pushed steel prices up, although demand has also weakened.
Wang of UBS said the broad impact of power cuts on
China
's
economy will be limited, because it already has been slowing after the
government put the breaks on spending for infrastructure and housing.
Andy Rothman,
China
strategist for CLSA Asia-Pacific Markets, said there are other motives behind
the power cuts.
China
's
central government has been pushing to consolidate the fractured steel
industry, partly to get rid of smaller, less-efficient mills but also because a
more-unified steel sector could increase its bargaining power against iron-ore
miners. Aluminum smelters, which typically use even more electricity than steel
mills, haven't been shut down in the crackdown, he said.
Environmental experts said the local actions suggest the government is having
difficulty implementing more lasting solutions. These measures show a
"lack of understanding of the real meaning of the energy-efficiency
targets," said Wen Bo, of the environmental group Pacific Environment. He
predicted emissions and energy consumption would rebound next year at the start
of the next five-year plan.
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