Beijing’s ban imposed on Australian coal by Commerce Ministry backfired as the industrial parks are facing sudden blackouts resulting into non-fulfilment of the overseas orders thereby eating into its GDP growth. While electricity is at a premium in the world’s second-largest economy and more than 80 Australian vessels with coal had been ‘held up’ off Chinese ports. These hold about 8.8 million tonnes but despite reports about individual ports granting entry to some ships most sit at sea waiting for a U-turn from Beijing on its coal ban, which ultimately is affecting the economy of China.
Sudden blackouts in industrial parks are raising speculation that Beijing’s ban on Australian coal imports is starting to backfire. The power shortage would eat into its GDP growth and industrial output after growth recovered back to positive territory in the third quarter. Manufacturers and exporters are searching for alternative power supplies to keep production lines running as overseas orders are piling up.
Exports from the economic powerhouse, whose GDP is on a par with those of Spain and Turkey, have bounced well above pre-Covid-19 levels, with October’s exports up 20% year-on-year. Many regions in China like Zhejiang, Jiangsu, Henan, Hubei, Hunan, Jiangxi, and Inner Mongolia are grappling with power shortages. Many small and medium businesses in the eastern Zhejiang province have reverted to work-from-home arrangements.
Moreover, it’s difficult for China to change its policy overnight regarding the import of coal from Australia. Power plants have in the past years retrofitted their equipment to use quality Australian coal but they cannot switch to domestic alternative overnight simply because comparable pure thermal coal is not easy to source.
