JULY 26, 2004
Companies have been asked to curb usage as the worst shortage since the 1980s hits economic growth
SHANGHAI - In the first 11 years since Shanghai
Pica Colour Separation & Printing set up shop
here, it never had a problem with electricity supply.
Then earlier this year, the Shanghai authorities
asked the Sino-Singapore joint venture to stop printing
one day out of the week in last month and this month
as part of an effort to reduce the metropolis' power
The company won a reprieve after explaining to the
authorities that it could not do so without hurting
business because its printing presses run non-stop
24 hours a day, seven days a week to print posters
and CD sleeves for Sony Music.
However, Shanghai Pica is not out of the woods yet.
The authorities are still asking the company to shut
down for one week next month.p> 'That is going
to be very bad for us,' said Mr Tan Wing Ming, general
manager of the company.
Unless Shanghai Pica can get another reprieve, Mr
Tan estimates that his company will lose 300,000 yuan
(S$63,000) to 500,000 yuan, or roughly one-tenth of
the small- and medium-enterprise's monthly revenue,
due to the disruption.
Mr Tan and other businessmen here are experiencing
firsthand this summer China's worst power shortage
problem since the 1980s.
The power shortage problem is proving to be the
greatest obstacle to sustaining the country's rapid
economic growth for the next decade.
State Power Economic Research Centre chief economist
Hu Zhaoguang estimates that China's gross domestic
product could have grown 10.4 per cent last year had
power blackouts not interrupted factory production.
China's economy officially grew 9.1 per cent last
year. 'Unlike two years ago, when the power shortage
problem was limited to a few provinces, this year,
the power shortage problem has spread throughout the
nation,' said Mr Shi Dan, an energy expert from the
Chinese Academy of Social Science's Institute of Industrial
In the first half of this year alone, 24 out of
the China's 31 provinces and municipalities have suffered
from blackouts because Chinese power companies just
cannot generate enough electricity for all of the
country's factories and smelters.
This summer, China's power companies are expected
to fall short by 30 million kilowatts, more than half
of which will be needed in Shanghai and the eastern
provinces of Jiangsu and Zhejiang.
These three areas in the Yangtze Delta region have
been hit the hardest by power outages because their
local economies are growing much faster than the national
The authorities have tried to alleviate the power
outages by attacking the root of the problem and raising
electricity prices, and sometimes banning the sale
of electricity to the steel, aluminium, cement and
chemical industries, which sucked up 29 per cent of
China's total electricity consumption last year.
A growing number of factories in the Yangtze Delta
region are being affected for the first time this
summer by additional government measures to stagger
their power usage outside of peak hours.
The measures have been aimed at the industrial sector,
especially state-owned enterprises that are less liable
to move their factories away as some foreign investors
have threatened to do.
Residential areas, which account for only 12 per
cent of total electricity usage, and essential services
such as hospitals have been relatively unscathed by
the government's restrictions on power usage.
'At home, I haven't had any problems with power
outages,' said Mr Gui Zuhua, chief financial officer
of Nanjing Hongguo, who lives in the capital of Jiangsu
'At the office, we have adopted regulations on air-conditioner,
lift and lighting usage to conserve energy.'
Last month, the State Council began promoting a
national energy conservation campaign recommending
businesses to turn off office lights during the day
and set thermostats no lower than 26 deg C.
At the same time, the local authorities have asked
Nanjing Hongguo to start its 12-hour workday at 5pm,
instead of 8am, and work through the night several
times a month at its factories in Jiangsu province
and the southern province of Guangdong.
Employees at the Singapore-listed shoe manufacturer's
Nanjing headquarters have also started working on
Sundays and taking a day off during the weekday instead.
But as the frequency of power outages shows no sign
of abating as the weather heats up, the local authorities
have resorted to more drastic measures, including
offering subsidies for factories to buy their own
power generators and asking some companies to give
their employees paid vacations this summer.
All these measures helped prevent the 757,000 brownouts
that plagued China in the first half of this year
from being more than it was, said industry experts.
However, the power outage problem probably will
not go away until 2006, when China's power supply
catches up with demand.
The root of today's power shortages can be traced
back to the Asian financial crisis. At the end of
crisis in 1999, China's economy grew at a relatively
sluggish pace of 7.1 per cent, leaving the country
with a surplus of power.
At the time, government bureaucrats approved the
construction of fewer power plants. Consequently,
when demand for electricity surged in recent years,
China did not have enough power plants to keep up.
Now realising that they underestimated demand, Chinese
power companies have been investing heavily to build
new plants to increase power generation capacity by
130 gigawatts, or almost a third more than China's
Some experts are questioning the wisdom of building
so many new power plants, which will take at least
three years to complete before they start generating
'All the new power plants won't begin operations
until 2006 and 2007. With so many new power plants
coming online, if there is a drop in demand for electricity,
we will see another surplus,' said State Power Economic
Research Centre's Mr Hu.
Then there are environmental concerns. More than
90 per will be noxious gas-emitting, coal-fired plants,
cheaper to build than natural gas and other renewable
energy power plants.
'In a couple of years, China's environmental pollution
problem is going to be very big,' said Mr Yang Fuqiang,
chief representative of the non-profit Energy Foundation.
Mr Yang said the Chinese government has been receptive
to the Energy Foundation's proposals to encourage
greater energy conservation.
But the authorities have been forced to adopt drastic
measures to curb electricity use because 'the power
shortfall is too big'.
As if to underscore his point, the power in the
Energy Foundation's Beijing office went out while
Mr Yang was being interviewed by The Straits Times.
-- Additional Reporting By Wang Zheng
Copyright @ 2004 Singapore Press Holdings. All rights