A China enfrenta graves problemas energéticos

The specter of serious power shortages across China this summer looms larger as more provinces are reporting problems. According to BP’s Statistical Review China is a very inefficient user of energy. Couple this with drought-induced shortages of hydro-power, the recent earthquake, various kinds of price caps on power and coal, and efforts to improve China’s abysmal coal mine safety record, and one has the perfect recipe for power shortages in a economy that is growing at 10 percent a year.

Beijing obviously will pull out all stops to ensure that shortages do not mar the August Olympics, even at the cost of slowing economic growth. In June Chinese aluminum exports jumped 43 percent. Chinese aluminum smelters are estimated to consume as much power as 100 million people. Already power for the aluminum industry has been cut by 10 percent.

The real issue is what will happen after the Olympics. During the major power shortage four years ago, China stepped up oil imports to keep many enterprises functioning with backup power generators. Given the much tighter coal and oil market that exists in 2008, any increase in imports likely would result in still higher world prices.

China’s economy, however, may be in more trouble than Beijing is letting on with rosy forecasts of at least a 10 percent increase in GDP during 2008. While China’s exports are still growing prodigiously – 17.6 percent year on year in June – this was down from 28.1 percent in May. Outside observers are beginning to question whether or not China’s years of unprecedented growth are coming to a close. The Chinese economic miracle has been built on cheap energy, which permitted inefficient plants coupled with cheap labor, a cheap Yuan, and cheap transportation to capture much of the world’s manufacturing.

Beijing maintains that its domestic market is so large that it can weather any economic downturn in its OECD customers. All these assumptions, including the course of Chinese oil imports, may well be tested before the year is out.

.