China’s Boom Economy Is Starved for Electricity
If power is the lifeblood of an economy, China is hemorrhaging. Across the country, electric utilities can’t keep up with demand, generators are hot sellers and brownouts endemic.
It’s been a brutal summer in China, with temperatures in the south frequently exceeding 100 degrees, putting an enormous strain on the electric grid.
The shortages have spurred a host of innovations, from the clever to the absurd. Cities have competed to seed clouds in hopes of cooling down the land and reducing the use of air conditioners.
The eastern city of Hangzhou opened vast underground caves built decades ago as fallout shelters, inviting residents to descend and play mah-jongg in air cooled by nature rather than man. Power companies have offered free outdoor movies to lure people from their appliance-filled homes. And Beijing has gone low couture, advising people to shun their hot Western suits in favor of short sleeves to beat the heat.
As the first hint of cooler weather descends on China’s smog-shrouded cities, energy planners are trying to take their first deep breath in months. But ravenous demand, poor energy forecasting and structural problems caused by decades of central planning will guarantee years of troubles ahead.
Nor is the effect limited to China, as the Middle Kingdom’s hunger for fuel pushes up prices worldwide and the smog belching from power plants spreads far beyond its borders.
“This economy is not just growing,” said Zhang Lizi, professor at the North China Electric Power University. “It’s booming. Just booming.”
At the massive complex of the Lang Sha Textile Co. here in Yiwu, thousands of young women stroll in and out of the main gate at lunch hour dressed in company-issue white T-shirts and paper caps. “We aim to be the sock king of the world,” boasts a sign near the gate.
Thanks to Wal-Mart Stores Inc. and other major U.S. retailers, they’re well on their way. In fact, one in five feet in America wears a Lang Sha sock, churned out on a vast matrix of clattering machines that suck in thread, spin it frenetically, weave in a logo and spit it out through an undulating plastic tube at up to 3 million a day, if all goes smoothly.
It rarely does these days. Yiwu has been hit particularly hard by the energy shortage in part because so many manufacturers are concentrated in a small area -- including 1,600 or so in the sock industry.
Lang Sha is doing what it can. It has invested heavily in generators. It has shifted production to low-use evening periods. It has petitioned for special treatment from local utility officials, arguing its status as a “major producer.” And it has created an entire department to constantly monitor the government brownout advisories printed in newspapers, relayed verbally or sent as last-minute text messages on cellphones.
With a bit of warning, the company is able to shut down its production line. Several times a day, however, despite the precautions, Lang Sha is hit with unexpected cuts. And even the slightest power break leaves a line in the fabric that doesn’t sit right with quality-conscious consumers.
“We’ve lost millions of dollars,” manager Liu Jun said, gesturing toward a vast display of purple, pink, Winnie the Pooh, Mickey Mouse, sports and dress socks on dozens of mannequin feet, their toes pointing skyward like a huge school of synchronized swimmers. “That doesn’t even count the contracts we’re afraid to bid on. It’s a major headache.”
China’s rush to satiate the world’s demand for cheap goods also has spurred a building spree in roads, bridges, factories and ports, giving a big boost to such power-gobbling industries as cement, steel and aluminum.
Employees returning home with their growing paychecks create more demand for voltage. Consumers who once dreamed of a new watch or bicycle now aspire to the Chinese dream: a nice house and a flashy car in the garage.
Producing these requires still more steel, glass and electric power, even before residents hit the mall for washer and dryer units, big-screen televisions and electric heaters to fill those houses. Most of China’s appliances, meanwhile, use three to six times as much energy as overseas models because there has been little pressure to economize.
On the road leading from Hangzhou Xiaoshan International Airport, miles of newly built houses crowd the road in startling shades of pink, purple and orange chosen to attract China’s growing middle class. Miniature pagodas, mock Eiffel Towers and fake family crests drip off houses built in a mishmash of styles.
“A decade ago, my entire family lived in a tiny farmhouse with one light and a small black-and-white TV,” said You Zhoushui, a 29-year-old Hangzhou taxi driver.
“Now we’re in a three-story concrete house with three televisions, several air conditioners and just about every other appliance imaginable,” he said. “We try to conserve energy, but you can’t go too far.”
Nor is there much apparent incentive to do so. Residential consumers are charged far less for electricity than industrial users as part of the government’s bid to maintain public stability. And most building codes don’t require double-paned windows, tight seals or other energy-saving steps even as residential users get preferential access when supply is rationed.
This means a disproportionate share of the pain from power brownouts fall on industry, said Scott Roberts, Beijing representative at Cambridge Energy Research Associates.
Few inside or outside China predicted how fast the economy would grow -- 9.7% during the first half of 2004 and 9.69% a year earlier.
Nor has energy demand exactly followed the script. A rule of thumb has power consumption growing at the same rate as the overall economy. In China, power demand has far exceeded economic growth as energy-intensive industries ramp up and waste in the system becomes more apparent.
Bureaucratic infighting, protected fiefdoms and top-down decisions have also left many utility companies less than responsive to customers. And grid and transmission problems mean that surpluses in one area can’t easily alleviate shortages in others.
The crisis probably will put off any quick move to reform the industry or introduce more competition, analysts say.
“China has looked at the lessons from California carefully,” said Kang Wu, an energy expert with the East-West Center in Honolulu. “It will focus on gradual change and trying to learn from California’s mistakes.”
Although intense media scrutiny and directives from the top have shaken things up, there’s no immediate fix in sight despite China’s multibillion-dollar spending spree aimed at fixing the problem.
A 31% increase in China’s generating capacity, is coming online in the next few years, including output from the controversial $33-billion
Three Gorges Dam, a project that has angered environmentalists and hundreds of thousands of displaced farmers.
Even as some worry that China won’t have enough power, others fret that China’s economy could hit the skids just as the new power plants come online, leading to overcapacity and another turn in China’s boom-bust profile.
Not everyone is completely upset by the brownouts and economic turmoil.
“Sometimes when the power shuts, it’s actually kind of nice,” said Fan Xiaoxie, a Hangzhou homemaker getting a shoeshine in front of a department store. “Everything is quiet. It gives you a few minutes to think.”
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Bu Yang in The Times’ Beijing bureau contributed to this report.
