Electricity rationing in China spells more supply delays


01-10-2021
Container ship

"The rationing of electricity at some of China's major industrial areas and its ports is likely to slow shipments of electronic components,” says John Harley of St Neots based OSI Electronics UK.  "It can only lead to longer lead-times and further shortages in the supply chain.”

China’s economic planning agency, the National Development and Reform Commission (NDRC), is planning to restrict energy-intensive activities and consumption as part of President Xi Jinping’s target for carbon emissions to peak by 2030 and carbon-neutrality achieved by 2060.

“Critically from our point of view as an electronics manufacturer,” says John Harley, OSI Electronics UK’s Director Business Development UK & EMEA, “NDRC has targeted the Jiangsu, Guangdong and Zhejiang provinces, home to a number of major PCB and computer chip factories.”

These provinces are among the most industrialised in China, receiving ‘red ratings’ for missing consumption targets.

Added to this are record high coal prices (up by a third on last year), which are making it unprofitable for many coal-fired power plants to operate, also leading to power outages.

And within the affected terriorires are some of China’s busiest ports (Ningbo, Guangzhou, Nansha, Yantian and Shekou) – with the Yangtze river delta also in Jiangsu province, its container exports are usually processed by Shanghai or Ningbo.

“The power restrictions will obviously have an impact on factory production and container shipments,” added Mr Harley.

“What knock on effects this will have for material supply remains to be seen, but is certain that if this continues it can only lead to longer lead-times and further shortages in the supply chain.”

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