Power cuts at many companies in China

According to media reports, companies in around half of China’s regions have had their electricity cut off for several days. A number of companies from a wide range of industries are affected.

Arbitrary power cuts

According to reports from German victims in China, the power cuts are largely arbitrary, without notice or legal basis, which leads to enormous uncertainty among those affected. The reasons for the rationing of electricity are believed to be China’s efforts to make its own power grid more economical and ecologically sustainable: two-thirds of the electricity generated in China comes from coal-fired power plants, which are not only harmful to the environment but have also become much more expensive to operate. According to an MDR report, power generation in China is currently largely a loss-making business.

All companies in the Chinese areas concerned are said to be affected by the shutdowns – state-owned enterprises as well as branches of foreign companies. Companies in the semiconductor industry are also affected by the shutdowns, which is likely to exacerbate the already difficult situation on the global market.

According to analysts, the measures are likely to have a significant impact on the Chinese economy: Economic growth forecasts have already been revised downward.

Also further restrictions

According to reports from Taiwan, not only companies but also private individuals are to be affected by restrictions. For example, shopping malls are said to have been closed and elevators in public areas have been put out of operation. Furthermore, a regulation is said to be in effect that prohibits the setting of air conditioners to temperatures below 26 degrees. Unsurprisingly, there are no reports from dictatorial China itself. It remains to be seen how the situation will develop and whether further confirmed information will reach the public. The consequences for companies and the business location also remain to be seen – so far, the situation is largely unclear.