Believe that many friends who deal with Chinese sellers have heard more or less about the recent “dual control of energy consumption” policy of the Chinese government, which forced some manufacturing enterprises to stop production or reduce production.
In addition, the China Ministry of Ecology and Environment has issued the draft of “2021-2022 Autumn and Winter Action Plan for Air Pollution Management” in September. This autumn and winter (from October 1, 2021, to March 31, 2022), the production capacity in some industries may be further restricted.
Then why did China introduce such a tough policy? There are at least three reasons：
First, the rise in coal prices has led to no profit for coal-fired power plants
Coal prices rose rapidly, and the price of power coal exceeded the 1000 yuan mark
In China, electric power is a public industry with strong public welfare attributes. The rise in electricity prices is related to the national economy and the people’s livelihood, and the government will not easily raise electricity prices.
70% of China’s electricity comes from coal. As soon as the cost of coal is high, the cost of electricity rises rapidly. However, if the electricity price cannot rise, coal-fired power plants can only generate electricity at a loss.
This has fallen into a vicious circle. The more power generation, the more losses. Some coal-fired power plants simply shut down and reduce power generation.
The second is because of the country’s judgment on the post epidemic era. China is the country with the best recovery from the global epidemic. The influx of global orders into China has led to the sharp rise of raw materials and the blind expansion of the manufacturing industry, but the incremental orders of the overseas epidemic are unsustainable.
Therefore, by regulating the social power supply and limiting the production capacity from the source, some downstream enterprises can not expand blindly, to truly protect the downstream when the future order crisis comes.
Third, prevent inflation risks. International capital companies are crazy speculating on commodities, copper, iron, grain, oil, and beans, etc. are easy to drive up prices, leading to potential inflation risks.
Overheated money on the supply side can stimulate production, but overheated money on the consumer side can easily lead to rising prices and inflation.