Factories in China are struggling at a time when the world's second largest economy has to contend with yet another concern: a
growing power supply crunch. A government survey of manufacturing activity released Thursday fell to 49.6 in September, down from 50.1 in August. Any reading below 50 indicates contraction — and in this case, it was the first time the official survey showed activity shrinking since the Covid-19 pandemic began. Factories are getting dinged by the soaring cost of energy, according to China's National Bureau of Statistics, which added Thursday that high-energy businesses have not been prospering.
"The big picture is that industry was coming off the boil even prior to the latest power shortages," wrote Julian Evans-Pritchard, senior China economist at Capital Economics, in a Thursday research note.
A
boom in construction and manufacturing drove much of China's economic recovery this year, and continues to play a vital role in growth.
But that work requires tons of power and thus massive amounts of coal. Power shortages
began to bite in June but have worsened since then as coal prices have soared and China's provinces have tried to meet Beijing's targets to reduce carbon emissions.
