The Chinese economy does not have to deal only with the economic consequences of the decision to intervene in almost all sectors of its economy, setting new regulatory rules. It also has to deal with the economic consequences of the sharp rise in energy prices.

Coal and gas have literally soared since the beginning of the year, and China relies on both for its economic growth. Economic activity has already begun to decline and the backlash from rising energy prices could be huge. China, for example, could suspend oil exports, reduce production of sludge, cement and other mining activities, leading to further shortages and higher prices.

China has set a goal of being a clean energy economy by 2060, which is why it has banned coal imports from Australia and closed several traditional power plants. All this leads to significant power shortages, which are expected to be long-term and will always pose a threat to the growth of the Chinese economy.

Already, 17 major industrial cities are facing energy shortages resulting in rolling blackouts, which have led to a cessation of economic activity. And this applies not only to activities such as the mining and industrial sector, but also to activities such as shops and offices that reduce operating hours, reduce the use of air conditioning, and at night even the traffic lights are turned off.

Source: Bloomberg