Chinese experts and officials warned that the growing electricity
shortages being experienced across the nation may cause foreign investors to
reconsider their business arrangements in China.
While most believe the current passion of investors will not cool, investors
could choose to move plants to provinces such as Sichuan, and Hubei or cities
like Chongqing where electricity demands are more easily met.
"Those provinces rich in energy supply will be investment targets," Zhang
Jianyu, a visiting scholar with Tsinghua University told China Daily.
Recently, multinationals such as Coca-Cola and General Motors in Shanghai,
Hangzhou of Zhejiang Province and Guangdong Province have had to temporarily
stop production during peak hours because of power shortages.
But Zhang reminded investors that the current shortages are likely to become
into surpluses after 2006 since the Chinese Government is busy now constructing
power plants.
"So it's a hard decision for investors," Zhang said.
The analyst's comments came against concerns circulating among Hong Kong
media that present electricity shortages may hinder overseas enterprises from
continuing to invest in the mainland.
An official surnamed Xia with the National Development and Reform Commission
expressed continuing confidence that the power strains will not chill the zest
of overseas investors.
"I've seen no sign of an investment slowdown because of electricity
shortages," said Xia. "Investors are still attracted by the country's and
investment environment."
Zhang Jianyu said current shortages may even become an investment opportunity
for some foreign energy enterprises, mentioning British Petroleum.
"Because they hold energy sources and they can sell more to China," said
Zhang.
Zhang even said shortfalls will not become alarming if effective management
is put in place.
Meanwhile, a Xinhua report on Sunday indicated that China's extensive
shortages of energy may worsen before 2020. And accelerating development of
power-intensive machinery, the auto, steel and manufacturing sectors, along with
the growing pace of urbanization and low energy efficiency are blamed for the
trend.
An industrial report by the State Information Centre with the National Bureau
of Statistics forecasts China will face a more severe power shortage this year
than it did last. Some two dozen provincial areas have imposed power brownouts
in the past few months, according to Xinhua.
Xu Dingming, a leading official with NDRC's Energy Bureau said China's output
of primary energy was equal to 1.603 billion tons of standard coal last year, up
11 per cent over the previous year.
But demand outpaced supply as shortages of coal, power and oil were reported
in many areas of China, whose economy grew by 9.1 per cent last year, and more
than 7 per cent in the two years before 2003.
Xu said China is now in the middle stages of its industrialization phase
characterized by faster development of energy-extensive machinery, auto, iron
and steel sectors.
Urban residential consumption of energy also rose dramatically due to the
country's fast pace of urbanization and improved standard of living.
The per-capita energy consumption for urban residents is 250 per cent more
than that of their rural cousins, said Xu.
Meanwhile, overseas investors are relocating their processing and
manufacturing sectors to China, especially the manufacturing sector
characterized by high energy consumption, further straining the country's energy
supplies.
