My wife and I were discussing last night whether, and to what extent, China’s boycott of Australian coal has contributed to its current power woes.
https://twitter.com/KennedyCSIS/status/1442680775569256450
Companies in China are getting sudden directives from their provincial government to slash their electricity consumption by 50%. Which is not exactly an easy thing to do, if you’re a manufacturer.
People in China are posting all kinds of theories about these power cuts on WeChat. Most of them sound pretty silly to me.
One theory is that it's a grand scheme to cause inflation in the US, by restricting exports. It might well cause inflation abroad, but the power cuts are hardly limited to the export sector. As I told my wife, it would be like lying down on the railroad tracks to derail a train.
Another theory is that it's finally an attempt to get rid of all excess capacity that's been built up in China. But power usage isn't a very good proxy for poor economic returns. Financial markets are supposed to do this, not across-the-board power cuts.
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