An acute coal shortage left China suffering its worst power crisis in years as unseasonably large snowfalls saw hundreds of thousands stranded when they tried to travel to their families for the lunar new year holiday. About half of China’s 31 provinces and regions have been hit by “brownouts”, or voltage reductions, caused by Beijing’s attempt to reimpose and tighten price controls on commodities including coal and oil.
Beijing is using old-fashioned price controls in an effort to stop food inflation, which has pushed the consumer price index to an 11-year high, from spreading to the rest of the economy.
| That will work as well as price controls usually do ... |
Power companies insist the brownouts are the result solely of coal shortages. But executives admit privately the industry may have exacerbated the situation to drive home to Beijing the unfairness of price controls. Global prices of coal, ChinaÂ’s staple fuel, have surged, causing pressure for the rises to be passed on. Power industry margins have also been cut by higher freight costs.
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