Odd things are happening in the People’s Republic of China (PRC): electricity shortages due to lack of coal; factories shutting down; cities going dark with no warning, blacking-out traffic lights, stalling people in elevators, and killing patients in hospitals. The entire power grid is said to be near-collapse.

Why? Are these electrical shortages due to the weaknesses of an increasingly centralized economy under the control of the Chinese Communist Party? Might they be traced to China’s banning of coal imports from Australia — until 2020, the largest exporter of coal to China? Or might the PRC be weaning itself off coal shipped by overseas routes that might be disrupted during a conflict over Taiwan?

A power company in China’s Northeast posted a notice on its website that unplanned blackouts would become “the new normal,” with power cuts lasting through next spring. The post was quickly taken down. Media in Jilin province said the cause was a rise in coal prices leading to short supply — which doesn’t entirely make sense (more on that in a bit). Residents have risked their social credit score by using social media to say the lack of electricity was like living in next-door North Korea.

Some Western media report that the electricity shortage is due to an edict out of Beijing to cut regional energy use, implying that it’s part of a “push to enforce environmental regulations.” Chinese Community Party Chairman Xi Jinping promises that China will peak its carbon emissions in nine years. This has resulted in electricity rationing that has idled energy-intensive industrial activity. A nine-day production halt ending Sept. 30 was ordered in Ma’an, China, about 80 miles south of Shanghai. Even food processing plants have been shuttered.

In a directly related issue, China outlawed all cryptocurrency activities on Sept. 24. Last year, two-thirds of the world’s Bitcoin was mined in China using about 86 terawatt-hours (TWh) of electricity, with almost two-thirds of that from coal power.

One Bitcoin transaction consumes 1,544 kilowatt-hours (kWh), or the equivalent of approximately 53 days of power for the average U.S. household, so about $200 worth of electricity. Bitcoin mining used 1.1 percent of China’s electricity in 2020. Coal produced 57 percent of China’s electricity in 2020, with the PRC importing about 8 percent of its coal, much of it for making steel.

Thus, banning cryptocurrencies, including their mining, saves enough electricity to reduce China’s thermal coal import requirements by about a third. Western media was quick to note a study in the journal Nature Communications by Chinese and Western academics that suggested cryptocurrency mining alone could force China to exceed its greenhouse gas emissions reduction targets.

Chairman Xi further played into this Western environmental narrative when he announced on Sept. 21 before the United Nations General Assembly that China would end its financing of coal-fired power plants in other nations. While Xi didn’t provide any details as to exactly when this would happen, Helen Mountford of the World Resources Institute applauded the move, saying, “China’s pledge shows that the firehose of international public financing for coal is being turned off. China’s commitment, coming on the heels of recent pledges by South Korea and Japan, represents a historic turning point away from the world’s dirtiest fossil fuel.”

Li Shuo, a Beijing-based policy adviser with Greenpeace East Asia, said exactly what China’s communist regime allowed him to say about the announcement: “It’s certainly a positive step forward. It’s going to contribute to the ongoing global trend to move away from coal.”

The Biden administration, led by climate envoy John Kerry, has made cooperation about climate change a centerpiece of its relationship with China. The administration had implored China to end its practice of building new coal plants in developing nations.

If China moves now to cancel the deals it had in the works in 20 nations, it will forestall the construction of 40 gigawatts (GW) of coal power — about the size of Germany’s coal power output. By comparison, China built 29.8 GW of coal-fired power last year — three-quarters of the supposed gains achieved in Xi’s announced intention to stop financing international coal projects now in the pipeline. Further, China is now building almost 100 GW of coal plant capacity with another 105 GW pending.

In fact, China built more than one large coal plant every week last year, or more than three times the rest of the world combined, and far more than the United States has decommissioned in recent years. China generated 53 percent of the world’s total coal power in 2020, compared to 44 percent in 2015.

While the PRC has pledged to end its financing of coal power abroad, U.S. investors, including the massive California state employee and teachers retirement funds, have sent tens of billions of dollars to China, including to Chinese firms involved in the PRC’s ambitious Belt and Road Initiative.

China State Construction, a firm on the former Trump administration’s investment blacklist for aiding the Chinese military, has built multiple coal-fired power plants in other nations — with the help of California’s pension funds. CalSTRS, the California State Teachers Retirement System, owned 1.7 million shares of China State Construction in mid-2020 along with 2.8 million shares in Shanxi Xishan Coal & Electric, which operates eight coal power plants in China and nine coal mines to feed them.

So, while Chairman Xi picks up praise for pledging to stop building coal-fired power plants elsewhere, California Democratic Gov. Gavin Newsom allows his pension funds to build coal-fired power plants within China.

What do these shifts in energy policy mean? The Western view, rooted in self-satisfied smugness, is that the PRC is making good on its promises to curtail greenhouse gas emissions. This view is now the consensus, especially among the foreign policy elite.

In truth, it may simply be that Chairman Xi’s effort to recentralize the economy around his edicts is running into the usual problems endemic to planned economies. In this case, the blackouts are akin to tales out of the old Soviet Union where factories would meet orders to increase shoe production by simply making more children’s shoes — the quota would be met but adults couldn’t find shoes.

Similarly, the Chinese communist regime may simply be running out of money to fund endless infrastructure projects at home and abroad. The collapse of Evergrande hints at larger problems. Thus, Xi made a virtue out of necessity when he told the UN that the PRC would halt the construction of foreign coal projects.

Both scenarios — Chinese inability to generate sufficient electricity or the need to conserve cash — are seen by the West as climate change cooperation. Our elites see what they want to see.

But there is another, more ominous possibility. A key tenet in deception operations is to project a scenario your enemy wants to believe. Thus, on the eve of D-Day in 1944, Allied deception operations reinforced the view among the German leadership that the invasion of Northern Europe would occur at Calais or even Norway, not at Normandy.

Might the PRC be preparing for conflict over Taiwan? If so, it might stockpile coal by curtailing consumption. China has already acted to boost domestic coal production while shifting imports from Australia, with Mongolia seeing a more than doubling of coal shipments to the PRC. Landlocked Mongolia has now replaced Australia as China’s number one supplier of the coal used to make steel. The net effect is that China has insulated itself from a loss of coal shipped by sea while obscuring this effort in a green cloak.

China runs on coal. Environmental pledges to foreigners mean little to the Middle Kingdom unless those promises can be leveraged for other purposes. The PRC’s apparent energy woes may not be what they seem.


Source: The Federalist

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