Energy shortage hits Chinese firms

Dai Hongdi owns a small textile factory on the outskirts of Shanghai.

Her business employs about 20 people and makes women’s and children’s clothes for export.

Her workers normally start at 7.30 in the morning and finish around 9 at night, seven days a week.

But that changed this summer. Their hours were drastically cut – not because there was not enough work, but because there was not enough electricity.

"There are now restrictions forced on us. For two days a week we are not allowed to use any electricity and that means I have to send my workers home," says Ms Dai.

Forced to close

China’s explosive growth is causing the problem. China is now the world’s fastest growing major economy and it is the largest producer and consumer of steel.

The country has doubled its steel output to over 250 million tonnes a year. Industries like steel are pushing up the consumption of electricity and putting a strain on energy resources.

So far the steel industry shows no sign of cooling down. Power shortages are now so severe that two manufacturing plants have already been forced to shut down completely.

Victim

The government is taking steps to rectify the problem by building new power plants across the country but it could be years before many of these are up and running.

In the meantime demand for electricity soars and the pressure on China’s electricity system grows bigger day by day.

This long hot summer has been particularly bad for big cities like Shanghai where many hotels and shops had to cut back on using air conditioning units during peak times.

And its not just in the big cities. Across China, small businesses are now worried about their future. Further power rationing means they are bearing the brunt.

Ms Dai says she has just been told that she will have to shut down for a whole week. She says she has many orders and she does not know what she is going to do.

Its seems it is small businesses like Dai’s, which have underpinned China’s booming economy, that could now become victims of its very success.