Weird Stuff In China

Shortages of coal are apparently the problem. The price of coal is up by a third on last year which is forcing coal-fired generating plants to reduce output.

Another factor is Xi’s diktat that CO2 emissions should peak in 2030 which has encouraged local authorities to mandate cut-backs in activity at coal-fuelled power plants in their areas.

Beijing and Shanghai are to suffer rolling blackouts which affect 48 million people.

Meanwhile Beijing wrestles with whether to bail out the $300 billion indebted property company Evergrande. If it doesn’t, then some 1.6 million Chinese waiting for homes to be finished plus hundreds of small businesses, creditors and banks may lose their money; if the government bails it out then it admits that some companies are too big to fail.

To top it all, Goldman Sachs has come up with a study showing that hidden local government debt – debt which is not recorded on the balance sheet – is equal to 52% of  China’s GDP and totals $8.2 trillion.

It is said that China thinks long-term but this looks more like flailing around fire-fighting immediate problems caused by failures of joined-up thinking on policy.

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