China, the world second largest economy is facing a power shortage and needs to secure coal supply from Australia to avoid an economic slowdown this quarter but Beijing’s cold relationship with Australia could make it difficult.
China is an industrial powerhouse and the planet’s greatest producer of carbon dioxide. The country creates a large portion of its power by consuming coal but the inventory of major power plants reached a 10-year low in August.
China needs as much coal as it can get its hands on to avert a slowdown in the nation’s economy due to the tyranny of rolling power shortages, geo-political tensions with Australia have blocked the most convenient source of high-calorific coal.
Australia used to be the biggest exporter of coal to China but that stopped late last year. The trade tension between the two countries soared after Australia backed a call for an international inquiry into China’s handling of the coronavirus.
As a result, China turned to Indonesia, Mongolia, Russia and other countries to try and make up for the shortfall. Last year, reports said that Indonesian coal miner signed a $1.5 billion supply deal with China.
China’s power shortage could lead to rise in prices for many export goods that could result in modest increase in consumer inflation.
