Recently, China’s power supply has been limited due to the lack of coal, which has made life difficult for residents in many places. Due to the high price of coal, the heating centers in some residential areas of northern cities have lowered the opening temperature of indoor central heating to 3 degrees Celsius, which is more than 10 degrees lower than before; residents who want to raise the room temperature with home air conditioners have encountered electricity restrictions. As a result, in this winter of late 2020, it is difficult to get warm in the cold, and it is extraordinarily cold inside. However, few people know that the real reason for this situation is that the Chinese Communist Party is “playing a big game” against the United States.
A. Many places limit electricity, official media “disinformation”?
Beijing’s “Dovetail News” reported on December 28 last year that China has seen electricity tensions not seen in years, with some cities in Zhejiang, Hunan and Jiangxi provinces in the south restricting electricity, requiring enterprises to stagger production, and restricting electricity for elevators, indoor heating and even street lighting.
In the face of this anomaly, a number of analytical articles appeared in the domestic media at first, suggesting that the Communist Party’s boycott of coal imports from Australia was the culprit behind this power crunch in China. For example, an article in Xinjing News on December 17 last year stated that coal imports in November saw a sharp decline due to changes in the trade environment. The so-called change in the trade environment and the sharp decline in coal imports are actually the result of trade sanctions imposed on Australia by the Chinese Communist Party since the second half of last year. Although many Chinese power producers bought Australian coal, authorities banned bulk carriers carrying Australian coal from unloading in time, resulting in coal arriving in port but not being landed, so power plants counting on Australian coal to generate electricity faced a shortage of coal to burn.
But the Chinese media soon began to change their tune and try to downplay the impact of the embargo on Australian coal. Because the embargo on Australian coal was ordered from the top, if the discussion continued in the media, the reason why people were suffering from the power restrictions was exposed. The headline used in a report in Dovetail News on December 29 last year was, “China’s Power Restriction Reason Found, No Need to Worry About Australian Coal Cutoff as Electricity Use Surges”. The article emphasized that the root cause of the tight coal supply and power cuts in some southern cities was that major power plants had incorrectly estimated the surge in electricity consumption in the winter of 2020; China’s boycott of Australian coal imports would have a minimal impact on China’s coal supply and coal-fired power generation.
This excuse is very tenuous: electricity consumption peaked before the outbreak in 2019, when power plants were able to supply sufficient power, indicating that they had sufficient capacity; air conditioning consumption also peaked last summer, while power supply remained normal. If the coal supply had been sufficient at the end of last year, the power plant would have been able to meet the demand for electricity and would not have had to pull the plug to restrict power supply. In fact, the shortage of power supply at the end of last year was due to the high price of coal and the limited power generation by power plants.
Second, behind the power restriction: power plants struggle for the price of coal
In China, the price of electricity output from power plants is regulated. Through various means, the government adopts a maximum price for feed-in tariffs, and government pricing for transmission and distribution prices. Since most of the power supply in coastal areas is supplied by thermal power plants, the price of coal has a significant impact on the price of electricity. The supply of coal includes domestic coal and imported coal, with domestic coal being of inferior quality and high price, while imported coal has high calorific value and is relatively cheap. When the price of domestic coal is high, the coastal power plants will switch to imported coal, and Australian coal is the most popular. Australian coal has low ash, low sulfur, high heat characteristics, the price is only half of the domestic coal. If the import of Australian coal is blocked, the power plant can only use domestic coal, and as long as the price of coal is higher than 600 yuan per ton, the cost of power generation will rise and the power plant will incur losses. Therefore, the cost of power generation and the utilization rate of power plant equipment are inverse; once the price of coal rises, power plants may reduce the utilization rate of equipment, and therefore reduce power generation, in order to relieve the pressure of rising costs.
Since last summer, power plants in coastal areas have been struggling to reduce the price of coal. According to a report in China Energy News on July 27 last year, “Why did the six major coastal power plants stop reporting data? The six major coal-fired power producers in the coastal region (Huaneng, Guodian, Datang, Yuehdian, Shangdian and Zhedian power plants in the coastal provinces) have started a “struggle” with domestic “coal companies”. When the peak of electricity consumption last summer, the electricity load in many places frequently set a new record, power companies to provide full power. At this time, the six major coastal power plants have stopped publishing their coal consumption, inventory and available days and other data. Why did the power companies stop releasing the data? Behind it is a battle of coal and electricity. For many years coastal power plants regularly disclose coal inventory data, which can directly reflect the coal demand in East China and South China. The above-mentioned report in China Energy News mentioned that the power plant stopped publishing coal inventory data, no doubt “struggle” with coal companies. Because the Shanxi coal group uses the public data of power generation enterprises, as the “weapon” of Jin coal price increase, the conflict between coal and electricity becomes more and more acute.
This struggle between coal and electricity stems from the fact that electricity prices are regulated by the government; if the government further regulates coal imports, and domestic coal prices are high, this struggle is bound to escalate further. Since last summer, Beijing authorities have been shouting “back to work” every day, and the media has been full of propaganda about “China’s economic recovery, the only one”. Don’t the power plants know that the winter peak is coming and that they should store enough coal in time? The real reason is that the power plants can’t afford the price of Jin coal, which is over 700 yuan per ton, and the import of Australian coal is blocked by the government, so the power restriction at the end of last year happened.
Third, Australian coal arrives in Hong Kong but the supply is cut off
In recent years, Australian coal has entered the Chinese market at a low price, and many coastal power plants have long been retrofitting their units to burn Australian coal. Since the second half of last year, power plants have been depleted of imported Australian coal due to a sudden order from Beijing authorities to stop receiving and unloading Australian coal. There are currently 73 Australian coal carriers stranded in Chinese ports with nearly 8 million tons of coal on board. According to The Australian, Australian Resources Minister Keith Pitt said that the Australian coal on board could not be cleared and that “the coal is owned by Chinese buyers and managed by the Chinese Communist authorities in terms of unloading.”
According to news on January 14 this year, the Chinese Communist authorities are determined to hit Australia economically and have made it clear to the owners of Australian coal carriers stranded in Chinese ports that the cargo on board will not be unloaded in China. The good coal from Australia cannot be landed, and the coal that Beijing authorities have promised to import from Indonesia and other countries cannot be shipped for a while, and the coal quality is far inferior to that of Australian coal. Only some of the domestic coal from Mengxi, Shenhua and Jinbei meet the quality requirements of power plants, but the price is far beyond the affordability of power plants, and many power plants are in financial difficulties as a result.
Why are the Beijing authorities so determined to crack down on Australia? In this regard, the Chinese Communist Party has told yet another lie. The Dovetail News explained the embargo on Australian coal as a series of irresponsible political accusations made by the Australian government against the CCP, which led to the bad blood between China and Australia. The so-called Australian government’s “accusations” against the Chinese Communist Party (CCP) were mainly a request to investigate the source of last year’s epidemic in China, which the CCP insisted had nothing to do with the source of the epidemic. But is this really the only reason for the bad blood between China and Australia? Of course not. In fact, the Chinese Communist Party is pursuing a pressure program against Australia to allow its strategic nuclear submarines to dive unimpeded from the South China Sea, through Australia’s northern gate, into the central Pacific Ocean in order to threaten the United States with intercontinental nuclear missiles.
Fourth, the Chinese Communist Party’s plan to strike Australia
Last spring, the Chinese Communist Party announced that it had seized the international waters of the South China Sea as a “deep sea fortress” and “launch site” for the Chinese Navy’s strategic nuclear submarines. In the past few years, the CCP’s strategic nuclear submarines have operated mainly in the Bohai and Yellow Seas, where the water depth is only a few dozen meters, making it difficult for nuclear submarines to hide. Since the Chinese navy seized reefs and built islands in the high seas of the South China Sea, this area has become the “backyard swimming pool” for the Chinese strategic nuclear submarines. On December 7 last year, I published an article on this website, “The Communist Party’s “Rise to Power” in the South China Sea”, describing the relevant background.
Although the CCP’s strategic nuclear submarines have gained a sense of security in the deep waters of the South China Sea, there are only three underwater routes out of the “deep sea fortress” to the Central Pacific. One of these is the Southeast Passage through the Philippine Islands and into the Philippine Sea. Last August, the then U.S. Secretary of Defense made a special visit to the Palau Islands to deploy in the Philippine Sea to prevent the underwater diving of Chinese strategic nuclear submarines. The CCP then began to try the Northeast Passage, located in the northeast corner of the South China Sea, where U.S. and Chinese submarines and anti-submarine aircraft and surface fleets battled repeatedly for a month in the waters southwest of Taiwan in late fall and early winter of last year. In addition, the Chinese navy has also attempted to bypass the South China Sea through the Java Sea of Indonesia and out into the Central Pacific, so Indonesia and Australia have borne the brunt of the battle.
China has taken a determined stance to open up the underwater southern route for strategic nuclear submarines, and has taken a three-pronged approach since last year. First, it has spent heavily on Papua New Guinea (which gained independence from Australia in 1975), the country’s northern gateway, to pave the way for a submarine base on that country’s Daru Island (see my Dec. 16 article “China’s Real Intentions in Pressuring Australia” on the Australian Broadcasting Corporation’s SBS website); second, it has imposed long-term economic sanctions on Australia to block Australia’s Third, while the U.S. Navy has yet to complete its deployment and patrols in the Central Indo-Pacific, the Chinese Communist Party is using unmanned underwater vehicles on a large scale to secretly probe the hydrographic data of the underwater routes of nuclear submarines, extending from the Java Sea of Indonesia to the offshore of Australia (see my article “China’s Real Intentions on Australia” on January 18 this year on the ABC SBS website). (see my article “An Analysis of the U.S. Indo-Pacific Strategic Framework” published on the Australian Broadcasting Corporation’s SBS website on January 18 of this year).
The Chinese Communist Party’s approach to Australia’s economy includes blocking the export of Australian coal, so that power plants along the coast are suddenly cut off from imported sources of coal. As a result, power cuts and restrictions in many places followed.
The Beijing authorities are sparing no effort to force Australia into concessions in order to threaten the United States militarily. The small people of the walled country are also “contributing” to the “big game” (freezing). But they do not know the truth, nor are they in a position to complain publicly. As long as the Chinese Communist Party’s ambition to dominate the world does not go away, the people of the country may bear all kinds of costs for it. This year is the second year of “this big game” layout, “occupying the position”, and the “cold and freezing”, “price increase” and so on, are just the “chess game”. ” and so on, is only “this big game” the beginning of the domestic consequences.