[gmin]

The quest for profit is like a river. It seeks the shortest route to the sea level of surplus and with China operating a gargantuan machine with wafer slim returns, capitalists will eventually have to base these industries right beside low cost commodities zones with underpriced labour. Arabia is the other place that cones to mind. Right beside Europe. Of course, Islam will have to be brought into the project. But yeah, I see a limited tenure for China.

You first have to introduce a few fundamentals to the population:

1.literacy
2.industrial discipline
3.respect for capital

The communist regime instilled 1 and 2 into the Chinese people in its first 30 years in power, and forced 3 down their throat in its 2nd 30 years in power.

these are the ground leveling work for building a gargantuan machine.

now tell me, have any governments of other "low cost commodities zones" done these?

[americandream]

The quest for profit is like a river. It seeks the shortest route to the sea level of surplus and with China operating a gargantuan machine with wafer slim returns, capitalists will eventually have to base these industries right beside low cost commodities zones with underpriced labour. Arabia is the other place that cones to mind. Right beside Europe. Of course, Islam will have to be brought into the project. But yeah, I see a limited tenure for China.

You first have to introduce a few fundamentals to the population:

1.literacy
2.industrial discipline
3.respect for capital

The communist regime instilled 1 and 2 into the Chinese people in its first 30 years in power, and forced 3 down their throat in its 2nd 30 years in power.

these are the ground leveling work for building a gargantuan machine.

now tell me, have any governments of other "low cost commodities zones" done these?

When the time comes for capital to fly China, these systems and cultural changes will be set in place. What do you think Iraq, Libya, Syria, Sudan, Angola, Negeria, Somalia, Kenya and so on and so forth are setting the parameters for. The AU is essentially dead. Sarkozy is in the process of cobbeling together a Mediterranean Union (of countries laden with oil and solar potential.). The Saudis who are the keepers of Wahhabism are central to these initiatives, presided over by a conservative theocracy strateching back to the post colonial years and the decades the Soviets posed a threat to Arab oil policies. Now that the field has all but been cleared, these things will fall into place, like a nice set of dominoes.

There is no conspiratoorial cabal sitting somewhere and plotting these things incidentally in case you think I am saying that. I don't believe in conspiracies. You don't need them. Capitalism, liberal and conservative, works organically, like any good organisation, and capacities are utilised in systematic fashion. The annexation of these oil fields for example, went off silently with barely a quibble from the liberal capitalists who are noted for preaching love and brotherliness in between sips of moccacinos and lattes down at the local Buddhist brasserie. Yet barely 20 years ago, all the world was up in arms when there was a (premature) battle of the two ideologies that represent modernity.

[kublikhan]

One thing China needs to keep its economy clicking is fuel -- lots and lots of fuel. And for China, that's becoming an increasingly dangerous problem.

We talk a lot about the U.S.'s depending on foreign oil -- rising gas prices, sending money overseas to buy oil, energy security concerns. However, unlike China, our dependence on foreign oil has actually fallen, from 60.3% of consumption in 2005 to 47% of consumption over the past six months. From being an exporter of oil in 1993, China has headed quickly in the opposite direction and is now more dependent than the U.S. on foreign oil. So far this year, China has imported 55.2% of its oil, compared to 40% in 2004 and 47% in the U.S.

Oil isn't China's only energy concern. Coal provides about 80% of the electricity generated in China and fuels the export machine that is Chinese manufacturing. In a clash of capitalism and socialism, generators are forced to buy coal at market prices, but are forced to sell the power at utility-regulated prices. When that results in a loss, there's not a huge incentive to keep the generator running. The blackouts hurt not only Chinese citizens, but also the businesses that are driving economic growth.

A Disaster Waiting to Happen

Unless the economy slows or China finds oil and coal reserves domestically, I see this as an increasing problem for the world's second-biggest economy. It's a problem that could cause a domino effect in our increasingly interconnected world.

China's Pending Energy Crisis

[kublikhan]

The expansion of China's nuclear power industry will slow from the rapid rate of the 11th Five-Year Plan (2006-2010). China will have 42 gigawatts (gW) of nuclear capacity by 2015, equal to 3 percent of total installed power capacity.

After the accident at Japan's Fukushima nuclear complex caused by the massive March earthquake and tsunami, China's State Council said on March 16 that it would suspend approvals of new nuclear power stations and order comprehensive safety inspections at all nuclear plants, including those under construction. China hasn't approved any new projects so far this year and the industry's development will slow compared with the past five years, said Zhang. Work on four previously approved plants, which hasn't yet started, was also halted by the safety inspections. Before the Japanese accident, another 10 units using the latest Westinghouse Electric Co AP1000 technology were in the planning stages. Preliminary work on these projects was also suspended, according to the State Nuclear Power Technology Corp, a major nuclear technology developer.

Last month, China connected its fourth-generation reactor to the grid. The plant is an experimental fast-breeder reactor, which produces less radioactive waste than current designs. Despite the vibrant development of renewable energy, nuclear power remains an irreplaceable choice for China to achieve the target of generating 15 percent of its electricity from non-fossil fuels by 2020, said Zhang. "We should take this crisis as an opportunity to catch up as the world's leading nuclear power country."

Nuclear industry's growth to slow

The coal monster

Like everything else in China, coal production statistics are simply immense. China now consumes and produces close to 50% of all the coal in the world. Thus, changes in Chinese consumption and / or production may have a dramatic impact upon the global coal market.

Threat to global economy
Should China ever fail to match coal consumption with indigenous production then 1 of 3 things may happen. The first option is that consumption is pegged back to match stalled production and this would stall Chinese economic growth with knock on effects to the global economy. The second option is that China tries to meet any shortfall buying coal on the international market. As already pointed out China is such a huge consumer of coal this would create great competition in the international market for limited supplies leading to severe upwards pressure on coal prices. The third option is that China somehow manages to install sufficient nuclear capacity to plug any energy gap.

The People's Daily reports a doubling of Chinese coal imports for the first 5 months of 2010 and upwards pressure on coal prices and it therefore looks like option 2 may be under way. Should Chinese coal imports double this year and next then China will be competing for about 50% of the coal on the world market and that may be like a wrecking ball going through the global economy that is founded on abundant and cheap supplies of energy.

What Happens When Chinese Coal Production Stops Growing 10% Yearly?

Wow, China consumption of coal is equal to half of world consumption. Looks to me like in response to the growing coal gap between domestic production and consumption, China is going with option 1: curtailing coal consumption. Coal imports are down this year in China, and utilities are using blackouts to lower demand. If China continues down this course, it will eventually curtail economic growth.

[babystrangeloop]

Wow, China consumption of coal is equal to half of world consumption. Looks to me like in response to the growing coal gap between domestic production and consumption, China is going with option 1: curtailing coal consumption. Coal imports are down this year in China, and utilities are using blackouts to lower demand.

I find the ways in which China curtails consumption fascinating in that I read that they simply issue stop orders to factories.

In the US they have "rolling blackouts"; in Pakistan the same thing only called "load shedding" but this is response to a technology issue that if you draw to much on a electrical generation source it causes it to fail for everyone.

In China they news reports suggest they issue orders to factories to not produce; they don't cut the power so the stories aren't about "blackouts" or "load shedding" but about "HSBC manufacturing PMI being below 50."

If China continues down this course, it will eventually curtail economic growth.

News stories suggest that the future is now when it comes to curtailing economic growth due to power shortages/fuel shortages. I've posted so many stories that repeat this but that experience is educational to me and I do it publicly because I appreciate the feedback. Well some of the feedback, I do have issues with off-topic responses especially personal attacks.

[babystrangeloop]

China provinces to face winter power shortages
By Fayen Wong; Writing by Jim Bai; Editing by Chris Lewis and Ken Wills / Reuters / September 7, 2011

... "A power shortage in the upcoming winter could be as severe as what we experienced in January this year, unless there is a miraculous recovery in hydropower later this month," Xue Jing, director of the statistics and information department under the CEC, told reporters on the sidelines of the IHS-McCloskey conference in Beijing. ...

... Coal is the source for almost 80 percent of China's electricity generation. ...

... The State Grid Corp of China, the country's dominant power distributor, has forecast expanding power shortages in the coming years in eastern provinces such as Jiangsu, Zhejiang and Shandong due to limited new power generation and environmental capacity, advancing its calls for more long-distance ultra-high voltage power lines to ship power from inland to the coast.

Commentary: I like to call "BS" on people who see China as invulnerable as Peak Oil (defined as structural limitations and diminishing returns on fossil fuel) is a world event and China is also suffering the consequences despite the endless heapings of hype about their unlimited growth.

[babystrangeloop]

UPDATE 2-Chinese regions face severe winter power shortage-NEA
By Jim Bai and Chen Aizhu; Editing by Michael Urquhart / Reuters / September 27, 2011

... A total of 23 coal-fuelled power generators, or 7 GW, were forced to shut down due to coal shortages in the summer, compared with 10 generators with total capacity of 1.89 GW last year, the NEA said. ...

China Coal Price Rises as Qinhuangdao Stockpiles Plunge 25%
Chua Baizhen; Editors: Mike Anderson, Paul Gordon / Bloomberg News / October 10, 2011

... Stockpiles at the port, which ships half of China’s seaborne coal supplies, fell 25 percent to 4.41 million tons from two weeks earlier. That’s the lowest level since inventories dropped to 4.06 million tons on Oct. 11, 2009. ...

[babystrangeloop]

China's oil demand set to lead world again in 2012
By Chen Aizhu / Reuters / October 12, 2011

... WORSE POWER SQUEEZE

Apart from the planned refining facilities, including PetroChina's 200,000 bpd greenfield plant in Sichuan and Sinopec Corp's (0386.HK) addition of 160,000 bpd at its east China Jinling plant, China may face a more severe power crunch next summer.

Zhou Xizhou, Beijing-based power analyst at IHS Cambridge Energy Research Associates, warns that a thermal power squeeze in the key consuming eastern provinces next summer may force factories to fire up stand-alone diesel generators and drive up demand for the fuel like it did in 2004.

Under-construction of new thermal plants during the past few years would finally hit supply in Zhejiang, Jiangsu province and financial hub Shanghai, where power demand is growing at double digits.

"It will be a lot worse than this year and may look more like 2004," Zhou said. More than half of Chinese provinces were hit by blackouts and brownouts in 2004 in the worst power crisis in decades as demand spiked ahead of generation capacity.

This year, shortages have hit mostly hydro-dependent central and southern regions due to lower than usual rainfall, but east China was less affected and has taken measures like juggling shifts to off-peak hours.

Even in the case of severe shortage, which Zhou estimated could reach as much as 50 gigawatt, the spur for diesel demand may not be as dramatic as in 2004, as power stations fired by natural gas, barely existent then, would be mobilized to help fill the gap. ...

Oil shows largest drop since 2008 financial crisis
The Citizen / October 12, 2011

London. Oil capped its largest quarterly drop since the 2008 financial crisis by tumbling to a one-year low as signs of slowing growth in China, the United States and Germany heightened concern that fuel demand will weaken. Futures dropped 3.6 per cent after China’s purchasing managers’ index fell for a third month ...

... A gauge of manufacturing in China, the world’s fastest- growing oil consumer, shrank for a third month, the longest contraction since 2009. ...

[babystrangeloop]

Electricity to play bigger role in energy consumption
Xinhua / October 25, 2011

... However, experts warn that in the face of a rise in demand, China's power industry needs a complete reform, as the country's power plants have not been performing well with frequent power shortages hitting many regions.

Lu Qiang, a researcher with the China Academy of Sciences, attributed the shortages in part to government controlled electricity prices verses market-orientated coal prices.

In China, coal prices are allowed to fluctuate freely, while electricity prices are strictly set by the government.

If the systematic conflict is not solved, nationwide power shortages will emerge every two years or so, he said.

China's State Electricity Regulatory Commission warned last Thursday that power shortages will hit China during the coming winter and spring, as rising coal prices will further increase supply pressures, and the maximum power shortage could reach 26 million kilowatts this winter.

China Says Its Power Gap May Peak at 40 Million Kilowatts
Editors: Mike Anderson, Baldave Singh / Bloomberg / October 27, 2011

China’s power shortage may peak at 40 million kilowatts in the winter and spring as demand growth outpaces supply, according to the China Electricity Council.

Power demand may rise 13 percent in the fourth quarter, while the full year electricity use may gain 12 percent to 4.7 trillion kilowatt hours, the industry group said in a statement on its website today. ...

TABLE-China winter-spring power shortage forecasts
Reporting by Jim Bai and Chen Aizhu; Editing by Chris Lewis / Reuters / October 21, 2011

Code: Select all

               EXPECTED        EXPECTED      GENERATING   

           PEAK SHORTAGE     PEAK DEMAND       CAPACITY    
SOUTH CHINA   
Total              15-18          105-110           171   
Guangdong          6-10                             71    
Guangxi             3                               25   
Guizhou             3                               34   
Yunnan              2                               36   
Hainan             0.2                             3.9   
CENTRAL CHINA                                          
Total               16            127.72            201   
Hubei            0.8-2.7          21.5              49   
Henan              5.35           40.5              51   
NORTH CHINA   
Total                                               215     
Hebei               1                               42   
NORTHWEST CHINA                                         
Total                             51.74              88   
NORTHEAST CHINA   
Total                                                88   
Heilongjiang                      9.5               17   


Code: Select all

--------------------------------------------------------   
TOTAL*           32-35   
  * a combination of available regional totals and Hebei's.

[ralfy]

Related:

"India grapples with coal shortfalls"

http://www.upi.com/Business_News/Energy ... 320091605/