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Old Maoist Policy Makes China’s Chill Worse
http://blogs.wsj.com/chinarealtime/2010/01/07/old-maoist-policy-makes-chinas-chill-worse/
China’s power supply system has been pushed to the brink again amid unusually cold weather. Holdover policies from China’s Maoist past aren’t helping.
China’s energy sector remains one of the few industries where there are strong remnants of the old planned economy. While the prices of most things are set by the market, energy is still tightly controlled by the central government.
For example, while coal prices have been liberalized, state-set electricity prices have been kept relatively low. That’s discouraged power producers from keeping costly inventories of coal.
A cold snap in China has raised heating demand
Low inventory levels have left China’s huge sprawling power grid vulnerable to sudden shocks like the current cold snap, forcing some provinces to ration power to industrial users so there’s enough to keep homes, hospitals and schools warm.
Another chilling shadow of the past: Since the 1950s, there has been no central heatingin southern China, roughly defined as below the Yangzte River – even though temperatures fall below freezing in plenty of southern cities.
Back in the 50s that was a money-saving move because the state provided heat as part of the iron rice bowl welfare of communism. Free heating has ended, but the north-south divide is still in place.
Now that China is richer, southerners want to stay warm, too, says Liu Xinfang, a spokesman for State Grid Corp., the biggest electricity grid operator in China. Unable to rely on central heating, southerners are cranking up electric heaters instead – which is putting a huge strain on power supplies.
“Nowadays, people’s living standard are higher than before,” Liu says. “Especially in southern China where there is no central heat, more and more people are relying on air-conditioners for heat. Once there is extreme cold weather, the electrical load in these regions rises sharply.” (Many Chinese homes have air conditioners that can also blow hot air.)
By the way, even up north, the government determines when central heating gets turned on in the fall, and when it’s shut off in the spring.
Another reason for this year’s jam is a drought. Central China relies on hydropower dams for about 60% of its electricity. But low water levels have meant more demand for coal.
Meanwhile, don’t pity the poor southerners. A recent study suggests that northerners suffer lower birth weights because of all the pollution from their coal-fired heating boilers.
The preliminary study found that babies born in northern China during the 1980s were skinnier than their southern brethren because of pollution from coal-fired boilers for heating. The impact was about a quarter as bad as for children born to mothers who were heavy smokers.
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