LAUNCESTON, Australia (Reuters) – China is paying a high price for policies that curbed domestic coal output and imports, and led to a shortage of the fuel that still largely powers the world’s second-largest economy.
The good news for Beijing is that while the scarcity of coal will cause problems for energy-intensive industries, such as steel and aluminium, the situation is likely to be resolved relatively quickly.
China has already signalled it will seek to boost imports, and domestic output is likely to recover strongly in coming months as more mines re-open after being idled for safety checks.
The problem is that increasing imports will not fully fix the problem and will be costly, especially if Beijing keeps its informal ban on shipments from Australia, put in place last year as part of an ongoing political dispute with Canberra. Looking at the domestic coal situation first, its clear that supply has become an issue in 2021.