Power play just drama?

As the nation witnessed images of dried-up lakes and cracked river beds in central China earlier this month, state media warned that a major energy crisis was looming this summer, complete with drops in hydropower, rationing at factories, and widespread financial losses for power-generating companies.

But do such drought conditions really result in epic power shortages?

Maybe not.

'We believe the power shortage is exaggerated,' economist Lu Ting at Bank of America-Merrill Lynch China writes in a research note. 'And it is unlikely that China will see a major disruption in power supply.'

As Lu and some other analysts see it, the power pessimists have failed to account for increases in China's power capacity since 2004, when the nation sweltered through its worst-ever power shortage. Yes, power supplies will probably fall short of demand, they say, but not as severely as some forecasts show. And any shortages are likely to be limited to certain areas and certain times of day.

'It isn't appropriate to exaggerate the impact of the shortage, or even to call it a national power-supply crisis,' says the China Electricity Council, which represents generating firms. 'This kind of deficiency is different from the nationwide, sustained blackout seen in the past.'

The council's data show that China's power capacity has more than doubled in the past six years. In percentage terms, the council said, this summer's shortage may be half that of 2004.