The chill wind blowing through China’s ailing coal industry

It was not until December, about a month later than usual, that the first snowstorm alert was raised in Hegang, a city in the north of Heilongjiang province in northern China. Yet its people had been feeling the cold long before then – from a chilly wind blowing through the regional economy.

Lao Xie, an equipment maintenance worker at a coal mine, needed to wait until early December to get his 2,000-yuan (HK$2,388) pay cheque from August. Despite the wait, finally receiving it gave him some relief.

“It is quite normal for payroll delays. Some of my colleagues haven’t been paid for eight months,” said Xie, 52.

He said there was little work at the coal mine, adding that he sometimes took part-time jobs such as bricklaying to earn extra money.

Xie and his colleagues work for the Hegang unit of the Heilongjiang Longmay Holding Mining Group, the biggest coal enterprise in China’s northeast. Unfortunately for them, it is also one of the biggest loss-making coal producers in the country.

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The coal sector was among the most severely hit industries in the northeast as China’s old rust belt took a beating from the economic downturn, confronted by excess capacity, falling prices and weak demand.