China orders coal and energy funding to ease power crisis, warns against Moutai and Puer tea investment

Name: Chinese manufacturing thrown into disarray as country's electricity crisis rolls on
Uploaded: 2021-10-05T09:55:11.000Z
Duration: 4 min 1 s
Description: Chinese manufacturing thrown into disarray as country's electricity crisis rolls on

Banks and other financial institutions should prioritise lending to qualified mines and power plants so they can increase thermal coal and electricity output

The China Banking and Insurance Regulatory Commission also warned against investments in high-end consume goods such as Mou-tai liquor and Puer tea

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The China Banking and Insurance Regulatory Commission has warned against investments in high-end consume goods such as Mou-tai liquor. Photo: AFP

Bloomberg

Published: 5:55pm, 5 Oct 2021Updated: 6:17pm, 5 Oct 2021

China ordered its banks to ramp up funding to coal and energy companies, another step in its efforts to ease a power crunch and ensure supplies this winter.

Banks and other financial institutions should prioritise lending to qualified mines and power plants so they can increase thermal coal and electricity output, the China Banking and Insurance Regulatory Commission said in a statement Tuesday.

In order to maintain price stability, bank loans and financing are strictly banned from being used to speculate on commodities such as coal, steel and metals in the financial markets, the regulator said.

It is also forbidden from being invested in related stocks, bonds and futures markets as it could be in violation of regulations, it said.

China has seen a widening power crunch since last month that has resulted in power rationing in most regions. The electricity shortage contributed to the first contraction in factory activity since the coronavirus pandemic began and prompted analysts from Goldman Sachs to Nomura to cut the country’s growth outlook.

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Chinese manufacturing thrown into disarray as country's electricity crisis rolls on

China’s power shortage is partly due to slowing coal production, with some coal miners struggling to secure financing after China set goals to lower the use of coal in energy production.