Short Circuit

Image source: NothingIsEverything - Shutterstock

What's going on?

Data out over the weekend showed that power shortages and emissions targets are putting the countrys economic growth at risk.

What does this mean?

A global shortage of coal and natural gas is by no means the only issue for Chinas businesses, many of which have been forced to cut production to meet the governments new emissions targets as it looks to hit carbon neutrality by 2060. And since that means theres now less of well, everything for shoppers to buy, its been putting a damper on the countrys spending. That might play some part in why investment bank Nomura said last week that Chinas economy will only grow 7.7% in 2021 down from 8.2% earlier in the year and why Morgan Stanley slashed its growth forecast for the fourth quarter too.

Why should I care?

The bigger picture: You scratch my back…
Chinas electronics industry is one of the few that hasnt been forced to make any major production cuts so far, which might be because its one of the countrys biggest employers. It also cant hurt that the sectors keeping the government sweet, with Taiwans Pegatron Corporation announcing on Monday that itll be rolling out energy-saving measures to comply with Chinas eco-minded targets. The rest of the world might be hoping it stays on Chinas good side: Pegatron supplies the likes of Apple, and a drop-off in production could see the prices of some of your favorite goods climb too.

Zooming out: Ah poop.
This isnt just a China problem: Europes fertilizer companies have been having to slash production in response to high energy costs, if not shut down completely. And since farmers will end up feeling the pinch from the supply bottleneck, they might need to bump up their own prices pushing up the price of food at a time when its already increasing at its fastest rate in over a decade.

Originally posted as part of the Finimize daily email.

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