October 19, 2021

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China's energy crisis may make Christmas gifts more expensive

China’s energy crisis may make Christmas gifts more expensive

This year, it might be smart to either buy short-term Christmas gifts, or calculate a slightly longer-than-usual delivery time for products made in Asia.

There is already a long wait for products such as gaming consoles, sofas, bikes and a number of products due to the global shortage of microchips and containers. TV 2 previously told how High shipping rates It makes many imported goods more expensive.

severe energy crisis

Now the difficult shortage of energy in China is further deteriorating the situation. The severe shortage of electricity means factories have to cut production. And that’s at the worst possible time, he writes TV 2 Denmark.

The channel said the delivery time for “made in China” products would be longer and possibly more expensive, and items such as Christmas lights, Christmas decorations, toys, electronics, winter equipment and underwear could be affected.

What is the cause of the energy crisis?

– What is challenging is that the spread of the delta variant is discouraging production in several places in Asia. At the same time, the demand for goods from open countries is increasing. There are shortages of many goods, and this energy crisis comes on top of everything, Eric Bruce, chief strategist at Nordea, tells TV2.

green shift

In addition, China has begun to require local authorities to reduce carbon dioxide production, and transitions to green energy are problematic.

At the same time, coal-fired power plants are not benefiting from producing more electricity now with higher prices. This means that many factories have to close or slow production. Smaller offers of export goods can lead to higher prices here in Norway.

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— The government in Beijing has recently tightened its grip on local governments, requiring them to comply with all new environmental and working life rules adopted several years ago. Ma Jun, one of China’s leading environmental experts and head of the non-governmental Institute for Public and Environmental Affairs, explains that local leaders are now having their carbon dioxide production measured.

China gets about 60 percent of its energy consumption from coal and accounts for 25 percent of the world’s total carbon dioxide production.

– hurt

There will be major changes in energy and transportation. It’s a painful turnaround, and the current electricity shortage is a reminder that it won’t be easy, says Ma Jun on TV 2 Denmark.

In September, coal prices reached the highest level ever measured in China.

Nordea’s chief strategist believes we must be prepared for an increase in energy prices in the future.

We’ll see more of what happens now, but it will turn into waves. A green transition will mean higher energy prices, Bruce says, but the world will be able to deal with that.

worst case

He believes that Norwegians can afford a potential price increase in the near future because many have a lot of money saved up after the pandemic.

– What’s the worst case scenario?

The biggest challenge is whether there is generally high inflation as prices and wages rise sharply. Then Bruce says that central banks should raise interest rates a lot.

Higher energy prices helped push eurozone inflation to 3.4 percent in September from the same month last year, Eurostat reported on Friday. This is the highest level since the financial crisis in 2008.

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However, the chief strategist is optimistic about Christmas shopping this year.

“I don’t think it will be difficult to get the Christmas gifts you want for Christmas, but some items may take a little longer to get them,” he says.