The US-China Business Council’s Recommendations and Concerns on Current Power and Production Restrictions

The US-China Business Council and its member companies appreciate China’s efforts to respond to climate change and fully support China’s efforts to proactively achieve peak carbon emissions by 2030 and reach carbon neutrality targets by 2060. We are very happy to see the United States and China maintain communication and cooperation on green energy and lowering carbon emissions. At the same time, we also believe that our members’ products and technology are able to aid China in reaching these goals earlier.

However, we have seen that recently nearly 20 provinces, autonomous regions, and municipal governments have released various power suspension or restriction measures. These measures are causing great difficulties for our members’ operational capabilities in China, impacting even their production security. The Council sincerely hopes that attention is paid to this matter and hopes relevant departments will comprehensively consider the actual hardships of companies, as well as this situation’s potential impact on the stability of foreign investment and trade, and release appropriate remedying proposals as soon as possible. The lack of unified guidance on the specific enforcement of power suspension and restriction measures has led to regional enforcement beyond what is necessary. In addition, the implemented measures have not fully taken into consideration the circumstances of different industries, and fail to distinguish between non-high energy consumption and high emission industries, or industries closely tied to people’s livelihoods—all of which has had an unexpected and negative impact on enterprises that emphasize higher efficiency and energy conservation.

Based on responses from our member  companies, the Council has summarized the impact of these measures below:

1. The short notice for power suspension and restrictions measures seriously disrupt company production and operations. Some companies have even had their power cut with no notice at all,  severely disrupting their operations. Many enterprises are unable to adjust production, failing to complete orders on time, and risking huge financial losses for breach of contract. Many companies place their main production capacity in China and the impact of power outages on them or their key suppliers could disrupt the global supply chain and cause companies to incur massive losses.
2. The current power suspension and restriction measures lack a clear timetable and road map. In the implementation of these measures,  no timetable has been given to companies, nor a future power rationing plan, causing companies to be unable to arrange production in an orderly manner and bringing extreme hardship to their operational and production activities.
3. Using power consumption as the sole relevant indicator dampens the enthusiasm of compliant enterprises. The current measures are very unfair to companies that focus on energy conservation, efficiency, and compliant electricity use. Moreover, the measures seriously jeopardize enterprises’ interests and enthusiasm to comply. For example, some low-energy technology companies and companies related to people’s livelihood are included alongside high energy consumption and high emission companies on the first batch of lists of companies subject to power rationing.

In light of the above, the US-China Business Council would like to make the following recommendations:

1. We recommend comprehensive management and clear guidance from the central government.  We also recommend strengthened guidance and supervision of local governments to prevent them from imposing unnecessary restrictions on companies, and promote the smooth and orderly progress of the “dual control system.”
2. We recommend the differentiated management of companies and a white list system for the dual control system of energy consumption. Priority should be given to companies that meet the requirements of “dual control” for energy consumption to ensure their power supply. In particular, the “one size fits all” electricity restrictions should not be applied to companies with low-energy consumption, advanced technology, and high relevance to people’s livelihood. At present, the unified power rationing not only seriously affects the normal operation of enterprises but also adds little contribution to the goals of industrial upgrades, low carbon emission, and environment protection.
3. Instead of using electricity consumption as a sole indicator, we recommend inviting industry experts and scholars to jointly formulate a set of more scientific indicators and make public the calculation principles for wattage thresholds, beyond which usage shall be rationed.
4. Considering the supply-demand relationship of electricity in the short term, we recommend adopting market-oriented methods to distribute electricity, instead of directly switching off power.
5. If circumstances necessitate the restriction of electricity supply, we recommend prior communication and consultation with enterprises to understand their actual power demand, and then formulating a power restriction scheme that ensures the stable and safe operation of companies.
6. Companies need a legalized business environment to operate. A stable and predictable policy environment is crucial to the long-term development of companies in China. We believe that a more transparent and scientific decision-making method will help companies fully understand the background and requirements of policy measures, and reduce the misreading of China’s overall business environment.