China takes steps to avoid summer energy crunch and opens market to Gates charity
July 21, 2004
Shanghai - China will force factories in the capital of a wealthy eastern province to shut for up to four days a week, the latest measure aimed at alleviating a summer power shortfall estimated at 20 000 megawatts.
The city of Hangzhou - known along with nearby Suzhou as heaven on earth - moved to its highest power alert yesterday, said a power bureau official.
Hundreds of plants will grind to a halt up to four days a week to keep an overtaxed electricity grid from crashing.
Manufacturing-intensive Zhejiang province, a cradle of private enterprise and thus an important driver for the country, has been the worst hit by a summer power crunch.
Foreign and local firms in Hangzhou have been told to suspend output three days a week, while larger ones that operate around the clock must keep within agreed usage quotas.
Top steel maker, Hangzhou Iron & Steel, was scrambling to economise energy to meet targets, but said it would invest in its own power sources for the future.
"We know we can't depend on the government entirely for our supply," said deputy general manager Han Xiaotong.
"We've adopted a series of energy-saving measures, and have plans to boost in-house capacity by more than 10 percent a year."
The city was facing a power shortage of 1.3 million kilowatts, state media quoted Hangzhou deputy mayor Shen Jian as saying.
Economists say chronic power crunches are shaving 1 to 2 percentage points off nationwide economic growth, a situation likely to persist until 2006.
Years of underinvestment in capacity and transmission mean the situation may get worse before it gets better.
Meanwhile, Bloomberg reported yesterday that China's securities regulator gave approval to the $27 billion (R158 billion) Bill & Melinda Gates Foundation, set up by the Microsoft chairman in 2000, to buy yuan shares and bonds, making it the first non-financial institution to join the country's programme to open its markets.
The charity foundation was accepted as a so-called qualified foreign institutional investor, the China Securities Regulatory Commission said on its website.
The approval brings to 17 the number of qualified foreign institutional investors, of which 14 have permission to invest a combined $1.95 billion.
Under China's market-opening plan, approved overseas investors with at least $10 billion in assets and $50 million to spend may buy yuan class A shares, convertible bonds and unit trusts. Class A shares trade on the Shanghai and Shenzhen exchanges.
China is gradually opening its securities markets to foreign investors as part of plans to improve economic efficiency and pave the way for a fully convertible currency. The yuan has been fixed at 8.277 to the US dollar since 1995.
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