China's electricity problems may reduce its economy's growth rate

China's electricity problems may reduce its economy's growth rate to 6 percent this year. Barclays reported this in its estimate. The Beijing government's goal of reducing its economy's dependence on energy means that the allocation of electricity will continue. If strictly enforced, according to Barclays, this could reduce the growth of the world's second largest economy to about 6 percent in 2021. "The government is facing a difficult choice between a more significant economic slowdown and the release of its overall energy consumption targets," Barclays economists said in a report. At the same time, most analysts expect China's gross domestic product (GDP) to increase by about 8 percent this year. This year, China has set itself the goal of reducing the "energy intensity" of its economy (the amount of energy consumed per unit of GDP) by 3 percent as it seeks to reduce air pollution. Beijing warned in August that most provinces were not well on track. This has led some of them to reduce energy consumption more in energy-intensive industries such as aluminum and steel. The government has set a target for growth in energy production this year at 2.9 percent, which means a similar target for the pace of increasing energy consumption, Barclays economists said. However, they estimate that China's energy consumption will rise by more than 4 percent this year. Therefore, if the cabinet starts to push harder for energy goals, economic growth could slow to 6 percent for the whole year. Analysts also predict that the reduction in energy consumption in the most energy-intensive sectors is likely to continue in the first quarter of 2022. However, according to the Barclays report, Beijing is generally likely to "adopt a more flexible approach to its goals" than to tolerate a sharp economic slowdown. Nevertheless, even more moderate enforcement of consumption reduction could reduce economic growth by 1 to 3 percent over the next two quarters.