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        The Next Economic Jolt: China Implements New Power Shutdown Rules

        The Next Economic Jolt: China Implements New Power Shutdown Rules

        Resulting from the ongoing stress of Covid-19, the global and domestic PPE supply chain remains strained. Unprecedented delays, coupled with a myriad of product shortages in key PPE categories, persist.

        Leaving little time for recovery, now China, in their effort to curb carbon emissions, has introduced a new directive to cut power consumption. In late September, parts of Northeast China, including Shenyang, Changchun, were subjected to power rationing for three days after the region’s entire power grid was deemed “in danger of collapse.” To date, widespread power rationing continues with brownouts and blackouts now common in certain sectors. Beijing is aggressively cracking down on local provincial governments like those in Jiangsu, Zhejiang and Guangdong that fail to meet the lower energy consumption targets. These three areas account for nearly a third of China’s economy and are home to large PPE production facilities.

        As the world’s largest carbon emitter, China relies heavily on fossil fuels, primarily coal, to power residential and commercial properties. It isn’t uncommon for China to ration power during colder months. However current coal and gas shortages, elevated fuel prices and production setbacks don’t bode well for immediate recovery.  The current and future rationing of power will certainly have an impact on glove market costs, specifically on the disposable vinyl glove category.  Though many manufacturers are doing their best to maintain operations and leverage existing inventory, sporadic factory blackouts are imminent and will likely add to the already overtaxed supply chain.

        The Chinese power initiative is expected to cause multi-day shutdowns in key PPE factories, negatively affecting the overall PPE supply chain.  Key events in early 2022 including Chinese New Year (beginning February 1st) and the Winter Olympics (February 4th through February 20th) will undoubtedly create additional complications. The global PPE supply chain may not show solid improvement until March 2022 or later.

        Many global markets are at risk and poised to experience additional shortages in various types of goods and components. Major tech firms and processor manufacturers including Apple, Intel, Nvidia, and Tesla as well as large manufacturing industries, are also experiencing their power being shut down for several days a month.

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