Russia Helped China Do What America Couldn’t

MOSCOW, August 29 — PRIME, Andrey Karabyants. Due to the drought in China, there was a shortage of electricity – coal-fired thermal power plants should compensate for the shortage. Despite record production in the country, the energy carrier is chronically lacking. Russia comes to the rescue – in July, China significantly increased coal imports from our country, and growth is expected to continue further.

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In July, due to abnormally hot weather, a drought came to the southwestern regions of China. According to Western media reports, 66 rivers in 34 provinces of China have completely dried up, the water level of reservoirs at hydroelectric power stations has fallen to a critically low level. As a result, hydroelectric power plants have reduced production to a minimum.

The most difficult situation has developed in Sichuan province, where large hydroelectric power stations are located that supply energy to many provinces in China. Due to power shortages, a number of large enterprises, including Toyota Motor, CATL and BYD plants, were forced to reduce production volumes. The energy saving regime was announced in Shanghai, the economic, financial and industrial center of China.

The country’s government is taking emergency measures to eliminate the acute shortage of electricity in the country.

Coal-fired thermal power plants should compensate for the reduction in electricity generation at hydroelectric power plants. Beijing demands to maximize the production and supply of fuel to thermal power plants. This will increase the production of electricity and eliminate the shortage that has arisen.

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In the past year, China has already faced a shortage of electricity. The authorities were forced to restrict the supply of industrial facilities in most provinces of the country. However, due to the increase in coal production, the problem of electricity shortage was resolved in the shortest possible time.

Beijing seeks to reduce dependence on energy imports, relying primarily on its own resources. China ranks fourth in the world in terms of coal reserves, which is both the most affordable and at the same time the dirtiest type of fossil fuel.

The rapid growth of the Chinese economy in recent decades has been fueled by its own coal reserves. In 2021, coal production reached a historical record, exceeding 4 billion tons.

This year, the growth of production in the coal industry continued. According to the State Bureau of Statistics of the PRC, last month, production increased to 372.66 million tons, or 12.02 million tons per day. – growth in annual terms amounted to 16%. In January-July 2022, 2.56 billion tons were produced, which is 12% more than in the same period a year earlier.

Despite record numbers, Chinese thermal power plants have not been able to increase their electricity generation to compensate for the drought-induced drop in hydropower production. In the second half of the year, China is forced to significantly increase coal purchases from abroad.


Indonesia is the largest supplier of coal to the Chinese market. Deliveries of coal from this country to China in July 11.7 million tons – 22% more than in June, but 40% less compared to July 2021. However, the quality of Indonesian coal is extremely low, its calorific value is less than 3.8 thousand kcal / kg, so Beijing has significantly increased purchases from its northern neighbor.

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According to the General Administration of Customs of the People’s Republic of China, imports of Russian coal to China rose by 14% in July compared to a month earlier to 7.42 million tons, the highest figure in the last 5 years. In June, deliveries of Russian coal to China amounted to 6.12 million tons, and in July 2021 – 6.49 million tons.

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In August, thermal power plants in southern China increased purchases of Indonesian coal through tenders, as it is cheaper than Chinese coal. Indonesian coal with a calorific value of 3.8 thousand kcal/kg FOB (without delivery to the buyer) cost $78/ton. Even with shipping, it is cheaper than Chinese coal, which is priced at 690 yuan ($101/tonne) on the domestic market. Due to the depletion of deposits, the cost of coal mining in China has increased significantly in recent years.

A number of Chinese officials are suggesting that Australian coal imports be resumed under the pretext of fighting a power shortage, but Beijing is not even considering such a possibility. Energy imports stopped at the end of 2022 for political reasons. In addition, the Australian government, at the suggestion of the United States, pursued a discriminatory policy towards the Chinese IT giant Huawei Technologies Co. However, the States failed to offer the PRC an adequate amount of energy carriers.

Market participants and traders predict a significant increase in Russian coal imports to China in the fourth quarter as the heating season approaches in the country’s northern provinces.

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The growth in deliveries to China was facilitated by sanctions against Moscow imposed by the collective West after the start of a special operation in Ukraine. After February 24, European countries, as well as Japan, South Korea and Taiwan, significantly reduced purchases of Russian coal. On August 10, the EU introduced a complete embargo. The EU leadership also intends to abandon Russian oil by the end of this year, and at the beginning of 2023 – from Russian oil products. An exception was made for gas, since the EU’s dependence on supplies from Russia is very high – about 40% last year.

Russian coal companies, with the assistance of Russian Railways, managed to quickly redirect their export flows from the West to the East. China has become their main market.

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According to Western media reports, Russian companies offered big discounts to their Chinese partners. Russian thermal coal with a calorific value of 5.5 thousand kilocalories was offered at the end of July at a price of about $ 150 / t on Cost & Freight terms (the price includes delivery of cargo to the buyer’s port), and Australian coal of similar quality with shipment in Newcastle on terms FOB (price at the seller’s port) exceeded $210/t.

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