China will see a continuous power glut in 2009 as the global economic downturn forces factories to scale back output and electricity consumption, according to a report released by the China Electricity Council (CEC).
Chinese power enterprises would experience the toughest days throughout the first two quarters of 2009. Falling demand is expected, said the CEC report.
Power consumption is likely to resume growth in the third quarter, fueled by recovery in the export-oriented eastern and the southern coastal areas, the powerhouse of Chinese economy. That will drive up the demand in the central and western region in the fourth quarter, according to the report.
The annual power consumption is likely to register a five percent growth this year, said Wang Yonggan, General Secretary of the CEC.
As the global financial crisis began to take a toll on the real economy, power demand plummeted in China as enterprises shut down or cut back working hours in response to moribund businesses.
Power consumption grew 5.23 percent in 2008, 9.57 percentage points lower than a year ago and the slowest in eight years, according to the CEC data.
The slowing demand was mainly contributed by the industrial sector, according to CEC data. About 3.43 trillion kilowatt-hours of electricity was used by the industry last year, up 3.83 percent from a year earlier, slower than the overall social power consumption growth rate for the first time.
Electricity used by the service industry and the rural and urban residents continued rapid growth, as the group was less affected by the financial crisis.
Wang Yonggan said that the slowdown in key sectors was the main reason behind the cooling demand.
Chemical, building materials, nonferrous metal and metallurgy sectors consumed 32.33 percent of the total, up 3.58 percent from a year ago, the slowest level in years, said the CEC report.
China's economy cooled to its slowest pace in seven years in 2008, expanding 9 percent year-on-year as the widening global financial crisis continued to affect the world's fastest-growing economy, data by the National Bureau of Statistics (NBS) showed.
The year-on-year growth rate for the fourth quarter slid to 6.8 percent from 9 percent in the third quarter and 9.9 percent for the first three quarters.