Written By: Andrew Gibson (04/10/2021)

In the past weeks, China hasn’t only been busy with concerns of financial delinquency contagion stemming from the liquidity problems of its second largest real estate developer (6). The world’s second largest economy is now struggling with an energy crisis. The cause? In part, its own environmental commitments (3). Naturally, the question arises: how could the environmental obligations be so short-sighted as to cause such a severe shortage? Of course, they aren’t, and they didn’t, right? Surely there’s something else afoot. But, does it matter? Not really. In a world of narrative economics, the story can sometimes be more compelling than the facts. Indeed, surging power demand, a cessation of Australian coal imports, lagging coal production and a resulting depletion of inventories (4) make it seem as though the energy problem is arising from market forces, not concerns for the environment. Yet, many Chinese are pointing the finger at government policy. Interestingly, they might not be wrong for doing so.

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