China's Generating Industry Powers Ahead Despite SARS Shadow

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). The fraught drama and tension of daily news items on how efforts to contain the SARS outbreak are progressing in China somewhat obscures the fact that the massive rollout of major industrial projects in that country continues and that new forward looking plans are being announced every week. The possibility of a break out of the disease in the vast tracts of peasant populated food producing rural areas casts a shadow on the forward march of the Peoples Republic but some items of current progress and future targets serve as a useful antidote.

A profit of $338 million was generated by China's 38 publicly listed power companies in the first quarter of 2003 which Shanghai Securities News reports is an increase of 25.05% year-on-year. The country's GDP rose 9.9% year-on-year in the first quarter, which was the fastest growth rate since 1997.

Five listed power companies posted more than a 100% increase in net profit for the quarter. They were Top Energy (SH A 600780), An Hui Wenergy (SZ A 000543), Shanxi Zhangze Electric Power (SZ A 000767), Shenyang Jinshan Thermoelectric (SH A 600396) and Hubei Changyuan Electric Power Development (SZ A 000966).

The report said that China generated a total of 408.884 billion kWh of the electricity in the quarter, which was an increase of 16.02% on the year. Consumption rose to 17.17% to 412.437 billion kWh. But China's current power supply cannot meet the increasing demand of the country's big cities some of which will suffer from power shortages in 2003/4.

Concurrent with this news of profits comes the approval of total investments of $6.2 billion in the construction of 13 new power stations to keep up with surging demand. The official Xinhua news agency reports that the new stations will be mainly in the booming industrial and energy hungry coastal provinces and in the western hinterlands that are rich in resources. The new stations will have a combined capacity of 11,800 MW. Already this year construction work has started on 17 new power stations in China with a total installed capacity of 10,600 MW.

The government has promised to add 25,000 to 30,000 MW generating power construction start-ups each year through 2005. With power demand expected to grow between 9% and 10% this year generating capacity is battling to stay ahead of shortages that are emerging in 50% of China's provinces. China is still the world's fastest growing economy and the second largest power market. The delayed effect of SARS is unlikely to affect this status in a year-on-year basis.