MercoPress. South Atlantic News Agency

Amid energy disarray China anticipates a “most difficult year”

Chinese Premier Wen Jiabao

Chinese Premier Wen Jiabao warned over the weekend that 2008 will be a “most difficult year” for the country's economy as a result of global uncertainty and domestic problems, reported on Monday China's Broadcasting Corporation.

"As we often discuss affairs, we fear that 2008 will be most difficult year for the economy" Wen Jiabao was quoted addressing State Council members last week. Wen Jiabao described those fears as "uncertainties in international economic circumstances and new difficulties and contradictions in the domestic economy". The Chinese leader was most likely referring to the expected economic slowdown in the U.S., the largest market for Chinese exports, and inflationary pressures at home. China's inflation jumped to 4.8% in 2007, the sharpest rise in 11 years, in the wake of higher food prices and strong economic growth, forcing the country's central bank to tighten monetary policy by raising interest rates and banks' reserve requirements several times over the past 12 months. Circumstances have worsen with increasing volatility in Chinese share markets and one of the coldest winters in recent history that has caused dozens of deaths and has forced the country to significantly increase energy supplies. No further details were revealed besides Wen Jiabao words that "our government will have to improve the implementation of its scientific democratic policies to address the situation". Chinese leaders have promised to adjust monetary policy so as to contain inflation and cool the economy but some analysts believe a fall in exports to a US economy in recession could force Beijing to actually adopt more flexible policies. Meantime state media reported that the government boosted the volume of coal transported by rail as it battles a severe weather-related power crunch. The number of train wagons carrying coal to the nation's power plants has been raised to 36,000 a day, an increase of about 28% over the same period last year, according to the Railway Ministry. The move was just one of several urgent nationwide steps taken by Beijing to keep coal --the source of about three fourths of China's energy-- flowing from mines to electricity generators amid the worst power shortfall in years. The supply of coal for power generation had fallen to 21 million tonnes, less than half the normal levels at this time of year, a government official said Monday. Apparently the shortfall was caused by an unexpected deadly cold wave peak demand. Severe weather conditions, including blizzards and intense snow fall, also knocked out roads and rail lines throughout large areas of the country, crimping coal distribution just as millions of Chinese packed trains on their way home for the annual Lunar New Year holiday celebrations. On Sunday, Premier Wen Jiabao ordered all government offices and resources to privilege coal supply to power plants and eliminate all but the most vital electricity use. A Beijing official admitted that 17 provinces have imposed power-rationing including rotating brownouts. "Due to the rain, snow and frost, plus increased winter use of coal and electricity and the peak travel season, the job of ensuring coal, electricity and oil supplies and adequate transportation has become severe" Wen Jiabao said at a cabinet meeting.