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PRC economy struggles under blanket of snow

"China will likely step up investment in power transmission, transportation and other types of infrastructure."

Merrill Lynch report

China's financial capital saw fresh snowfall yesterday as the impact of unusually wintry weather deepened, highlighting the vulnerabilities of the country's booming economy.

With many regions facing severe shortfalls, Vice Premier Zeng Peiyan (曾培炎) repeated calls for coal suppliers and railways to ensure adequate coal supplies for utilities struggling with surging demand and damage to power grids, the official Xinhua news agency reported.

For much of southern and central China, ice and snow are rarities. Businesses, railroads, airports and other systems that normally keep the economy ticking at double-digit rates are ill equipped to handle what -- at no more than 300mm of snow overall -- is normal winter weather elsewhere.

Dozens of factories were closed, with mining and metals companies suffering from severe power shortages.

The storms have caused economic losses of 22 billion yuan (US$3 billion) since they began on Jan. 10, the Civil Affairs Ministry said on Tuesday.

Courier companies announced they were rejecting non-local deliveries. The Shanghai Post Office said demand for its EMS delivery service was up 50 percent as a result, but asked that customers call ahead to confirm services before trying to send parcels.

Some cargo shipments were suspended because of transport snags elsewhere, said a customs official at Shanghai Waigaoqiao Free Trade Zone, where some operations were suspended on Monday because of snow.

With companies unable to send documents by courrier, customs clearance was delayed in some cases, said the official, who declined to give his name.

The storms illustrate the limitations China faces despite 30 years of economic reforms, with economic growth forecast at more than 10 percent this year.

Just a few months earlier, shortages of diesel fuel slowed transport in many regions. Now, it's coal -- used to power more than three-quarters of the country's electricity -- that's in short supply.

China's railways are already overburdened; its fast-expanding road system is incomplete -- even in Shanghai's suburbs -- and its electricity grid is antiquated and inefficient.

"Underinvestment remains China's key challenge," said a report issued yesterday by investment bank Merrill Lynch.

It focused on the opportunities posed by the country's need to build up the country's "fragile infrastructure" and help close the huge gap between relatively modern coastal areas and impoverished inland regions.

"China will likely step up investment in power transmission, transportation and other types of infrastructure," it said.
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