Moody's: If China's power cuts are short-lived the effects on GDP will be limited

“China's power cuts, if short-lived, will have limited effect on GDP and rated companies,” Moody’s Investors Service said in its latest assessment of the Chinese economy on Monday.

Additional takeaways

China's power cuts and the resulting disruptions to production across industrial sectors are credit negative.

China's electricity cuts will add to economic stresses, weighing on GDP growth for 2022.

Costs of the cuts will be borne unevenly across sectors.

Expect China's power cuts and resulting production disruptions to be temporary.

Power cuts will likely harden China's resolve to boost its supply of renewable power, nuclear power and power storage infrastructure.

China's larger, financially stronger companies will fare better operationally and financially than smaller and weaker companies.

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