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Data: FactSet; Chart: Axios Visuals

Energy crises in Europe and China are spilling into economic forecasts, supply chains and beyond.

Driving the news: Europe has for weeks been facing sky-high natural gas and power prices, while China — the world's second-largest economy — is facing electricity shortages that are hobbling factories.

Here are a few takeaways on the big, multi-continental energy crunches:

1. They defy simple narratives. There are many reasons behind both regions' woes.

  • Via the NYT, in China, they include growing demand on the country's power-hungry factories as the global COVID recovery continues — including the need for energy-intensive metals.
  • That has pushed up coal prices, the piece notes, yet regulators have not allowed power companies to raise rates, so "utilities have been slow" to boost operations.
  • That story and others also point to Chinese officials' efforts to curb energy consumption and its emissions are also playing a role.
  • In Europe, where natural gas prices are tethered to both regional and global forces, it's a perfect storm ranging from higher gas demand due to the cold winter and then summer heat in multiple regions; but also EU carbon permit policies; lighter winds; constrained Russian supply and more.

2. They are making supply chain problems even worse. There's a lot of reporting on interrupted output from Chinese factories that make all sorts of things.

  • For example, this detailed WSJ piece notes that over 10 semiconductor-related facilities have announced temporary closures.
  • That story and others also say multiple Apple suppliers have been affected. More broadly, the shutdowns are coming at a time when global supply chains are already facing problems.
  • AP warns of "possible shortages of smartphones and other goods" ahead of Christmas. In Europe, meanwhile, high gas prices have cut the output of fertilizer and other goods.

3. Analysts see significant economic impact. Per CNBC, Goldman Sachs has reduced its forecast for China's GDP growth this year to 7.8% from 8.2%. Nomura analysts, among others, reached largely the same conclusion.

4. Conventional wisdom can be wrong. Commentary from the Center for Strategic and International Studies' Nikos Tsafos delves into Europe's problems — and the limits of the common idea that U.S. LNG can help Europe counter Russian gas disruption or limits.

  • That's wrong in the short term, Tsafos notes, because "U.S. LNG, like other LNG, responds to market forces, and if other markets are willing to pay more than Europe, Europe has no immediate remedy." (It does provide a bargaining tool to limit gas prices in the medium and long term, he adds.)

5. Winter is coming. "Even a normally cold winter in the Northern Hemisphere is expected to drive up natural gas prices further across much of the world," Bloomberg reports.

6. So is the UN climate summit. A key thing to watch in Glasgow in just a month is whether the crises boost momentum for speeding up energy transition, or show that national initiatives that raise costs — through carbon taxes or other policies — lack political support.

Go deeper

China's economic growth slows

A worker assembles heavy truck engines in Hangzhou in eastern China's Zhejiang Province, on Monday. Photo: Long We/Costfoto/Barcroft Media via Getty Images

China's economy grew 4.9% in the third quarter of 2021 compared with a year earlier, the country's National Bureau of Statistics announced Monday.

Why it matters: The gross domestic product growth in the July-September period in the world’s second-largest economy marked the "weakest pace since the third quarter of 2020 and slowing from 7.9% in the second quarter," Reuters notes.

The new cold war panic

Illustration: Aïda Amer/Axios

The world has seen a power struggle between nuclear powers before, and has seen those countries inch closer to military conflict. But it's never before seen a cold war between two countries as interconnected — with each other and with the rest of the globe — as the U.S. and China.

Why it matters: Escalating antagonism between the world's two superpowers is likely to hinder global cooperation to fight climate change, divert resources to costly arms and tech races, complicate diplomacy for U.S. allies, and victimize Chinese and American citizens living in each other's countries.

Car trouble hits manufacturing stats

Data: FRED; Chart: Axios Visuals

Industrial and manufacturing activity slowed in September, surprising economists to the downside.

Why it matters: Industrial production is one engine of economic output and provides a measure of demand for durable goods.

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