Jan. 28 (Bloomberg) -- China's heaviest snowstorms in five decades crushed homes, grounded flights, disrupted electricity and left hundreds of thousands of travelers stranded, a week before millions take to the roads for Lunar New Year holidays.

As many as 5 percent of China's coal-fired power plants, which generate 78 percent of electricity, were shut because snow hampered coal shipments, the National Development and Reform Commission said today. Zhuzhou Smelter Group Co., China's largest zinc refiner, said shortages forced it to cut production.

More than a foot (34 centimeters) of snow fell yesterday in Nanjing in the east, the city's heaviest in 50 years, halting air and rail service, in turn delaying a third of ensuing flights in Beijing and Shanghai and throwing national train service into chaos. Military police kept order at the Beijing railway station today, where 400,000 passengers were stranded.

``We face a very severe situation in ensuring supplies of coal, electricity, oil and transportation,'' Zhu Hongren, spokesman for top planning agency the National Development and Reform Commission, said at a press conference today in Beijing. ``The inventory of thermal coal fell due to a combination of energy demand, massive snowstorms and the annual peak Lunar New Year traffic. Early holidays at some coal mines also contributed to the shortage of the fuel.''

The Chinese Lunar New Year holiday runs Feb. 6 to Feb. 12 this year. Travelers will probably make a record 2.17 billion journeys during the period, according to the government.

Power Shortages

China's fifth year of power shortages may increase pressure on Premier Wen Jiabao to lift caps on coal, gasoline and electricity prices, undermining efforts to curb the fastest inflation in 11 years. December inflation was 6.5 percent, and the central bank raised interest rates six times last year to curb spending. The government also capped the prices of food and public transport and ordered banks to reduce lending.

``Energy shortages and transportation bottlenecks are likely to aggravate inflation pressures in China in the short term,'' Goldman Sachs Group Inc.'s senior economist Liang Hong said today. ``These latest developments will likely push up near-term CPI inflation to levels that will be very uncomfortable for policy makers and China's investors.''

China's 2007 electricity demand jumped 14 percent, as the fastest economic growth in 13 years spurred new factories, shopping malls and offices. Power shortages have affected 17 Chinese provinces, or half of the country, the Chinese planning commission's spokesman Zhu Hongren said today. Closures of coal- fired power plants forced 13 provinces to ration power, figures from State Grid Corp. of China showed on Jan. 23.

`Enormous' Shortage

``The shortage is close to 39.9 million kilowatt hours, an enormous number,'' Zhu said today in Beijing. ``The main cause is the shortage of coal. Power plants are all working against the clock to get more coal delivered.''

To ease the shortage, coal shipments were increased by 2,000 train carriages to 36,000 a day on Jan. 26, Railway Minister Liu Zhijun said at a conference yesterday, according to minutes released by the government. That's 30 percent more than the increase at about the same time last year, he said.

Coal stockpiles at 90 power plants in central and northern China have dropped below the ``caution line'' of three days' requirements, State Grid said. The shortage may ease after the Lunar New Year holidays, which start on Feb. 7, when weather conditions may improve according to forecasts, Li Xiaochao, spokesman for the National Bureau of Statistics, said on Jan. 24. Snowstorms may continue into February, the China Meteorological Administration said today without being specific.

Bad Weather, Bad Policies

``Other factors also contributed to the shortage, namely the various government controls of energy prices and transport bottlenecks,'' said Goldman's Liang. ``Bringing down inflation appears to be top of the macro policy agenda this year. Bad weather and bad policy choices have made this goal even more difficult to attain.''

China's coal production rose 9.4 percent last year to 2.3 billion tons, the statistics bureau said on Jan. 25. Exports of the fuel dropped 16 percent and imports jumped 33 percent in 2007, leaving the nation with 2 million tons of net exports, according to customs data.

Snowstorms in central China's Hunan, Guizhou, Anhui and Jiangxi provinces were the worst in decades, affecting industrial production, the meteorological administration said. Forty-four counties in Guizhou reported power outages, with only 12 having managed to restore the supply of electricity, Xinhua said today.

Electricity shortages may force smelters to cut their aluminum production by up to 200,000 tons, Beijing Antaike Information Development Co.'s chief analyst Wang Feihong said.

Smelters Disrupted

``About 800,000 metric tons of annual aluminum production capacity might be affected,'' Wang said in a phone interview today in Beijing. ``Assuming that the power shortages last three months, aluminum output this year will be 200,000 tons less than our earlier forecast.''

Zhuzhou Smelter had been cutting production since heavy snow in mid-January led to power shortages, company trading Managing Director Wang Jianjun said.

Snow delayed as many as 35 percent of flights from two airports in Shanghai, China's financial hub, the airfields' operator said. At the railway station in Guangzhou, southern China's largest city near Hong Kong, 170,000 passengers were stranded for 24 hours yesterday, Xinhua News Agency said.

Buses, Roads

Jiangsu Expressway Co., the biggest operator of toll roads in eastern China, said it's allowing only trucks on its roads to reduce the potential for accidents and fatalities, according to a statement on its Web site. All roads to the Shangri-La resort area in Yunnan province in the south were closed because of poor weather, the provincial meteorological bureau said.

The biggest long-distance bus service in Hubei Province halted all routes connecting with other parts of the country today for a third consecutive day, Xinhua said.

Power lines linking the Three Gorges hydroelectric dam in central China's Hubei province to Shanghai were damaged in snowstorms, Xinhua said today, without saying when the lines were expected to be repaired. The worst snowstorms in 50 years have led to the closure of 18 transformer stations in the southern province of Guangxi, it said.

``The difficulty in ensuring stable supplies of coal, electricity, oil and transportation is increasing,'' the planning commission's Zhu said. ``Coal supplies in China will rise in 2008 and the government will ensure shipments of fuel and natural gas.''

To contact the reporters on this story: Zhang Dingmin in Beijing at Dzhang14@bloomberg.net; Ying Lou in Hong Kong at ylou1@bloomberg.net

Last Updated: January 28, 2008 05:46 EST