Categories: Economic News

China rations electricity as heat wave causes factories to shut down

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BEIJING – China’s worst heat wave in six decades is deepening the economic pain of pandemic lockdowns, with authorities this week ordering factories to suspend production in several key manufacturing regions to preserve electricity.

Sichuan province, home to more than 80 million people, announced on Monday that factories in 19 cities and prefectures would halt operations until Saturday to preserve electricity for “people’s use”. Other areas in southern China have also mandated that electricity be prioritized to run air conditioners.

The factory shutdowns reflect how climate change is intensifying China’s economic challenges. Officials have warned that the country is likely to miss its 5.5 percent growth target for the year as coronavirus lockdowns disrupt trade and normal life.

China’s economic growth slows to 0.4%

On Tuesday, Jin Xiandong, a spokesman for the National Development and Reform Commission, said China needed to rely more on coal for power, because the heat wave and drought were significantly reducing hydroelectric production.

Fierce heat waves like this summer are expected to become more frequent in China as climate change worsens. Eleven provinces currently have temperature advisories in excess of 104 degrees Fahrenheit. Chongqing, a self-administered city surrounded by Sichuan province, hit a record high of 112.1 degrees Fahrenheit over the weekend, with highs of more than 104 degrees expected for another week.

China, the world’s biggest emitter of carbon dioxide, has sought to present itself as a global leader in climate action, touting its shift to electric vehicles and other measures. But the country has continued to build new coal-fired power plants. This month, Beijing suspended bilateral climate talks with the United States in retaliation for House Speaker Nancy Pelosi’s trip to Taiwan.

Dangerously high temperatures have left nations around the world struggling this summer, with dry heat causing fires in Britain, a power grid shutdown in Iraq and more than 1,000 deaths in Portugal. Last month, President Biden called climate change an “emergency.”

China’s inland Sichuan province has become an international manufacturing hub in recent years due to its lower production costs compared to coastal areas. The region produces and exports items such as electronics, furniture and food. State media reported that Sichuan marked the highest electricity consumption month on record in July.

As the production shutdown took effect on Monday, factories were scrambling to figure out the financial effects.

Tongwei Solar, the world’s largest producer of crystalline silicon solar cells, has experienced outages at its three production bases in Sichuan, a company public relations official told The Washington Post by phone, declining to give the his name

“We are now cooperating with relevant government departments to adjust power consumption in an orderly manner and they are still assessing specific impacts,” he said.

What inflation? China’s pepper suppliers are feeling the heat.

Foxconn, a major Apple assembler, told the China Securities Journal that “the effect would not be large for the company’s operations.” Foxconn produces some Apple products such as iPads and Macs in Sichuan.

A Sichuan fertilizer maker, Lutianhua, issued a warning to the Shenzhen Stock Exchange on Monday, saying it expected a net profit of $4.4 million due to the production shutdown.

High temperatures could continue unabated until the end of the month, according to the China National Meteorological Center.

China released its latest economic data on Monday, for July, showing unemployment rates rising and economic recovery slowing as new coronavirus outbreaks and a heat wave took their toll. Youth unemployment rose to a record 19.9%.

Fu Linghui, a spokesman for China’s National Bureau of Statistics, told a news conference on Monday that high temperatures in the south had caused “adverse effects on economic operations”. He also said that the effect of the pandemic on companies meant that they could not offer as many jobs to young people as before.

“The momentum of economic recovery has slowed marginally, and the foundations still need to be strengthened to consolidate the economic recovery,” Fu said.

In China, officialdom chic is the new look for tough times

Underscoring Beijing’s concerns about the economy, China’s central bank unexpectedly cut a key lending rate this week.

The country’s leaders had hoped for a stronger economic showing this year, ahead of a crucial Chinese Communist Party congress in the fall, where leader Xi Jinping is expected to break precedent by staying on for a third term. But Xi made clear in recent months that he would not lift China’s “zero covid” policy despite the costs.

With foreign tourism still largely suspended, Beijing had encouraged families to take national holidays during the summer to bolster consumption. But the surge in travel led to new outbreaks of the coronavirus across the country, leading to lockdowns in some holiday destinations including the beach resort of Sanya, the Xinjiang capital of Urumqi and parts of Tibet.

China’s policy of quarantining any close contact of a covid patient also continues to disrupt daily life. Videos of shoppers fleeing an Ikea store in Shanghai were widely shared over the weekend, following an announcement that those at the site would be forced into quarantine because a close contact of a covid-19 patient had visited the store.


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