China Makes Comprehensive Efforts to Minimize Impact of Heat Waves

China Makes Comprehensive Efforts to Minimize Impact of Heat Waves; Economy to ‘grow within reasonable range’ despite dual pressures

Since Aug. 18, 2022, water has been pumped from a canal to a waterway in Ma'anshan, east China's Anhui Province, to alleviate drought and ensure harvests as Chinese provinces and regions grapple with prolonged heatwaves.  Photo: VCG

Since Aug. 18, 2022, water has been pumped from a canal to a waterway in Ma’anshan, east China’s Anhui Province, to alleviate drought and ensure harvests as Chinese provinces and regions grapple with prolonged heatwaves. Photo: VCG

As an ongoing heatwave continues to affect major hydroelectric power production and electronics manufacturing bases in southwest China, Chinese officials and energy companies have launched a comprehensive, nationally coordinated effort to secure electricity supplies and stabilize economic activities already strained by COVID-19 outbreaks.

Although the power shortages caused by the heat wave and drought are affecting certain business operations, with some companies reportedly temporarily closing or reducing capacity, and these impacts may spill over to other major economic hubs in the east and south, the overall impact on the Chinese economy remains limited and foreign media hype about the impact on the Chinese economy is seriously exaggerated, Chinese economists said.

Analysts noted that with the growing efforts to deal with the current power shortages caused by the extreme weather, coupled with the already intensified campaign to stabilize the economy, the world’s second largest economy is set to operate within reasonable limits, in stark contrast to dire situations, including Recession faced by other major world economies.

Southwest China’s Sichuan province and the city of Chongqing are suffering the worst heat wave in about 60 years. To ensure the power supply to homes, Chongqing has joined neighboring Sichuan Province to suspend some industrial power supplies from Wednesday to August 24, media agency jiemian.com reported.

According to the Ministry of Water Resources, rainfall in the Yangtze River basin since July was 40 percent less than the same period last year and the lowest since the same period in 1961.

The power outages will hamper the operations of some key companies in the region, such as Toyota Motor Corp and China’s CATL, the world’s largest battery maker, which has halted work at its Sichuan plant, media reported.

Other sectors including photovoltaics, electronics and chips, which use Sichuan or Chongqing as key bases, have also been hit, although some of the Global Times said the overall impact was limited. The latter group includes Hon Hai Technology, Apple’s largest supplier, and electronic component maker BOE Technology Group.

SK Hynix, a South Korean company specializing in chips, said operations at its Chongqing facility are normal.

Although Chongqing and Sichuan are important electronics manufacturing regions, they account for only a small part of the sector’s revenue across the country and will not have a major impact on the industry chain.

In 2021, Sichuan’s electronic information industry generated sales of 1.46 trillion yuan (US$214 billion), ranking first in central and western China. However, in the same year, the revenue of the big companies in the entire industry reached 14 trillion yuan, according to official figures.

The drought is also worrying provinces like Guangdong, Zhejiang and Jiangsu, but they are taking measures to deal with the impact.

China Media Group reported on Tuesday that 3,300 companies in Ningbo, east China’s Zhejiang Province, voluntarily adjusted their working hours to avoid power outages.

Aerial photo shows technicians from State Grid Zhejiang Electric Power Company checking power transmission lines to ensure stable operation of local power supply in Zhoushan, east China's Zhejiang Province, Oct. 23, 2020. Photo by Xinhua

Aerial photo shows technicians from State Grid Zhejiang Electric Power Company checking power transmission lines to ensure stable operation of local power supply in Zhoushan, east China’s Zhejiang Province, Oct. 23, 2020. Photo by Xinhua

Growing Efforts

Officials have called for greater political support and efforts to secure electricity supplies, and various government agencies, electric utilities and stakeholders have taken action to meet the additional electricity demand caused by the ongoing heatwave.

According to State Grid Chongqing Electric Power Co., Chongqing now gets power from six regional and 15 provincial grids. For the first time, power from the Inner Mongolia Autonomous Region and Liaoning Province was diverted to the southwestern municipality.

It is also the first time that two state-owned power companies — State Grid and China Southern Power Grid — have combined their systems to send power from southern provinces to Chongqing.

Energy supplier State Grid also said it will send electricity from Baoji in northwest China’s Shaanxi Province to Deyang in Sichuan, with a daily transmission of 132 million kWh. Sichuan provincial government coordinates coal supplies to ensure power generation.

China’s highest-elevation mega-hydroelectric power station — the Yalong Hydroelectric Power Stations on the Yalong River in Sichuan’s Garze Tibetan Autonomous Prefecture — reportedly generated 17.05 billion kWh of electricity from July 1 to August 15, up 27.2 percent year-on-year .

Chinese Vice Premier Han Zheng on Wednesday called for effective measures to ensure security and supply of energy and electricity. Security and supply of energy and electricity are the basic guarantee for stable economic and social processes, Han said, stressing that it is imperative to avoid power outages and speed up key projects.

In a news briefing on Tuesday, Jin Xiandong, an official with the National Development and Reform Commission (NDRC), said rising electricity demand reflects the ongoing heat and economic recovery. Meanwhile, the supply of thermal coal is under pressure due to lack of water supply and insufficient hydroelectric power output.

The NDRC said it is guiding relevant companies to speed up coal production, and the nationwide average daily coal production shipped has been at a relatively high level of about 12.4 million tons since July.

effect “exaggerated”

However, CNN reported that China’s growth forecasts are being cut as heatwaves hit industrial heartlands, citing Goldman Sachs, which cut its forecast for China’s GDP growth this year to 3% from 3.3%.

CNBC reported that China is being gripped by a devastating heatwave that could seriously affect its economy, quoting a chief economist at Hang Seng Bank China who said China will lose about 1.5 percentage points of GDP due to this year’s power shortages. growth.

“Some foreign media and institutions’ estimates are too pessimistic,” Li Changan, a professor at the Academy of China Open Economy Studies at the University of International Business and Economics, told the Global Times on Friday.

Of course, extreme weather conditions will affect the local areas, especially considering that the Sichuan-Chongqing area is a key location for automobile and home appliance manufacturing, which will affect the industry and supply chains, but there are no blackouts in the region yet There have been more economically developed regions in the Yangtze River Delta that contribute more to GDP, he said.

He forecast that China’s GDP growth this year will still remain within a reasonable range even amid the twin pressures of drought and epidemic, a forecast echoed by other economists.

The government and the Chinese people have accumulated a lot of experience in dealing with the epidemic over the past three years. Now the government’s priority is to boost consumption, Cao Heping, an economist with Peking University, told the Global Times on Friday.

To boost consumption, Premier Li Keqiang said on Friday that China will extend the purchase tax exemption for new energy vehicles to the end of next year and push ahead with the construction of charging stations.

If the government can strike a good balance between the epidemic and economic growth, growth of around 5 percent is still possible, said Zhang Yansheng, chief research fellow at the China Center for International Economic Exchanges.

Tian Yun, former vice director of the Beijing Economic Operation Association, told the Global Times on Friday that infrastructure and new energy could be key drivers of GDP growth in the second half of the year.

In a renewed call to push China’s economically largest provinces to be at the forefront of the national stabilization push, Premier Li on Tuesday and Wednesday undertook an inspection tour of Shenzhen, Guangdong, emphasizing the pioneering role of the city and province.

Noting that China’s economy is at a critical stage of stabilization, Li urged economic powerhouses to ensure the solid implementation of a package of pro-growth policies, while taking measures to strengthen market participants, smooth logistics, and stabilize industrial and supply chains to use.

In a sign of the appeal of the Chinese market and continued investor confidence in the Chinese economy, China’s actual investment in foreign capital rose 21.5 percent year-on-year to US$123.9 billion in the first seven months of this year, with investments exiting South Korea, the United States and Japan are registering the fastest growth, China’s Commerce Ministry said on Thursday.