BEIJING – Extreme weather and drought in much of south-west China, largely centred in Sichuan province, have led to a hydropower crunch whose effects are being felt across much of China.

While factories in Sichuan and Chongqing have already been forced to cut power use in a bid to conserve energy, the south-western province also exports hydro-generated power to Jiangxi and Shanghai, both of which are starting to experience shortages.

Coupled with a resurgence in Covid-19 cases, economists say this is likely to result in a further drag on the economy.

In the past two months, much of the Yangtze River basin has been suffering from a record heatwave, further exacerbated by drought.

Sichuan province, whose power supply is more than 80 per cent dependent on hydropower, has been hit particularly hard.

The State Council, China’s Cabinet, on Thursday (Aug 25) announced a slew of measures targeted at bolstering growth.

“(The) economy has continued the momentum of recovery and growth registered in June, yet marginal fluctuations remain and the foundation for recovery is not solid,” said a readout after the meeting.

Officials will be sent to various provinces to “supervise and assist” work to improve economic performance, the State Council said, but noted that the recent heatwave and drought have massively impacted livelihoods.

Trying to salvage mid-season crops affected by extreme weather is also a priority.
“10 billion yuan (S$2.03 billion) will be earmarked from the central government reserve fund for drought relief and disaster mitigation, with priority given to fighting the drought facing middle-season rice,” the State Council said.

Analysts from French investment bank Natixis noted that the weather problems that led to the hydropower crunch come on the back of persistent pressure from the country’s zero-Covid policy and weakness in the real estate market.

There are also implications on the harvest of crops, with about 22 billion sq m of China’s arable land facing water shortages – including in Hunan, Hubei and Jiangsu, all key suppliers.

The autumn harvest of rice and corn is also likely to be affected, possibly pushing up food prices further.

“All in all, the heatwave and drought in China will exert short-term pressure on the electricity supply beyond Sichuan and affect sectors such as agriculture, automobile, chemicals and semiconductors,” Natixis analysts Alicia Garcia Herrero and Gary Ng wrote in a note.

“(No) one can control the weather. The sudden hydropower shock clearly points to climate risks and additional constraints to China’s growth model in the medium term.”
 

 

 

 

 

BEIJING – Extreme weather and drought in much of southwest China, largely centred in Sichuan province, has led to a hydropower crunch whose effects are felt across much of China.

While factories in Sichuan and Chongqing have already been forced to cut power use in a bid to conserve energy, the southwestern province also exports hydro-generated power to Jiangxi and Shanghai, which are starting to experience shortages.

Coupled with a resurgence in Covid-19 cases, economists say this is likely to result in a further drag on the economy.

In the past two months, much of the Yangtze River basin has been suffering from a record heatwave, further exacerbated by drought. Sichuan Province, whose power supply is more than 80 per cent dependent on hydropower, has been hit particularly hard.

The State Council, China’s Cabinet, on Thursday (Aug 25) announced a slew of measures targeted at bolstering growth.

“(The) economy has continued the momentum of recovery and growth registered in June, yet marginal fluctuations remain and the foundation for recovery is not solid,” said a readout after the meeting.

Officials will be sent to various provinces to “supervise and assist” work to improve economic performance, the State Council said, but noted that the recent heatwave and drought have massively impacted livelihoods.

Trying to salvage mid-season crops affected by extreme weather is also a priority.

“10 billion yuan (S$2.03 billion) will be earmarked from the central government reserve fund for drought relief and disaster mitigation, with priority given to fighting the drought facing middle-season rice,” the State Council said.

Analysts from French investment bank Natixis noted that the weather problems that led to a hydropower crunch come on the back of persistent pressure from the country’s “zero-Covid” policy and weakness in the real estate market.

There are also implications on the harvest of crops, with some 22 billion sq m of China’s arable land is facing water shortage, including in Hunan, Hubei and Jiangsu, all key suppliers. The autumn harvest of rice and corn is also likely to be affected, possibly pushing up food prices further.

“All in all, the heatwave and drought in China will exert short-term pressure on the electricity supply beyond Sichuan and affect sectors such as agriculture, automobile, chemicals, and semiconductors,” Natixis analysts Alicia Garcia Herrero and Gary Ng wrote in a note.

“(No) one can control the weather. The sudden hydropower shock clearly points to climate risks and additional constraints to China’s growth model in the medium term.”