China makes all-out efforts to minimize the impact of heat waves; economy to ‘grow within a reasonable range’ despite double pressure

Water has been pumped from a canal into a waterway to relieve drought and ensure harvest since Aug 18, 2022 in Ma'anshan, east China's Anhui province, as Chinese provinces and regions are fighting against prolonged heat waves.  Photo: VCG

Water has been pumped from a canal into a waterway to relieve drought and ensure harvest since Aug 18, 2022 in Ma’anshan, east China’s Anhui province, as Chinese provinces and regions are fighting against prolonged heat waves. Photo: VCG

As a persistent heat wave continues to affect major hydropower production and electronics manufacturing bases in southwest China, Chinese officials and power companies have made a comprehensive and coordinated effort nationwide to ensure energy supply and stabilize economic activities already under pressure from COVID-19 outbreaks.

Although power shortages caused by the heat wave and drought are affecting certain business operations, with some businesses reportedly closing or temporarily reducing capacity, and such impact may spread to other key economic centers 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 greatly exaggerated, Chinese economists said.

Analysts noted that with increasing efforts to deal with the current power shortage caused by extreme weather, coupled with the already intensifying campaign to stabilize the economy, the world’s second largest economy will operate in a reasonable range, in stark contrast to extreme situations, including recession, faced by other major world economies.

Southwest China’s Sichuan province and Chongqing municipality are experiencing the worst heat wave in about 60 years. To ensure residential power supply, Chongqing joined neighboring Sichuan province in cutting off some industrial power supplies from Wednesday to Aug. 24, news outlet jiemian.com reported.

Rainfall in the Yangtze River basin since July has been 40 percent less than the same period last year and the lowest since the same period in 1961, according to the Ministry of Water Resources.

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

Other sectors, such as photovoltaics, electronics and chips, which use Sichuan or Chongqing as major bases, are also affected, although some told the Global Times the overall impact is 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 that specializes in chips, said operations at its Chongqing facility are normal.

Although Chongqing and Sichuan are the main electronics manufacturing regions, they account for a small proportion of the industry’s revenue nationwide and will not have a major impact on the industry chain.

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

The drought also worries provinces such as Guangdong, Zhejiang and Jiangsu, but they are taking measures to cope with the impact.

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

The aerial photo shows technicians from State Grid Zhejiang Electric Power Company checking power transmission lines to ensure the stable operation of local power supply in Zhoushan, east China's Zhejiang Province, 23 October 2020 Photo: Xinhua

The aerial photo shows technicians from State Grid Zhejiang Electric Power Company checking power transmission lines to ensure the stable operation of local power supply in Zhoushan, east China’s Zhejiang Province, 23 October 2020 Photo: Xinhua

growing efforts

Officials have called for increased political support and efforts to secure power supplies and various government agencies, power providers and stakeholders have taken steps to help meet the additional power demand caused by the ongoing heat wave.

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

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

Power provider State Grid also said it is sending electricity from Baoji in northwest China’s Shaanxi province to Deyang in Sichuan, with a daily transmission of 132 million kWh. The Sichuan provincial government is coordinating the supply of coal to ensure power generation.

China’s highest-altitude mega hydropower plant, the Yalong Hydro facility on the Yalong River in Sichuan’s Garze Tibetan Autonomous Prefecture, reportedly completed 17.05 billion kWh of power generation from July 1 to August 15, a 27, 2 percent more than the previous year.

Chinese Vice Premier Han Zheng on Wednesday called for effective measures to ensure the security and supply of power and electricity. Security and supply of energy and power is the basic guarantee for stable economic and social operations, Han said, stressing that power outages should be firmly avoided and key projects should be speeded up.

At a press conference on Tuesday, Jin Xiandong, an official with the National Development and Reform Commission (NDRC), said rising energy demand reflects persistent heat and economic recovery. Meanwhile, thermal coal supply is under pressure due to lack of water supply and insufficient hydroelectric production.

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

Impact ‘exaggerated’

However, CNN reported that China’s growth forecasts are being slashed as heat waves hit the industrial heartland, citing Goldman Sachs, which lowered its forecast for China’s GDP growth this year from 3.3% to 3%.

CNBC reported that China is caught in a devastating heat wave that could have a serious impact on its economy, citing a chief economist at Hang Seng Bank China, who said this year’s power shortage will see China lose about 1 .5 percentage points. of GDP growth.

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

Of course, extreme weather will affect local areas, especially considering that the Sichuan-Chongqing area is an important base for automobile and home appliance manufacturing, which will have an impact on the industry and supply chains, but it is not yet known. power outages have occurred in the more economically developed regions of the Yangtze River Delta, which contribute more to GDP, he said.

He predicted that China’s GDP growth this year will still remain in a reasonable range, even when faced with the dual pressures of drought and epidemic, a forecast echoed by other economists.

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

To stimulate consumption, Premier Li Keqiang said on Friday that China will extend the tax exemption on the purchase of new-energy vehicles until the end of next year and boost the construction of charging layers.

If the government can strike a good balance between the epidemic and economic growth, it is still possible to see growth of about 5 percent, said Zhang Yansheng, a senior researcher at the China Center for International Economic Exchanges.

Tian Yun, former deputy director of the Beijing Economic Operations Association, told the Global Times on Friday that infrastructure and new energy could be important driving forces for GDP growth in the second half of this year.

In a new call to push China’s largest provinces in economic terms to be at the forefront of the national stabilization drive, Premier Li undertook an inspection tour in Shenzhen, Guangdong, on Tuesday and Wednesday, during which he emphasized the pioneering role of the city and the province.

Noting that China’s economy is at a critical stage of stabilization, Li urged economic powers to ensure the sound implementation of a growth-friendly policy package while taking advantage of policies to streamline market entities, smooth logistics and stabilize industrial and supply chains.

In a sign of Chinese market attraction and continuing investor confidence in the Chinese economy, China’s actual use of foreign capital rose 21.5% year-on-year to $123.9bn in the first seven months. this year, with investments from South Korea. , the United States and Japan experience the fastest growth, China’s Ministry of Commerce said on Thursday.

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