China makes every effort to reduce the effects of heat waves; Despite double pressure, economy ‘will grow in reasonable range’

Water has been poured from a canal in Manshan in eastern China’s Anhui province since August 18, 2022 to ease drought and ensure harvests as Chinese provinces and regions grapple with prolonged heat waves. Photo: VCG

As persistent heat waves continue to affect major hydropower generation and electronics manufacturing bases in southwest China, Chinese authorities and power companies have taken a full, national level effort to ensure electricity supply as well as stabilize economic activity. Coordinated efforts have been made which are already under pressure. COVID-19 outbreak. Although power outages due to heat waves and droughts are affecting some business operations, some companies have reportedly temporarily shut down or reduced capacity, and the impact of this has been on other major economic activities in the East and South. The overall impact on the Chinese economy remains limited, Chinese economists said, and the impact of foreign media outlets on the Chinese economy has been taken seriously.

Analysts noted that the world’s second-largest economy would operate in a reasonable range, with increased efforts to deal with the current power shortage due to extreme weather, along with an already intensified drive to stabilize the economy. Unlike the circumstances, which include recessions faced by other major economies of the world.

Southwest China’s Sichuan Province and Chongqing Municipality are suffering the worst heat wave in nearly 60 years. To ensure residential electricity supply, Chongqing has joined neighboring Sichuan province in suspending some industrial power supplies from Wednesday until August 24, media outlet jiemian.com reported.

According to the Ministry of Water Resources, 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.

Media reported that the power cut would disrupt operations of some major firms in the region, such as Toyota Motor Corp and China’s CATL, the world’s largest battery maker, which had stopped operations at its plant in Sichuan. .

Other sectors, including photovoltaics, electronics and chips, that use Sichuan or Chongqing as important bases are also affected, although some told the Global Times that the overall impact is limited. This latter group includes Hon High Technology, the largest of Apple’s suppliers, and BOE Technology Group, a manufacturer of electronic components.

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

Although Chongqing and Sichuan are the major electronics manufacturing regions, they account for a small portion of the revenue in this sector across the country, and they will not have a major impact on the industry chain.

In 2021, Sichuan’s electronic information industry achieved revenue of 1.46 trillion yuan ($214 billion), ranking first in the central and western region of China. According to official statistics, in the same year, however, the revenue of major businesses in the entire industry reached 14 trillion yuan.

Drought is also a concern for provinces such as Guangdong, Zhejiang and Jiangsu, but they are taking measures to deal with the impact.

China Media Group reported on Tuesday that 3,300 enterprises voluntarily adjusted their working hours to avoid power cuts in Ningbo, east of China’s Zhejiang province.

Aerial photo shows technicians from State Grid Zhejiang Electric Power Company checking power transmission lines to ensure stable operation of local electricity supplies in Zhoushan, eastern China's Zhejiang province, October 23, 2020.  Photo: Xinhua

Aerial photo shows technicians from State Grid Zhejiang Electric Power Company checking power transmission lines to ensure stable operation of local electricity supplies in Zhoushan, eastern China’s Zhejiang province, October 23, 2020. Photo: Xinhua

increasing efforts

Officials have urged strong policy support and efforts to ensure the provision of electricity and various government agencies, electricity providers and sportspersons involved to help meet the additional power demand due to the continuing heat wave. Huh.

According to the State Grid Chongqing Electric Power Company, Chongqing is now drawing energy from six regional and 15 provincial grids. For the first time, power from the Inner Mongolia Autonomous Region and Liaoning Province has been given to the South-Western Municipality.

It is also the first time that two state electric utility companies (State Grid and China Southern Power Grid) have combined their systems to send electricity from the southern provinces to Chongqing.

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

China’s highest-altitude mega hydropower plant – the Yalong Hydro Facilities on the Yalong River in Garze Tibetan Autonomous Prefecture in Sichuan – reportedly completed 17.05 billion kWh of electricity generation from July 1 to August 15, up 27.2 percent from a year earlier. is more.

Chinese Deputy Prime Minister Han Zheng on Wednesday called for effective measures to ensure the safety and supply of energy and electricity. Security and supply of energy and electricity are basic guarantees for stable economic and social operation, Han said, adding that power cuts should be strongly avoided and major projects accelerated.

An official of the National Development and Reform Commission (NDRC), Jin Xiandong, told a news conference on Tuesday that rising electricity demand reflects continued warming and economic recovery. Meanwhile, the supply of thermal coal is under pressure due to lack of water supply and insufficient hydropower generation.

The NDRC said it is guiding related enterprises to accelerate coal production, and the national average daily dispatch of coal has been at a relatively high level of around 12.4 million tonnes since July.

effect ‘overflow’

However, CNN reported that China’s growth forecasts are being downgraded as heat waves hit industrial hearts, citing Goldman Sachs, which downgraded its forecast for China’s GDP growth to 3.3 percent this year. percentage reduced to 3.3 percent.

China is in the grip of a devastating heat wave that could have a severe impact on its economy, CNBC said, citing a chief economist at Hang Seng Bank China, who said that the power shortage this year cost China about 1.5 percent. Points will be lost. of GDP growth.

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

Of course, extreme weather will affect local areas, especially given that the Sichuan-Chongqing region is a major base for automobile and home appliance manufacturing, which will have an impact on industry and supply chains, but power cuts have not yet occurred. . The more economically developed Yangtze River Delta regions, which contribute more to GDP, he said.

He predicted that China’s GDP growth this year would still be at a reasonable range, even if faced with the twin pressures of drought and pandemic, a forecast echoed by other economists.

The government and the people of China have gained a lot of experience in dealing with the pandemic over the past three years. Peking University economist Cao Heping told the Global Times on Friday that the government’s priority now is to increase consumption.

To stimulate consumption, Premier Li Keqiang said on Friday that China would extend the purchase tax exemption for new-energy vehicles until the end of next year, and that it would promote the creation of charging plazas.

Zhang Yansheng, chief research fellow at the China Center for International Economic Exchange, said if the government could achieve a good balance of the epidemic and the economy’s growth, it could still see growth of about 5 percent.

Tian Yun, a former vice president of the Beijing Economic Operation Association, told the Global Times on Friday that infrastructure and new energy could be key driving forces for GDP growth in the second half of this year.

In a new call to prompt China’s largest provinces to stay at the forefront of the national stabilization push, Premier Li held an inspection tour in Shenzhen, Guangdong on Tuesday and Wednesday, during which he toured the city and the city. Emphasis on leading role. province.

Noting that China’s economy is in a critical phase of stabilization, Li called for a package of pro-growth policies, leveraging policies from economic superpowers to activate market institutions, smooth logistics, and stabilize industrial and supply chains. urged to ensure concrete implementation.

China’s real use of foreign capital rose 21.5 percent year-on-year to $123.9 billion in the first seven months of this year, with investments from South Korea in a sign of the attractiveness of the Chinese market and continued investor confidence in the Chinese economy. . China’s commerce ministry said on Thursday that the US and Japan were seeing the fastest growth.

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