China: Extreme heatwave is the next problem for supply chains

(Hier finden Sie die deutsche Version des Beitrags)

The worst heatwave in Chinese history is not only affecting local people, but is likely to put global supply chains under pressure once again. As a result of the extreme temperatures and drought, Chinese authorities say dozens of rivers have dried up, with serious consequences for the power supply. In the particularly hard-hit province of Sichuan, for example, electricity supply depends heavily on hydropower. At the same time, demand for electricity, especially for air conditioning, had skyrocketed in recent weeks. As a result, electricity has already been sanctioned in several provinces; companies in Sichuan have been affected since July. The province is also a particularly important location for the semiconductor industry.

Coal-fired power plants are running at the limit

The heatwave in China has now lasted 70 days, the longest since records began, CNN reports. In the history of the world's climate, "there is nothing even minimally comparable to what is happening in China," weather historian Maximiliano Herrera tells New Scientist. The heat wave combines extreme intensity with extreme duration and affects a huge area. In the central Chinese metropolis of Chongqing, with its 30 million people, a maximum temperature of 45 °C was reached a few days ago, after which it did not drop below 34.9 °C at night. For more than 20 days, the temperature there has not dropped below 30 °C. Meanwhile, pictures of China's dried-up rivers and lakes are going around the world.

To make up for the shortfalls in hydropower, coal-fired power plants have been running at full speed for weeks. In Sichuan, the 67 local coal-fired power plants are currently producing 50 percent more electricity than their planned capacity, state media report. For more than a week, the province has been rationing electricity for its 81 million inhabitants and industry. Normally, 82 percent of the energy comes from hydropower. In the central Chinese province of Hubei, the water level of the Yangtze River has reached its lowest level since records began in 1865.

The extreme weather has already had consequences for agriculture, with tens of thousands of hectares of grain already lost and hundreds of thousands at risk, writes the New Scientist. The Ministry of Agriculture therefore wants to make clouds rain, but it is unclear whether this will actually help. Together with the heat waves and droughts in Europe, North America and Africa, the heat in China could thus exacerbate the global food crisis that started with Russia's war of aggression on Ukraine. However, China may be able to absorb at least some of the losses through its own reserves.

Restriction after restriction for the economy

Meanwhile, to save electricity, air conditioners in many metropolises are being shut down, lights and escalators switched off. The provincial government in Zhejiang introduced an emergency plan in early August to shut down production at companies for one to two days a week. Similar measures were taken in Jiangsu. German companies were also affected. In Shanghai, companies complained of power cuts lasting several hours last week. German companies in Sichuan and Chongqing have already been affected by cutbacks since July, some of them also leading to production stops.

Among German companies, automotive suppliers are particularly affected by the production stoppages, explains the German Chamber of Commerce in China. In a survey published in January 2022, 15 percent of German companies in China had already named the lack of energy availability as "one of their three biggest operational challenges". For China's government, supplying private households and public institutions is a priority. Because of the forced shutdowns, struggling industrial production could suffer further. In any case, the economy is not regaining momentum after the lockdowns in spring. The reasons are not only the ongoing zero-covid restrictions, which also threaten the supply chains of global players like Apple, but also the severe crises in the real estate and banking sectors.

(with material from dpa) / (mho)