A heat wave in China has prompted a key industrial area to urge firms and residents to use less energy, while crop failure fears are driving up hog prices.
Dozens of cities have been suffering record-high temperatures at a time when the economy is still recovering from the devastating Covid-related lockdowns. The heatwave comes as consumer inflation reaches a 23-month high, primarily due to increased food costs.
According to the National Meteorological Administration, as many as 84 cities throughout the country issued their highest-level red alert warnings on Wednesday, indicating that temperatures are projected to rise beyond 40 degrees Celsius (104 degrees Fahrenheit) in the next 24 hours. For the first time this year, Shanghai recorded temperatures of 40 degrees Celsius on Sunday.
As people turn up the air conditioner, China’s heat wave has driven power consumption to extraordinary levels in several locations. Zhejiang province, a key export and manufacturing powerhouse on China’s east coast, asked its 65 million inhabitants and enterprises to save energy on Tuesday.
“To secure electricity supply for households and businesses…we ask for cooperative activities by the whole society to save electricity,” the province’s energy bureau and State Grid said in a joint statement.
According to experts from numerous Chinese brokerage firms, Zhejiang’s energy bureau has also rationed power supplies for several energy-intensive sectors, such as polyester makers and textile printing and dying enterprises in the cities of Hangzhou, Shaoxing, and Haining. The current shortages occur only months after China recovered from an energy crisis that resulted in widespread power outages in the second half of last year. The blackouts were blamed on a paucity of coal, which China uses to generate over 60% of its electricity, as well as an increase in power demand.
The current heatwave and consequent power outages provide a new challenge for China’s enormous industrial sector, which is still recuperating from months of severe Covid lockdowns. China releases GDP figures for the April-June quarter on Friday, with growth likely to fall to about 1% in the second quarter from 4.8 percent in the first three months of the year.
High temperatures are also affecting agricultural productivity in China, threatening to drive up food inflation. The Central Meteorological Observatory has warned that high temperatures might harm maize, soybean, wheat, and pasture output in numerous northern regions, including Ningxia, Inner Mongolia, and Hebei.
In recent weeks, rising food costs in both domestic and worldwide markets have begun to affect the feed business and pig farming. Earlier this month, a number of large feed companies, including New Hope Group, warned customers that prices for pig, poultry, and fish feeds will rise due to increased costs for soybean meal, corn, and wheat. The majority of the price increases went into effect last week. Pork, China’s staple meat, has been particularly hard hit, as soybean and maize are the primary commodities utilized in the pig business. According to the most current CPI statistics from China, the consumer price index grew 2.5 percent year on year, up from 2.1 percent in May and the highest level in over two years. Pork prices jumped over 3% from May to June, adding to the rising pressure, according to the national office of statistics.