About 84 cities across the country on Wednesday issued the highest level of red alert warnings – meaning temperatures are expected to reach 40 degrees Celsius (104 Fahrenheit) in the next 24 hours – according to the National Weather Service. Shanghai reported 40 degrees Celsius on Sunday for the first time this year. China’s heat wave has pushed electricity demand to extreme levels in many regions as people turn up the air conditioning. On Tuesday, Zhejiang province – a major energy export and manufacturing powerhouse on the east coast – urged its 65 million residents and businesses to conserve energy. “In order to ensure the supply of electricity for residents and companies…we call for joint actions from the whole society to save electricity,” the provincial energy office and the state grid said in a joint statement. Zhejiang’s energy bureau has also cut power to some energy-intensive companies such as polyester producers and textile printing and dyeing companies in the cities of Hangzhou, Shaoxing and Haining, according to analysts from various Chinese brokerages. The latest shortages come just months after China emerged from an energy crisis that caused widespread blackouts in the second half of last year. The blackouts are due to a shortage of coal, which China uses to generate about 60% of its electricity, and rising energy demand. The current heatwave and subsequent power curtailment is yet another challenge for China’s massive manufacturing industry, which is still recovering from months of severe Covid restrictions. China releases GDP data for the April-June quarter on Friday and is expected to show growth falling to around 1% in the second quarter from 4.8% in the first three months of the year.
Concerns about inflation
High temperatures are also hitting China’s crop production, threatening to drive up food inflation. The Central Meteorological Observatory has warned that the high temperature could adversely affect the production of corn, soybeans, wheat and pastures in many northern provinces, including Ningxia, Inner Mongolia and Hebei. Rising food prices in both domestic and global markets have begun to affect the feed and pig industry in recent weeks. Earlier this month, several major feed producers, including New Hope Group, warned customers that they would raise prices for pig, poultry and fish feed due to rising costs of soybean meal, corn and wheat. Most of the price increases started last week. Pork, the staple meat in China, has been hit particularly hard, as soybeans and corn are the main ingredients used in the pig industry. By the week ending July 1, hog prices had risen 46 percent since March, according to the latest data from the National Development and Reform Commission, the country’s top economic planner. The commission said last week it was considering tapping into the country’s strategic pork reserves to curb rapidly rising prices. It also pledged to curb any price gouging behavior by pig farms. According to China’s latest CPI data, the consumer price index rose 2.5 percent from a year earlier, up from 2.1 percent in May and highest in nearly two years. Pork prices, which rose almost 3% in June from May, had added to the upward pressure, the national statistics office said in a statement. — CNN’s Jessie Yeung and Shawn Deng contributed reporting.
