Save time by listening to our audio articles as you multitaskIn a recent letter, Shanghainese officials urged the heat-struck region to guarantee supplies to feed their production lines. This has led to an outpouring of anger in Sichuan. The letter, which circulated widely on social media, listed the phone numbers of several officials in Shanghai.
In what may have been a gesture of solidarity, Shanghai switched off many of the bright lights of its famous skyline on August 22nd-23rd. But the rupture between the two cities reveals how far the drought is rippling through supply chains. China is in the midst of what is being called the worst heatwave ever recorded. The south-west has also been hit with a devastating drought. Rainfall in Chongqing is down by 60% from seasonal norms.
The combination of heat and drought has increased demand for energy while also greatly reducing hydroelectric generation, on which the region relies. Dams make up about 80% of Sichuan’s power generation and nearly 15% nationwide. Hydroelectric output in Sichuan has halved compared with last year. Local governments have prioritised residential needs, although some homes now lose power for several hours a day.
The power cuts have shut down operations in the region at firms such as Toyota, a Japanese carmaker, and Foxconn, one of Apple’s main suppliers. But the impact is also being felt much further downstream. In Wuhan, about 900km east of Chongqing, low water levels on the Yangzi river have prevented the passage of ocean-bound cargo ships. Many companies based across China are losing access to components usually supplied by manufacturers based in the south-west.
China faced a crippling power crunch last year after the government curbed the use of coal in order to hit climate targets. Since then central planners have worked out some of the bottlenecks in the power supply. And a sluggish economy has also lessened demand. Perhaps the lessons learned last year will stop the crisis in the south-west from spreading nationwide.
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Green Swan 🦢