Extreme heat and drought affect Chinese economy

By Tobias Schmitz

2 Sep 2022 by baseadmin
Henan province

Low water levels in the Yangtze River

China announced its first national drought emergency on the 19th of August amid the hottest, driest summer since Chinese records began 61 years ago. In mid-August, water in the drainage area of the Yangtze River had dropped to 60% below its average levels for August. Overall, water levels in the main course of the Yangtze had dropped to 50% below the average for the past five years. Chinese officials noted that as yet, water levels had not dropped to levels which would impede navigation of the river, but if drought conditions persisted, traffic along the river would be limited. In China’s central and southern provinces, many cities experienced weeks in which temperatures exceeded 40°C. The heatwave is on course to become the worst in recorded history in terms of intensity, scope and duration.

In Sichuan province, which is highly dependent (80%) on hydropower for its electricity supplies, factories were ordered to shut down for six days in order to save power. In Chengdu, the capital of Sichuan province, several neighbourhoods had to contend with power cuts for more than ten hours a day. The Volkswagen plant in Chengdu was closed for ten days, and production at Toyota and Tesla’s assembly plants was also interrupted. Authorities estimated that some 1 million people in rural areas are due to face water shortages.

The drought has also affected an estimated 2.2 million hectares of agricultural land. China’s State Council announced a US $ 1. 45 billion package of subsidies for rice farmers to compensate for agricultural losses. Prior to this, Henan province, which has 5.7 million hectares under grain production, of which 56% is irrigated, announced an allocation of 130 million yuan to support drought relief and the reduced autumn harvest.