China drought leads to factory closures, rolling blackouts

Factories in China’s southwest have shut down and a city imposed rolling blackouts after reservoirs to generate hydropower ran low amid a worsening drought, adding to economic strains at a time when President Xi Jinping is trying to extend his hold on power.

Companies in Sichuan province, including makers of solar panels and cement, closed or reduced production after they were ordered to ration power for up to five days, according to news reports Wednesday. This came after reservoir levels fell and power demand for air conditioning surged in scorching temperatures.

“Leave power for the people,” said an order from the provincial government dated Tuesday.

In Sichuan, which has 94 million people, water levels at hydropower reservoirs are down by as much as half this month, according to the Sichuan Provincial Department of Economics and Information Technology.

The power company in Dazhou, a city in Sichuan with 3.4 million people, imposed 2 ½-hour power cuts this week and expanded that Wednesday to three hours, according to the Shanghai news outlet The Paper. The newspaper Securities Times said office buildings in Chengdu, the provincial capital, were told to shut off air conditioning.

The shutdowns add to challenges for the ruling Communist Party as Xi, the country’s most powerful leader in decades, prepares to try to break with tradition and award himself a third five-year term as leader at a meeting in October or November.

On the heels of COVID closures

Growth in factory output and retail sales weakened in July, setting back China’s economic recovery after Shanghai and other industrial centres were shut down starting in late March to fight COVID-19 virus outbreaks.

The economy grew by just 2.5 per cent year-over-year in the first half of 2022, less than half the official annual goal of 5.5 per cent.

Areas across central and northern China ordered emergency measures to ensure drinking water supplies after summer rain was as little as half of normal levels. The official Xinhua News Agency said fire trucks carried water to two dry villages near Chongqing in the southwest.

Hundreds of thousands of hectares of crops across central and northern China wilted due to lack of water and high temperatures, according to the government. Some areas reported the summer growing season to be a failure.

The weather agency has warned temperatures in some areas could spike to 40 C.

A subsidiary of Guoguang Co. that makes pesticide and fertilizer closed from Monday through at least Saturday, according to a company announcement through the Shenzhen Stock Exchange.

Makers of solar power equipment in Sichuan, including Tongwei Solar and GCL-Poly Energy Holdings, said they received notices to ration power.

Tongwei said the “power cut and production shutdown have not had much impact,” the business news outlet East Money reported.

China faced similar strains last year when Guangdong province in the southeast, one of the world’s most important manufacturing centres, ordered factories to shut down after hydropower reservoirs ran low due to sparse rain.

The government has allocated 280 million yuan ($53.1 million Cdn) for drought relief in Hebei and Shanxi provinces and the Inner Mongolia region in the north and Liaoning province in the northeast, according to Xinhua.