According to the Chief Economist of Hang Seng Bank China, China is currently in the grip of a devastating heatwave, which could have a serious impact on its economy.
China is facing record-breaking heatwaves and power shortages in the Yangtze River region. Extreme temperatures have inhibited crop growth and put livestock at risk.
She said, “It will affect those large energy-intensive industries and will have an impact on the entire economy and even the global supply chain”.
“We are already seeing a slowdown in production in the steel industry, chemical industry, and fertilizer industry. Those are very important things when it comes to construction, agriculture, and manufacturing in general,” Wang said.
According to a state media report, most areas of the Yangtze River basin have seen extremely high temperatures since July. Based on data from the Ministry of Water Resources, the rainfall in the region has fallen by about 45% compared to the average in recent years.
The report also cited Liu Weiping, vice-president of water resources, as saying on Wednesday that reservoirs have replenished 5.3 billion cubic meters of water in the middle and lower reaches of the Yangtze River since August.
The latest heatwaves and power outages were reminiscent of last year’s major blackout, which covered many of China’s major manufacturing hubs such as Guangdong, Zhejiang, and Jiangsu.
“Last year, as we estimated, a period of power shortage gave China about 0.6% of GDP growth,” Wang said. “This year we think that number will be much higher… I would say 1.5% points lower.”
“Right now, we are giving 4% of GDP growth for the full year. If the current situation continues, I would say that the growth rate is probably below [3%],” she said.