Citizens of China run on the street wearing respirators to escape the heat on May 23, 2019. China’s Henan province’s power load reached a new record on Monday. This was mainly driven by demand for air conditioners, as a scorching heat wave spread across the region north of the Yangtze River.
VCG | Visual China Group | Getty Images
China is currently embroiled in a devastating heat wave that could severely impact its economy, according to Hang Seng Bank China’s chief economist.
Dan Wang told CNBC’s “Squawk Box Asia” on Thursday that the heat wave was “very dire”, adding that it could probably last “easily for the next two to three months.” rice field.
China is facing a record heat wave and the Yangtze River region is battling power outages. Extreme temperatures stunt crop growth and threaten livestock.
“It affects those big energy-intensive industries, [a] It’s a knock-on effect across the economy and even into global supply chains,” she said.
“We are already seeing a slowdown in production in the steel, chemical and fertilizer industries, which are very important for construction, agriculture and manufacturing in general,” Wang added.
Most parts of the Yangtze basin have experienced extremely high temperatures since July, according to state media reports.. According to Ministry of Water Resources data, rainfall in the region has decreased by about 45% compared to recent averages.
The report also quoted Liu Weiping, Deputy Minister for Water Resources, saying the reservoirs have replenished 5.3 billion cubic meters of water in the middle and lower reaches of the Yangtze River since August.
The recent heat wave and blackouts are reminiscent of last year’s massive power outages that blanketed many of China’s major manufacturing hubs, including Guangdong, Zhejiang and Jiangsu provinces.
“Last year, a period of power shortage caused about 0.6 percentage points of China’s GDP growth, as we estimated,” Wang said. “We think that number will be significantly higher this year. I would say 1.5 percentage points lower.”
“We are currently giving 4% of GDP growth for the full year. I have to say that growth is probably below that if current conditions continue. [3%],” she added.