Heat wave in China threatens power shortages and rising pork prices

Dozens of cities have experienced record high temperatures at a time when the economy is still trying to recover from heavy Covid-related restrictions. A heat wave also comes as consumer inflation hits a 23-month high, mostly due to higher food prices.

On Wednesday, 84 cities across the country issued their highest level of red alerts, which means temperatures are expected to top 40 degrees Celsius (104 Fahrenheit) in the next 24 hours, according to the National Weather Administration. Shanghai reported 40 degrees Celsius for the first time this year on Sunday.

China The heatwave has pushed demand for electricity to extreme levels in many regions as people turn on air conditioners.

On Tuesday, Zhejiang Province is a major export and manufacturing center. on the east coast – 65 million inhabitants called him and enterprises to save energy.

“In order to provide electricity to residents and businesses … we call on the entire community to take joint action to save electricity,” the provincial power department and the State Grid said in a joint statement.

Zhejiang’s power bureau has also rationed power for some energy-intensive firms such as polyester manufacturers and textile printing and dyeing companies in the cities of Hangzhou, Shaoxing and Haining, analysts at several Chinese brokerage firms said.

The latest deficit came just months after China emerged from an energy crisis that caused massive power outages in the second half of last year. The blackouts were blamed on a shortage of coal, which China uses to generate about 60% of its electricity, as well as a sharp increase in electricity demand.
The current heat wave, and the resulting power rationing, is another challenge for China’s large manufacturing industry, which is still recovering from months of strict Covid restrictions.
On Friday, China releases GDP data for the April-June quarter, and growth is expected to ease to about 1% in the second quarter from 4.8% in the first three months of the year.

Inflation worries

High temperatures are also hitting China’s crop production, threatening to fuel food inflation.

The Central Meteorological Observatory has warned that high temperatures could negatively impact corn, soybean, wheat and pasture production in many northern provinces such as Ningxia, Inner Mongolia and Hebei.

Residents spend time in a bomb shelter escaping the summer heat amid a heatwave warning in Nanjing, Jiangsu province, China, July 12, 2022.
In recent weeks, rising food prices in both the domestic and global markets have begun to affect the feed and pig industries.

Earlier this month, a number of major feed manufacturers, including the New Hope Group, warned customers that they would raise prices for pig, poultry and fish feed due to rising prices for soybean meal, corn and wheat. Most of the price increases happened last week.

Pork, a staple food in China, has been particularly hard hit as soybeans and corn are the main ingredients used in pig farming.

By the week ending July 1, hog prices had risen 46%. March, according to the latest figures from the National Development and Reform Commission, the country’s top economic planner.

Commission said Last week, he considered tapping into the country’s strategic pork stocks to curb the rapid rise in prices. He also pledged to stop any price gouging by pig farms.
According to the latest CPI data from China, The consumer price index increased 2.5% year-over-year, up from 2.1% in May and the highest reading in nearly two years. Pork prices, which rose nearly 3% in June from May, added to upward pressure, the National Bureau of Statistics said in a statement. statement.

– Jessie Yeung and Sean Deng of CNN contributed to the story.

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