Chinese Factories Ration Electricity As Heatwave Disrupts Hydropower Generation

China’s worst heatwave in decades is curbing hydropower generation in one of the country’s most populous provinces. Local authorities requested some factories in southwestern China to halt production to conserve electricity, adding to the financial pressures of an already rapidly slowing economy. 

Sichuan province has more than 80 million inhabitants and is home to a major manufacturing hub. The Washington Post said some factories had suspended production on request by the government due to high temperatures and drought, leading to declining water flows through local hydropower reservoirs. 

Jin Xiandong, a spokesman for the National Development and Reform Commission, said on Tuesday that China has to increase coal-fired power output because of waning hydropower output. 

China’s inland Sichuan province is a major manufacturing hub that produces consumer goods from electronics, furniture, and food. Also, it’s home to the world’s largest crystalline silicon solar cell producer.

China Securities Journal said Foxconn’s plant in Sichuan that produces Apple products, such as iPads and Macs, wouldn’t be significantly impacted by power rationings. 

The province is highly dependent on hydropower, and high temperatures that could last through the end of this month might indicate more power restrictions for manufacturing plants. 

Fu Linghui, China’s National Bureau of Statistics spokesman, said the heatwave has sparked “adverse effects on economic operations,” adding that the economic recovery “has slowed down marginally.” 

On Sunday, we noted that China’s central bank unexpectedly cut its key interest rates in a feeble attempt to prop up the failing economy weighed by Covid lockdowns, property downturn, and a crippling heatwave. The cut comes after July’s economic data was awful, pointing to an economic slowdown gaining momentum. 

Further power cuts in Sichuan will result in more production suspension and dampen the country’s souring economic outlook.