China Power Crisis: Chongqing municipal government ordered factories to halt operations

As per sources, a power crisis brought on by the heat wave is affecting most of southern China, forcing the closure of companies, and getting worse by the time. The Chongqing municipal government ordered factories, including those controlled by Japanese companies, to halt operations through August 24 to preserve energy as demand increases due to the […]

As per sources, a power crisis brought on by the heat wave is affecting most of southern China, forcing the closure of companies, and getting worse by the time. The Chongqing municipal government ordered factories, including those controlled by Japanese companies, to halt operations through August 24 to preserve energy as demand increases due to the high heat.

Chongqing is following its neighbor Sichuan Province, which declared earlier this week that some of the biggest international corporations in the world, including Toyota Motor Corp. and Contemporary Amperex Technology Co., have closed due to declining hydropower generation.

The heatwave, according to Moody’s Vice President and Senior Credit Officer Boris Kan, will only increase China’s reliance on coal-fired energy.

Power demand has increased in Chongqing, particularly in the Liangjiang region, as a result of an increase in air conditioner usage brought on by the excessive heat. Automobile and computer manufacturing plants are concentrated in Chongqing, and their power-saving shutdowns could affect worldwide supply networks.

Among the businesses in Chongqing are the state-owned Chongqing Changan Automobile, Ford Motor of the United States, BYD Auto, and Taiwanese electronics producers.
And on Thursday, Chinese President Xi Jinping addressed the urgent situation while a power crisis festers in the southwest of the country. He urged the local government to address the severe drought that is endangering electrical supplies in some provinces and could affect economic growth.

President Xi also stated that China would open up its economy despite the heat wave and factory closures, even if globalization has seen an increase in protectionism in some regions of the world.

Good luck with the reopening; the country’s central bank had to abruptly lower its key interest rates earlier this week due to the worrisome July economic figures. Add a power outage and industrial closures to China’s already bleak economic outlook (caused by zero-Covid policies and a failing real estate market), and the country’s recession seems to be getting worse.

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