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Speaker 1: Let's get now to Bloomberg Asia Energy reported down Mortel,

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Speaker 1: who joins US from Beijing to discuss China's severe drought

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Speaker 1: and power crosses factory shutting down as this extreme heat

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Speaker 1: wave strains energy grids with Situan hottest hit, I mean,

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Speaker 1: this is quite a dire situation down and just really

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Speaker 1: adding to China's economic woes. Tell us what we're seeing

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Speaker 1: and the impact here to these factories being shut down. Yeah, well, Jules,

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Speaker 1: as you know, I lived in Singapore for several years,

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Speaker 1: and Central China is putting Singapore's heat to shame. It's

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Speaker 1: been above above forty degrees for most of the last

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Speaker 1: two months, uh, certainly above thirty five just about every day.

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Speaker 1: The heatwave there has dried up the youngs River, one

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Speaker 1: of the biggest rivers in the world, to the point

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Speaker 1: that riverbanks are exposed for for more than ten meters

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Speaker 1: in a lot of places in Wuhan where we visited.

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Speaker 1: Uh and that's created two big problems for for China's

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Speaker 1: energy system. One is that air conditioning demand has gone

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Speaker 1: through the roof in Sichuan Province, like the daily peak

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Speaker 1: US has jumped by from just a year ago and

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Speaker 1: at the same time, China is the world's biggest hydropower generator.

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Speaker 1: Big damn projects like the Three Gorges produce a lot

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Speaker 1: of energy, and the river is so low that they're

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Speaker 1: producing about fifty less power right now than they were

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Speaker 1: just a little while ago. So those two things are

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Speaker 1: going in and Sichuan has had to shut basically power

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Speaker 1: off to almost all of its industrial users for basically

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Speaker 1: the past ten days to be able to keep lights

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Speaker 1: and air conditioners on at people's homes, and it's starting

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Speaker 1: to spread beyond that too. Uh Shanghai, for example, has

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Speaker 1: shut off the lights for its skyscrapers in the bund area,

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Speaker 1: so you don't see that beautiful skyline right now. Um Juhan,

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Speaker 1: We went to a mall where only half the escalators

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Speaker 1: were working. The air conditioner was kept up at a

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Speaker 1: much higher rate than normal. So there's lots of little

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Speaker 1: conservation efforts hate happening throughout the country. In addition to

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Speaker 1: the really severe cuts in in Sichuan, the country also

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Speaker 1: has the largest fleet of solar panels and wind turbans.

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Speaker 1: I wonder whether or not that has helped has has

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Speaker 1: has that been able to replace some of the laws

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Speaker 1: supply honestly, not really. So Sichuan has a very unique

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Speaker 1: uh power structure in that about eight percent of its

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Speaker 1: generation capacity is these hydro power dams. You know. So

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Speaker 1: sich One is famously the mute, mountainous and beautiful with

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Speaker 1: rivers everywhere, and so they've always been able to rely

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Speaker 1: on hydro power dams. They only have a little bit

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Speaker 1: of wind and solar, and they only have a little

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Speaker 1: bit of cold power plants, so they haven't had much

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Speaker 1: to fall back on once this drought really took hold. Uh.

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Speaker 1: I think if when you look out into the future,

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Speaker 1: China's going to be doing a couple of things to

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Speaker 1: try to uh make sure the situation doesn't happen again.

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Speaker 1: One thing is that they're gonna try to improve the

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Speaker 1: interconnectedness within its power grids within the country so that

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Speaker 1: some of these wind and solar um installations all around

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Speaker 1: the country that you're talking about can getting into Sichuan

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Speaker 1: and relieve the pre sure in the future down. What

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Speaker 1: does this have in terms of an impact to China's growth?

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Speaker 1: I mean, we're already grappling with the COVID zero policy,

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Speaker 1: with the property slowdown. What are economists saying in terms

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Speaker 1: of the power outages impacting GDP targets, it's certainly not

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Speaker 1: going to help. Most economists say that, you know, we're

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Speaker 1: it's basically August fifty have been the really severe power

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Speaker 1: cutoffs in Sichuan, and Sichuan accounts for about five percent

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Speaker 1: of Chinese GDP. So unless the heat wave lasts longer,

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Speaker 1: in the power outages lasts longer, or these ripple on

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Speaker 1: effects in the other provinces get worse than it are

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Speaker 1: than we're seeing right now, they don't think that there

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Speaker 1: will be a noticeable impact on the national GDP. But

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Speaker 1: what's happening is several industries have very key supply chain

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Speaker 1: hubs in Sichuan. Um sich One is a big producer

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Speaker 1: of polysilicon for solar panels, for example, or lithium chemicals

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Speaker 1: for e V batteries, and so we're going to see

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Speaker 1: ripple effects in those industries. UH continuing down this pledge

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Speaker 1: and for the next couple of weeks and maybe even months,

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Speaker 1: with hydro power cuts so much that output is it

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Speaker 1: likely we're just going to see a lot more coal

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Speaker 1: burned in these these days. Yeah. Absolutely. Brand At the

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Speaker 1: beginning of this year, the first half of this year,

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Speaker 1: China actually burned less cold than last year because it

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Speaker 1: was really rainy and hydropower generation surged. It was up

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Speaker 1: about over the first six months, but that it has

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Speaker 1: just completely reversed. We've seen the in August so far

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Speaker 1: coal burning has been up by about fift And you know, frankly,

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Speaker 1: this isn't you know once once these heat waves go

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Speaker 1: away and air conditioning goes down and the power curves

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Speaker 1: end in sich One, this isn't going to be the

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Speaker 1: end of the problem because we're going to spend the

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Speaker 1: rest of this year. These reservoirs aren't going to get

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Speaker 1: repleted right away, and so the hydro power generation is

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Speaker 1: going to be pretty low for a while. And that

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Speaker 1: means China is going to have to go out and

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Speaker 1: import more gas, and import more coal, and mind more

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Speaker 1: coal to power its country. That's going to put in

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Speaker 1: on a collision course with European nations that are out

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Speaker 1: there right now driving up power or driving up prices

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Speaker 1: of coal and gas to make sure that they get

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Speaker 1: heated for the winter. Just finally and quickly down. What

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Speaker 1: does all this mean for for global food supply, because

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Speaker 1: as you say, it's not just happening in China, and

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Speaker 1: we know what's happening in India and affecting rice planning

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Speaker 1: areas too. Yeah, I mean, this is the scary thing

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Speaker 1: is we don't really know yet how bad the impact

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Speaker 1: on agriculture is going to be. We see pictures of

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Speaker 1: crop lands or scorched torch and we're hoping that, you know,

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Speaker 1: the farmers are able to maintain crop yields, but so

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Speaker 1: far that that's going to be the big thing to

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Speaker 1: watch in the coming months is how badly this damages

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Speaker 1: crops and you know, the biggest food consuming country in

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Speaker 1: the world. All right, terrible news. Thank you. Dan as

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Speaker 1: always down at Bertel Bloomberg as Asia Energy reporter with

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Speaker 1: us in Beijing. Fascinating piece by the Bloomberg team. They're

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Speaker 1: about China's historic drought, spawning this power crisis and being

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Speaker 1: a new test for President. She