Speaker 1: Let's get now to Bloomberg Asia Energy reported down Mortel,
Speaker 1: who joins US from Beijing to discuss China's severe drought
Speaker 1: and power crosses factory shutting down as this extreme heat
Speaker 1: wave strains energy grids with Situan hottest hit, I mean,
Speaker 1: this is quite a dire situation down and just really
Speaker 1: adding to China's economic woes. Tell us what we're seeing
Speaker 1: and the impact here to these factories being shut down. Yeah, well, Jules,
Speaker 1: as you know, I lived in Singapore for several years,
Speaker 1: and Central China is putting Singapore's heat to shame. It's
Speaker 1: been above above forty degrees for most of the last
Speaker 1: two months, uh, certainly above thirty five just about every day.
Speaker 1: The heatwave there has dried up the youngs River, one
Speaker 1: of the biggest rivers in the world, to the point
Speaker 1: that riverbanks are exposed for for more than ten meters
Speaker 1: in a lot of places in Wuhan where we visited.
Speaker 1: Uh and that's created two big problems for for China's
Speaker 1: energy system. One is that air conditioning demand has gone
Speaker 1: through the roof in Sichuan Province, like the daily peak
Speaker 1: US has jumped by from just a year ago and
Speaker 1: at the same time, China is the world's biggest hydropower generator.
Speaker 1: Big damn projects like the Three Gorges produce a lot
Speaker 1: of energy, and the river is so low that they're
Speaker 1: producing about fifty less power right now than they were
Speaker 1: just a little while ago. So those two things are
Speaker 1: going in and Sichuan has had to shut basically power
Speaker 1: off to almost all of its industrial users for basically
Speaker 1: the past ten days to be able to keep lights
Speaker 1: and air conditioners on at people's homes, and it's starting
Speaker 1: to spread beyond that too. Uh Shanghai, for example, has
Speaker 1: shut off the lights for its skyscrapers in the bund area,
Speaker 1: so you don't see that beautiful skyline right now. Um Juhan,
Speaker 1: We went to a mall where only half the escalators
Speaker 1: were working. The air conditioner was kept up at a
Speaker 1: much higher rate than normal. So there's lots of little
Speaker 1: conservation efforts hate happening throughout the country. In addition to
Speaker 1: the really severe cuts in in Sichuan, the country also
Speaker 1: has the largest fleet of solar panels and wind turbans.
Speaker 1: I wonder whether or not that has helped has has
Speaker 1: has that been able to replace some of the laws
Speaker 1: supply honestly, not really. So Sichuan has a very unique
Speaker 1: uh power structure in that about eight percent of its
Speaker 1: generation capacity is these hydro power dams. You know. So
Speaker 1: sich One is famously the mute, mountainous and beautiful with
Speaker 1: rivers everywhere, and so they've always been able to rely
Speaker 1: on hydro power dams. They only have a little bit
Speaker 1: of wind and solar, and they only have a little
Speaker 1: bit of cold power plants, so they haven't had much
Speaker 1: to fall back on once this drought really took hold. Uh.
Speaker 1: I think if when you look out into the future,
Speaker 1: China's going to be doing a couple of things to
Speaker 1: try to uh make sure the situation doesn't happen again.
Speaker 1: One thing is that they're gonna try to improve the
Speaker 1: interconnectedness within its power grids within the country so that
Speaker 1: some of these wind and solar um installations all around
Speaker 1: the country that you're talking about can getting into Sichuan
Speaker 1: and relieve the pre sure in the future down. What
Speaker 1: does this have in terms of an impact to China's growth?
Speaker 1: I mean, we're already grappling with the COVID zero policy,
Speaker 1: with the property slowdown. What are economists saying in terms
Speaker 1: of the power outages impacting GDP targets, it's certainly not
Speaker 1: going to help. Most economists say that, you know, we're
Speaker 1: it's basically August fifty have been the really severe power
Speaker 1: cutoffs in Sichuan, and Sichuan accounts for about five percent
Speaker 1: of Chinese GDP. So unless the heat wave lasts longer,
Speaker 1: in the power outages lasts longer, or these ripple on
Speaker 1: effects in the other provinces get worse than it are
Speaker 1: than we're seeing right now, they don't think that there
Speaker 1: will be a noticeable impact on the national GDP. But
Speaker 1: what's happening is several industries have very key supply chain
Speaker 1: hubs in Sichuan. Um sich One is a big producer
Speaker 1: of polysilicon for solar panels, for example, or lithium chemicals
Speaker 1: for e V batteries, and so we're going to see
Speaker 1: ripple effects in those industries. UH continuing down this pledge
Speaker 1: and for the next couple of weeks and maybe even months,
Speaker 1: with hydro power cuts so much that output is it
Speaker 1: likely we're just going to see a lot more coal
Speaker 1: burned in these these days. Yeah. Absolutely. Brand At the
Speaker 1: beginning of this year, the first half of this year,
Speaker 1: China actually burned less cold than last year because it
Speaker 1: was really rainy and hydropower generation surged. It was up
Speaker 1: about over the first six months, but that it has
Speaker 1: just completely reversed. We've seen the in August so far
Speaker 1: coal burning has been up by about fift And you know, frankly,
Speaker 1: this isn't you know once once these heat waves go
Speaker 1: away and air conditioning goes down and the power curves
Speaker 1: end in sich One, this isn't going to be the
Speaker 1: end of the problem because we're going to spend the
Speaker 1: rest of this year. These reservoirs aren't going to get
Speaker 1: repleted right away, and so the hydro power generation is
Speaker 1: going to be pretty low for a while. And that
Speaker 1: means China is going to have to go out and
Speaker 1: import more gas, and import more coal, and mind more
Speaker 1: coal to power its country. That's going to put in
Speaker 1: on a collision course with European nations that are out
Speaker 1: there right now driving up power or driving up prices
Speaker 1: of coal and gas to make sure that they get
Speaker 1: heated for the winter. Just finally and quickly down. What
Speaker 1: does all this mean for for global food supply, because
Speaker 1: as you say, it's not just happening in China, and
Speaker 1: we know what's happening in India and affecting rice planning
Speaker 1: areas too. Yeah, I mean, this is the scary thing
Speaker 1: is we don't really know yet how bad the impact
Speaker 1: on agriculture is going to be. We see pictures of
Speaker 1: crop lands or scorched torch and we're hoping that, you know,
Speaker 1: the farmers are able to maintain crop yields, but so
Speaker 1: far that that's going to be the big thing to
Speaker 1: watch in the coming months is how badly this damages
Speaker 1: crops and you know, the biggest food consuming country in
Speaker 1: the world. All right, terrible news. Thank you. Dan as
Speaker 1: always down at Bertel Bloomberg as Asia Energy reporter with
Speaker 1: us in Beijing. Fascinating piece by the Bloomberg team. They're
Speaker 1: about China's historic drought, spawning this power crisis and being
Speaker 1: a new test for President. She