Toyota and Foxconn hit as drought leads to record low Yangtze River
Toyota and Apple supplier Foxconn are among the companies that have suspended factory operations in southwest China as the region is plagued by hydropower shortages caused by drought and heat waves.
Sichuan, a province of 84 million that generates most of its electricity from hydropower, announced it would suspend power supplies to factories in a number of cities as it braced for a week of weather forecast to peak more than 40C, according to a government statement.
Toyota said it had suspended operations in the province from Monday to Saturday, in accordance with provincial restrictions. Foxconn, the world’s largest contract electronics manufacturer, has also confirmed that it has closed its factory in Chengdu, which makes Apple Watches, iPads and MacBooks. The impact on production was “not significant so far,” the company added.
Chinese media reported that electric vehicle battery maker and Tesla supplier CATL closed its factory in Sichuan for the same period. CATL did not immediately respond to a request for comment.
“Laptop and iPad or tablet makers, there is a lot in Sichuan and what we heard was [the eastern province of] Jiangsu also faced some limitations,” said Dan Nystedt, vice president at TriOrient Investments, an Asia-based private investment firm.
Sichuan is also an important hub for lithium mining and solar panel production.
The power rationing has led to production shutdowns at about 20 steel mills, while energy-intensive aluminum and zinc smelters have curtailed production, according to data provider Shanghai Metals Market.
The Yangtze River, China’s largest and most important waterway, also reached its lowest level ever recorded for this time of year last week, according to a press release from the Ministry of Water Resources.
The ministry said rainfall in the Yangtze Basin was 40 percent lower than normal since July and that in some areas there had been more than 20 days without significant rainfall.
China Three Gorges Corporation, the operator of the world’s largest power plant, declined to comment on the impact of water shortages on the dam. It said on its website that it would seek policy support to mitigate the negative impact of “the fluctuation of water inflow” on its operations.
The disruptions come at a time when growth in the world’s second-largest economy is slowing. China’s gross domestic product grew just 0.4 percent in the second quarter, as its strict zero-covid policy — which puts in place lockdowns as soon as outbreaks are detected — boosted demand and closed businesses.
Chinese Prime Minister Li Keqiang chaired a meeting with a number of provincial leaders on Wednesday calling on them to take responsibility for the country’s economic recovery at a “critical moment for economic recovery”.
Zhang Lilei, a tea farmer on an island in Lake Tai, one of China’s largest freshwater lakes in Suzhou’s eastern commercial center, said villagers had resorted to buying pumps or carrying water in buckets from rivers and puddles to make their own. to water crops.
“But we can’t pump water to the hill for more than 100 minutes,” Zhang said. “If it doesn’t rain soon, all the tea trees on the hill will die. It will all be gone.”
Additional reporting by Harry Dempsey