China’s power cuts put spotlight on manufacturing risk in hydropower-reliant southwest
- Manufacturing hubs along the Yangtze River are restricting power consumption in multiple industries to accommodate surging electricity demand
- In the future, Chinese manufacturers may channel future investment towards cooler regions that are less dependent on hydropower, experts say
Disruptions to electricity supply in southwestern China could see manufacturers invest in cooler and less hydropower-dependent provinces in the future, but this summer’s heatwave is unlikely to make them relocate outright, analysts said.
Since June, temperatures of more than 40 degrees Celsius (104 Fahrenheit) have smothered parts of China, from Sichuan in the west to Shanghai in the east, causing the country’s most severe heatwave since 1961.
If disruptions become more regular, manufacturers may channel future investment for factories towards cooler and more coal-reliant coastal regions, despite higher operating costs and the central government’s long-term goal of stimulating western provincial economies, experts said.
At this moment locally they don’t have many options because Sichuan has such a concentration of hydropower
“At this moment locally they don’t have many options because Sichuan has such a concentration of hydropower,” said Ma Jun, founding director of the Beijing-based Institute of Public & Environmental Affairs.
“So mid to long term they have to think about other scenarios. They don’t want to put all their eggs in one basket.”
