China’s local governments in several provinces have issued notices, ordering foreign-invested firms to suspend their production due to power outages.
In Chengdu city, Sichuan province, where factories of Apple suppliers Foxconn and a Toyota joint venture firm are located, the blackouts are carried out due to extreme heat and a lack of rainfall.
Extreme heat waves hit parts of China with temperatures as high as 110 ºF (43 ºC). In Sichuan, an official says temperatures have been the highest in 60 years.
High temperatures have caused rising air conditioning demand, overloading the electricity grid.
Chongqing, Zhejiang, and Jiangsu also imposed power restrictions, raising concerns that the move can disrupt global supply chains and China’s distressed economy.
According to Nikkei Asia, in Sichuan, heavily reliant on hydropower, authorities on Sunday, August 14, ordered industrial power users to suspend all production from Monday, August 15, through Saturday, August 20.
The outlet reported that 19 cities in Sichuan are affected by the power cuts. Estimated 16,500 companies, including many global manufacturers in the province, will be hit.
Toyota and Volkswagen said that they suspended production in their plants in Sichuan from Monday until Sunday, in line with authorities’ restrictions timeline. Volkswagen told the Wall Street Journal that some deliveries would be delayed, but they could be made up for short.
Foxconn confirmed that it had ceased production at a plant in the province. The company said that the impact on its production was not significant.
Chinese media reported that China’s Contemporary Amperex Technology (CATL), the world’s largest automotive battery maker and Tesla supplier, closed its big factory in Sichuan.
Sichuan has a population of 84 million people and relies on hydropower for over 80% of its electricity generation in 2021.
According to China’s Ministry of Water Resources, the Yangtze River recorded the lowest level for this time of year, down 40% in July. The river is China’s largest and most important waterway and a crucial source of hydropower, transport, and water for crops.
The scorching weather-related business suspensions due to power outage further worsens China’s economic downturn hit by Covid measures. Economists said that China would not achieve its official growth target of 5.5% for the year.