Toyota and Foxconn hit as drought drives Yangtze River to record high

Toyota and Apple supplier Foxconn are among companies that have suspended factory operations in southwest China as the region is rocked by hydropower shortages caused by droughts and heatwaves. .

Sichuan, a province of 84 million that generates most of its electricity from hydroelectricity, announced it would suspend power supplies to factories in a number of cities as it was preparing for a week of weather that is expected to reach highs of over 40C, according to a government statement.

Toyota said it has suspended operations in the province from Monday to Saturday, in accordance with provincial restrictions. Foxconn, the world’s largest contract electronics maker, also confirmed the closure of its Chengdu factory, which makes Apple Watches, iPads and MacBooks. The impact on production was “not significant so far”, the company added.

Chinese media reported that CATL, an electric vehicle battery maker and supplier to Tesla, closed its Sichuan plant during the same period. CATL did not immediately respond to a request for comment.

“Laptop and iPad or tablet makers, there are a lot of them in Sichuan and what we heard was [the eastern province of] Jiangsu also faced some restrictions,” said Dan Nystedt, vice president of TriOrient Investments, an Asia-based private investment firm.

Sichuan is also an important hub for lithium mining, as well as for the production of solar panels.

Electricity rationing has led to production stoppages at about 20 steel mills, while energy-intensive aluminum and zinc smelters have cut output, according to data provider Shanghai Metals Market.

The Yangtze River, China’s largest and most important waterway, also hit its lowest level on record 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 has been 40 percent below normal since July and in some areas there have 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 how water shortages were affecting its dam. It said on its website that it would seek political support to mitigate the negative impact of “fluctuating water supply” on its operations.

The outages come as growth slows in the world’s second-largest economy. China’s gross domestic product rose just 0.4% in the second quarter as its strict zero-Covid policy – which institutes lockdowns as soon as outbreaks are discovered – hammered demand and shuttered businesses.

Chinese Premier Li Keqiang on Wednesday chaired a meeting with some provincial leaders calling on them to take responsibility for the country’s economic recovery at a “critical time for economic rebound”.

Zhang Lilei, a tea farmer on an island in Lake Tai, one of China’s largest freshwater lakes in the eastern trading center of Suzhou, said villagers had resorted to buying pumps or carrying water in buckets from rivers and puddles to water their crops.

“But we can’t pump water up the hill more than 100 meters,” Zhang said. “If it doesn’t rain soon, all the tea bushes on the hill will die. Everything will be gone.

Additional reporting by Harry Dempsey

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