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Extreme Weather Poses Risks for Chinese Crops, Power Over Summer

(Bloomberg) -- Another exceptionally hot summer, accompanied by drought, flooding and typhoons, is risking Chinese crop harvests and lifting power demand as climate change creates more extreme weather.

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In the latest developments, more than 5,000 people were evacuated and rice fields were saturated following a dike breach in Hunan province late on Friday. Authorities have issued flooding alerts in Shandong and Sichuan for this week, and warned that several major waterways - including the Yangtze and Yellow Rivers - are at risk of overflowing.

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Temperatures were above-normal in June and will exceed average levels by even more this month, the National Climate Centre said in a briefing late last week. Different parts of the country are being simultaneously hit by floods, droughts and tropical storms, threatening to spur food inflation if output of wheat, soybeans, rice and corn is affected.

China will see more extreme weather events in the coming years due to the impact of climate change, Yuan Jiashuang, deputy director at the climate centre, said at the briefing. The China Meteorological Administration has begun a new round of zoning of agricultural resources, the first time they’ve done this in 40 years, to help the sector adapt, she said.

Eastern, western and central China will see temperatures that are 1C to 2C above average over July, according to the climate centre, compared with 0.7C higher-than-normal across the country last month.

The increased risk of heat waves may reduce output of crops such as cotton and rice, Jia Xiaolong, another deputy director at the climate centre, said at the briefing. Eastern China, meanwhile, is set to experience severe rainfall and flooding this month, raising the risk of secondary disasters like landslides, he said.

The high temperatures are set to boost electricity consumption as people use air conditioners more. The National Energy Administration warned on Thursday about the risks to power infrastructure and production from extreme weather and asked grid operators to ensure safe and reliable supply. However, the high rainfall will push up hydropower generation this year and raise profits of producers including China Yangtze Power Co., according to Bloomberg Intelligence.

China is already grappling with record precipitation, while the southeast is being hit by more typhoons than usual, according to the centre, which is forecasting one or two tropical cyclones to hit the region this month. Major rice-growing areas in the south have been soaked by flooding, while droughts further north have damaged wheat and delayed corn and soybean planting.

On the Wire

China’s central bank didn’t buy any gold for a second month in June, as the precious metal edged lower from a record high.

China’s price data for June will show demand still in the doldrums, according to Bloomberg Economics. Consumer price inflation will probably inch up from May’s very low level.

Chinese scholars are highlighting a period of turbulence in the bilateral relationship with Washington ahead of US presidential elections, with some even skeptical on long-term improvements.

This Week’s Diary

(All times Beijing unless noted.)

Monday, July 8

  • Nothing major scheduled

Tuesday, July 9:

  • China to release June aggregate financing & money supply by July 15

Wednesday, July 10:

  • China inflation data for June, 09:30

  • CCTD’s weekly online briefing on Chinese coal, 15:00

  • Consultation period ends on draft of China’s new rules for carbon trading

Thursday, July 11:

  • Nothing major scheduled

Friday, July 12:

  • China’s 1st batch of June trade data, including steel, iron ore & copper imports; steel, aluminum & rare earth exports; oil, gas & coal imports; oil products imports & exports; soybean, edible oil, rubber and meat & offal imports ~11:00

  • China weekly iron ore port stockpiles

  • Shanghai exchange weekly commodities inventory, ~15:30

  • China’s monthly CASDE crop supply-demand report

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