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China Faces Droughts and Power Shortages…Again
Policy Loans to Ensure the Completion of Off-plan Homes
Asymmetric Rate Cuts to Boost Consumer Credit
Huawei to Launch New Phones on September 6
Bank Asset Quality Unexpectedly Improved in First Half
China Faces Droughts and Power Shortages…Again
Extreme temperatures and droughts are causing power shortages and production problems in parts of China, including Sichuan. The province’s power system is experiencing exceptionally high loads while facing a 50% reduction in hydropower supply. Since last week, the Sichuan government ordered a full production shutdown to ensure the power grid safety and the electricity supply to homes. Source: The Paper (澎湃新闻)
Qi’s take: A similar situation last year caused brownouts in China, yet it did not have much impact on industrial production given the strong economy. This year we aren’t so lucky. The economic recovery is already so fragile…
Sichuan is the sixth largest province in China ranked by GDP. It is equivalent to a Turkey in terms of the GDP (USD 786 billion in 2021) and population (91 million in 2022). Sichuan is also home to a number of industrial leaders like Tongwei (600438.SH), Tianqi Lithium (002466.SZ), Pangang Steel (000629.SZ) and Dongfang Electric (600875.SH) etc.
The supply chain impact goes beyond Sichuan, since this is also a manufacturing hub for auto parts. The Shanghai government reportedly wrote to Sichuan recently, petition Sichuan to ensure the flow of supplies to Shanghai Auto (600104.SH) and Tesla (TSLA).
Policy Loans to Ensure the Completion of Off-plan Homes
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