As if recovery from the pandemic shutdowns and inflationary pressures weren’t enough to drive up prices, expect more economic misery as high temperatures in China threaten the impact U.S. supply chain.
“Unimaginable heat in China,” Scott Duncan, a London-based meteorologist who developed the weather forecasting website WXCHARTS, tweeted. “The longevity and intensity of the heatwave is hard to comprehend. Too many heat records to count, both day and night. Beibei hit 45°C for two consecutive and some places not falling below 34°C at night. The heat is ongoing.”
China has been experiencing a record-breaking heatwave since July. The high temperatures have negatively impacted crop growth, threatened livestock, and could harm China's economy, CNBC reported.
Dan Wang, Chief Economist of Hang Seng Bank China, said the heatwave "will affect those big energy-intensive industries” and will have an effect on the economy and even to the global supply chain.
“We already see a slowdown in production in the steel industry, in chemical industry, in fertilizer industry,” Wang said in the CNBC report. “Those are very important things when it comes to construction, to agriculture and also to manufacturing in general."
China's worst heatwave in 60 years led officials in the province of Sichuan to instruct all factories to shut down for almost a week, CNN Business reported. The region has been experiencing power outages, as increased demand for air conditioning has added pressure to the power grid, while a decline in rainfall has led to decreased electricity coming from hydropower plants.
Sichuan is a major hub for semiconductor and solar panel manufacturing, as well as lithium mining, so the factory shutdowns could drive price increases for critical raw materials used in manufacturing, leading to price pressures on Apple, Texas Instruments, and Intel products.
The heatwave's detrimental impact on crops has also exacerbated inflation, according to Fu Linghui, a spokesperson for the National Bureau of Statistics.
"Affected by the continuous high temperature in many places, the price of fresh vegetables rose by 12.9% year-on-year, which was significantly higher than the same period in previous years,” he said earlier this month, CNN reported. “August and September are the key periods for the formation of autumn grain production. [We must] pay close attention to the impact of natural disaster, insects and disease on our country's food production."
Republican Study Committee Chairman Jim Banks (R-IN) introduced the Countering Communist China Act last year and has been joined by dozens of Republican cosponsors, according to the Ripon Advance. The legislation has now been referred to 14 different House committees for consideration. https://riponadvance.com/stories/johnson-gop-colleagues-propose-sweeping-bill-to-counter-chinas-abuses/
The legislation aims, in part, to protect the U.S. supply chain, especially as it relates to medical and national security items, according to the Congressional record. The bill calls for the Secretary of Health and Human Services to identify barriers and regulations that are preventing the domestic manufacturing of pharmaceutical ingredients and medical devices that are currently being imported from other countries and make recommendations on how to switch to manufacturing those items domestically. The bill includes tax incentives for relocating that manufacturing to the U.S.
The Countering Communist China Act has not been put up for a vote in the House.
