China’s Manufacturing Hub Raises Flood Alert to Highest Level

Date: Wednesday, June 22, 2022
Source: Bloomberg

China’s manufacturing hub of Guangdong raised its flood warning to the highest level due to the worst rains in decades, spurring more evacuations and threatening further supply chain disruptions in an economy reeling from Covid-related lockdowns.

Guangdong province raised its flood control emergency response to the highest Level late on Tuesday, ordering areas at risk to take “necessary steps” to promptly halt schools, businesses, and traffic to minimize the impact of the torrential downpours and ensure the safety of lives and property, according to a notice from the local emergency management department.

Shaoguan, a major industrial production center in the north of Guangdong that borders Hunan and Jiangxi provinces, told most firms to halt output and suspended public transport after a “severe flood disaster” in the past few days. Average precipitation in the city exceeded previous records, according to the local government.

China Railway Guangzhou Group Co. halted train services for lines passing through Shaoguan. Multiple districts in the adjacent Qingyuan city suspended classes on Wednesday as the rains pushed up water levels in reservoirs to dangerous levels.

Guangdong, along with the southern provinces of Fujian and Guangxi, has been hit by record rains over the past month, forcing millions of people to evacuate from low-lying areas in the Pearl River basin. From May 1 through June 15, the average precipitation in the three areas reached 621 millimeters, the highest in six decades, the official Xinhua News Agency reported.

Floods are not uncommon during the summer, especially in low-lying areas, but they are set to become more extreme and frequent as the planet warms.

Images of the flooding have been startling. State media photos showed people in Shaoguan huddling in schools converted into temporary shelters and hundreds of tents erected on a sports ground. One photo by Xinhua showed dozens of high-rise buildings surrounded by floodwaters in Wuyuan county in Jiangxi province.

Analysts have warned the extreme weather, including floods in southern provinces and droughts in the north, will affect production of grain, vegetables and pigs and push up domestic inflation, according to local media. Frequent heavy storms will continue in southern provinces over the next 10 days, flooding some farmland and hurting rice, corn and vegetables crops, China’s National Meteorological Center warned earlier on Monday. High humidity is also conducive for pest outbreaks.

So far, the worse flooding has been contained to the northern part of Guangdong, minimizing the potential impact on some of the biggest manufacturing companies in the province, which hosts the headquarters of companies like Huawei Technologies Co. and Midea Group Co. Any threat to manufacturing, shipping and logistics operations could deal another blow to an economy which has yet to recover from widespread Covid lockdowns in major cities.

China’s economy is now estimated to expand just 4.3% this year, well below the government’s target of around 5.5%.

 

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