The Economic Effects of Extreme Heat in China

As heat waves sweep across the country, China will suffer the economic effects of extreme heat. Some cities are on high alert for temperatures above 95 degrees Fahrenheit, while many cities across the country are likely to exceed 104 degrees F. This extreme heat will have economic impacts through energy rationing, reduced performance of crops and effects on delivery and other outdoor workers. .

Extreme heat is hitting China, challenging people and businesses to go about their daily business. More than 600 million people have been affected and some cities have reported deaths from heat stroke. Heat challenges not only affect human economic activity, but can also affect infrastructure, such as dams, which will face stress as the heat melts glaciers.

The power grid is already under pressure due to increased demand for air conditioning in homes and offices. Zhejiang province has already asked households and businesses to save energy and has rationed power supply for energy-intensive businesses, including textile producers and printing houses. Electricity consumption reached record levels in Shandong and Henan provinces due to increased use of air conditioning. Restricted energy supply, coupled with targeted emission reductions, will reduce the amount of energy available to electricity-hungry homes and businesses.

China has a recent experience with power shortages. The shortage hit last September due to insufficient electricity supplies to meet demand. Many factories have been forced to reduce their working hours or even close completely to comply with energy restrictions. As a result, almost half of China’s industrial activity was negatively affected, resulting in a decline in economic growth, possibly 1 percent or more. The energy crisis also negatively affected global supply chains, as many companies encountered significant delays in obtaining the goods needed for production and sales, driving up costs for those companies and their end customers.

Extreme heat will also affect crop yields. A to study by McKinsey and Company found that climate change in China, including extreme heat waves, is likely to reduce wheat, corn, and rice crop yields by 10 percent each year. Heat waves affect crop health and productivity, as well as the length of growing seasons and crop maturity patterns. Fear of crop failure in China has already resulted in rising pork prices. Soybean meal, corn and wheat are key feeds for pigs whose growth is threatened by high temperatures. China produces a quarter of the world’s grain, so reduced cultivation capacity in China will result in lower national and global food security.

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Delivery drivers and other outdoor workers have also been affected by the extreme heat. Hot conditions have increased the likelihood of heat stroke in outdoor workers. A study by Luke Parsons, a climate researcher at Duke University, and colleagues found that global heat-related job losses have increased more than 9 percent over the past 40 years. Other to study by Rachel Licker, senior climatologist at the Union of Concerned Scientists, and others examined outdoor workers in the US to show that outdoor worker exposure to extreme heat will triple between 2000 and 2050, which will result in earnings – related economic losses of 3.7 percent .

The heat also reduces overall productivity, not only in strictly outdoor workers but also in office workers, as some workplaces allow temperatures to rise a bit to offset high cooling costs indoors. An Australian study of both indoor and outdoor workers found that extreme heat caused a 1.2% loss in productive earnings per year. In this study, 70 percent of respondents were less productive and 7 percent were absent at least one day a year due to heat.

The frequency and intensity of extreme heat waves are expected to increase in the future as global average temperatures rise. The northeastern and eastern regions of China are likely to be the most shocked, and heat intensity is expected to increase by more than 5 degrees Celsius in high heat and humidity events by the end of the century. However, all regions will experience a temperature rise of more than 2 degrees Celsius, according to scientific modeling led by Huopo Chen, a researcher at the Chinese Academy of Sciences.

Assessing the various sources of economic loss due to extreme heat in China is challenging, as there are many factors to measure at once. The decline in productivity also affects the rest of the world, as China is well integrated into global supply chains. There is one important takeaway from the study of the economic effects of extreme heat: Nations must work hard to slow or stop the progress of climate change, which is responsible for generating extreme heat.

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