The unprecedented heatwave in Shanghai has raised concerns about the possibility of a power crunch and disruption to construction work, hampering the city’s economic recovery from a two-month Covid-19 lockdown. This summer, China’s biggest commercial city recorded at least seven days where the temperature rose above 40 degrees Celsius, the most since meteorological records started in 1872, according to the local meteorological station. Shanghai also logged its hottest day ever on July 13, when the mercury hit 40.9 degrees. Large parts of the country have been affected by a severe drought because of the record-breaking heatwave. The hot weather prompted local authorities to switch off lights along The Bund waterfront and the Lujiazui finance zone, where the Shanghai Stock Exchange and HSBC Tower are located, for two days to conserve power to ensure supplies for industrial and household use.
“The sweltering heat has posed yet another challenge to the local economy after it was walloped by a two-month citywide Covid-19 lockdown,” said Wang Feng, Chairman of Ye Lang Capital, a Shanghai-based finance firm. “Most manufacturing companies have been prepared to operate at reduced capacity because of power shortages and concern for their staff’s health and well-being.” The heatwave has hit the city’s efforts to get its damaged economy back on its feet after the two-month lockdown was lifted on June 1. The lockdown caused Shanghai’s economy to contract by 13.7% in the second quarter, the worst slowdown in more than four decades.
Shanghai has so far avoided power cuts that have affected large parts of the country since July, allowing manufacturers and service providers to maintain smooth operations. But the decision to temporarily turn off the lights along The Bund was a clear sign that the local electricity distributor was under pressure to sustain power supply to the city of 25 million people, said a State Grid official. Shanghai, home to 2.67 million businesses, consumes massive amounts of power, which rocket during the summer when residents and businesses crank up the air-conditioning. Sufficient power supply is also needed to keep key facilities such as Yangshan Port and Pudong International Airport running. Companies like electric carmaker Tesla and China’s biggest chip maker Semiconductor Manufacturing International Corp (SMIC) also need huge amounts of power. Meanwhile, the Shanghai government has ordered a halt to outdoor work on construction sites between 11 am and 3 pm on days when the temperature is above 35 degrees.
A survey by Shanghai-based real estate agency E-house R&D Institute found that the current average vacancy rate of 20 grade A office buildings and shopping malls was 9%, above the “warning line” of 5%. Super Brand Mall in Lujiazui was the worst hit, with a vacancy rate of 34%. “Hundreds of shops in the Tangqiao subdistrict have closed down since June 1 when Shanghai lifted the lockdown because they could not sustain operations,” said Zhang Yixiang, a small restaurant owner in Tangqiao, Pudong. “A big wave of business closures might have eased the power shortage woes,” the South China Morning Post reports.
