Lack of power crisis in China forces Auto companies to shut down factories

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• Aug 21, 2022 | Poonam Nath

China's power shortage compels major corporations to close factories.

Digital Desk: China is currently dealing with several economic difficulties in addition to a severe power outage brought on by an extreme heatwave in the southwest of the country. Due to this, several factories were forced to temporarily close down, which could further damage the network supply chain.

For instance, the municipality of Chongqing is home to numerous factories that assemble computers and cars.

However, the local administration has now mandated a manufacturing halt to conserve energy. The province of Sichuan, which is also a center for manufacturing, has also closed its plants.

According to sources, among others, the decision will affect Foxconn Technology, Toyota Motor Corporation, Volkswagen, and CATL, Tesla's battery supplier. While some areas are experiencing a heatwave, other provinces have just experienced flooding.

At a time when the 69-year-old Chinese President Xi Jinping is expected to extend his term by another five years at the 20th National Congress meeting scheduled for October-November, this will have an even greater influence on the economy.

Although it is expected that Xi will keep his position as president, there are voices of discontent, an analyst with experience in China told India Narrative.

However, he claimed that the Chinese equipment would now be used to generate statistics that would depict a less catastrophic condition.

Every five years, the Communist Party holds its national conference, at which time significant decisions and leadership changes are made. The commencement of President Xi Jinping's unusual third term in office is anticipated to occur at the 20th Party Congress, which will be held in Beijing in the second half of 2022.

As Xi, the nation's most powerful leader in decades prepares to try to break with precedent and grant himself a third five-year term as a leader at a meeting in October or November, the shutdowns "add to the hurdles for the ruling Communist Party," according to the news agency AP.

Local officials have been instructed to address the situation as soon as possible after Xi and his team intervened. However, sources claimed that it was difficult to cure the issue.

The zero COVID policy and Xi's steadfast adherence to it has already attracted attention. According to figures from the National Bureau of Statistics (NBS), the country's urban youth unemployment rate reached 19.9% in July, the highest level since the start of record keeping for this statistic in January 2018.

Not only did China's manufacturing production, as determined by the purchasing managers' index (PMI), fall from 50.2 in June to 49 in July, A score below 50 suggests contraction, whereas a result above 50 shows growth.