• News
    • Stocks
    • Banks and Finance
    • Companies
    • Crypto
    • Forex
  • Videos
  • Articles
    • Forex CRM
    • Crypto Payments
    • Trading
    • Crypto Exchange Business
    • Forex Business
    • Fintech
    • Liquidity
    • FinTech Awards
  • Liquidity Providers List
  • Crypto Payment Providers

Dark Theme

Here’s Why China’s Thirst for Freshwater May Be Bad News For Global Economy

Sep 23, 2022

Here’s Why China’s Thirst for Freshwater May Be Bad News For Global Economy

China is in the grip of a severe water scarcity issue, aggravated by an unprecedented heat wave. The drought has proven disastrous for China's industry.

Global investors must also pay heed. Water is essential for power generation, industry, agriculture, and manufacturing, so water scarcity is limiting agricultural production in China and exacerbating a severe domestic energy crisis that mirrors Europe's, affecting virtually every economic sector, particularly manufacturing.

Few industries are immune to supply-chain shocks emerging from China, given that the rest of the world still imports around $3.36 trillion of Chinese economic output each year.

As this combined water and energy crisis has emerged in recent months, the Chinese Communist Party has prioritized water and power for homes above industry, almost ensuring further — and significant — cuts in industrial production. These supply shocks will echo across global supply networks and financial markets, with scary and unpredictable global economic effects.

Despite the water problem and Beijing and Washington's shared goal to lessen economic reliance, China's grip on vital energy supply chains is likely to grow. China's share of the worldwide polysilicon market — a critical component of photovoltaic solar panels — has just reached 80% and is expected to rise further.

The supply chain for lithium-ion batteries, graphite, nickel, and the majority of rare-earth materials used in renewable energy, electronics, and defense manufacture is dominated by China. Since January 2021, polysilicon market prices have nearly tripled, while lithium metal prices have nearly quintupled, illustrating how little slack there is in the market, even before the recent escalation of the Chinese water issue. As Covid-related and other market constraints eased in spring 2022, lithium battery pack prices moderated — but market deliveries more than quadrupled year on year, leaving supply tight and vulnerable to disruption.

The drought and heat wave have probably been exacerbated by climate change. Ironically, this poses a challenge to some of the well-capitalized companies that are favorites of environmental, social, and governance investors and the sustainability crowd. Apple had 380 suppliers in mainland China in 2019, accounting for 46% of its overall supply chain. The corporation has recently gone to tremendous pains to lessen its reliance on China for suppliers.

However, because "the great majority of Apple products" are still produced in China, Covid-related supply-chain concerns in China have created severe production interruptions, showing persistent susceptibility. Tesla, the poster child for the clean-energy economy, inked long-term supply agreements with two Chinese firms in July. This has the impact of further concentrating Tesla's China supply chain for its Shanghai "gigafactory," as Tesla refers to its facility, increasing its sensitivity to China's drought. Tesla's facilities have high water requirements. The inauguration of Tesla's Berlin gigafactory was delayed due to a lack of available water.

Indeed, China's severe water scarcity is already impacting its supply-chain resilience, with industrial customers fearing catastrophic power outages in both 2021 and 2022. This puts China's economy in jeopardy, forcing the CCP to choose between sustained economic expansion and the depletion of water supplies. As a result, the underlying premise that has fueled most of the global economy for decades — that China can continue to manufacture low-cost goods — is now more doubtful than ever. Capital markets will go through a hard period of adjustment as the new reality is priced in.

Beijing does have choices for minimizing water usage or increasing supply, but all come with significant political consequences for the CCP. These include pressuring Chinese consumers to adjust their eating habits, such as eating less meat, drastically boosting the price of water for farmers and industry, and protecting water supplies from rivers that pass into neighboring nations. Everything would be problematic.

Beijing is making use of atmospheric manipulations. Cloud seeding techniques increase rainfall but also likely intensify severe weather patterns. Beijing has historically relied on water transfers from wetter to drier areas. However, indicators of severe water stress in previously considered water-rich places, such as the Pearl River Delta, warn that these transfers may soon become unfeasible. Large-scale desalination is also unfeasible due to a large amount of power required and the absence of distribution networks to transfer water from the coast to China's interior.

This puts Chinese policymakers in a tough position. However, it may make things easier for investors: China's economic forecast is significantly more volatile. Buyers should take caution.

Subscribe Our Newsletter

Stock Market News Live Updates: Stock Futures Open Lower After S&P 500 Posts Worst Month Since March 2020
Stock Market News Live Updates: Stock Futures Open Lower After S&P 500 Posts Worst Month Since March 2020

Futures on Wall Street's major indexes fell just below the break-even point in post-market trade on Monday, after equities rose previously in the session to end an extremely turbulent January in positive.

Stocks
Stock Market News Live Updates: Stocks Stage Massive Comeback Despite Russia Invasion Of Ukraine
Stock Market News Live Updates: Stocks Stage Massive Comeback Despite Russia Invasion Of Ukraine

"Globally, financial markets have gone into a risk-off mode with safe-haven for US Treasury bonds, the dollar, and gold," Comerica Wealth Management Chief Investment Officer John Lynch said.

Stocks
Alexander

How to Spot Cryptocurrency Scams
The cryptocurrency world is still relatively new and uncharted territory. Many of the concepts at play in this new economy can be complex and difficult to understand. This can make it challenging for those who are new to the space to get a grasp on how everything works.

discover
5 Top-Tier Breakthrough Trading, Crypto and Fintech Industries Software Solutions in 2022

Constantine

5 Top-Tier Breakthrough Trading, Crypto and Fintech Industries Software Solutions in 2022

At the intersection of finance and technology, FinTech is an expansive industry that continues to grow at a rapid pace. This market features innovative approaches to goods and services offered by the conventional financial sector combined with technological advances from tech companies or new entrants.

Crypto Exchange Business

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries b2broker

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Tamta

    Crypto Trading For Beginners

    https://liquidity-provider.com/app/uploads/2023/03/cover-8-800x540.jpg

    Tamta

    How To Make Money With Cryptocurrency

    https://liquidity-provider.com/app/uploads/2023/03/cover-7-800x540.jpg

    Tamta

    What Is A Candlestick Chart?

    https://liquidity-provider.com/app/uploads/2023/03/cover-6-300x203.jpg

    Constantine

    White Label Forex Software — Ultimate Guide on How to Choose The Best Industry Solution

    https://liquidity-provider.com/app/uploads/2023/03/cover-3-300x203.jpg

    Tamta

    Forex Trading: A Beginner’s Guide

    https://liquidity-provider.com/app/uploads/2023/03/cover-2-300x203.jpg

    Tamta

    How to Create a Cryptocurrency

    https://liquidity-provider.com/app/uploads/2023/03/cover-1-1-300x203.jpg

    Tamta

    Top Ten Richest People In The World, 2023

    https://liquidity-provider.com/app/uploads/2023/03/cover-4-1-300x203.jpg

    Constantine

    What’s at Stake? Here’s How to Avoid Scam Tokens

    https://liquidity-provider.com/app/uploads/2023/03/cover-5-300x203.jpg

    Constantine

    Investing in Currencies That Are More Valuable Than the American Dollar

    https://liquidity-provider.com/app/uploads/2023/02/cover-2-300x203.jpg

    Alexander

    5 Best Forex CRM Solutions for 2023

    https://liquidity-provider.com/app/uploads/2023/02/cover-300x203.jpg

    Alexander

    Full Bitcoin Price History: From 2009 to 2022

    https://liquidity-provider.com/app/uploads/2023/01/cover-11-300x203.png

    Constantine

    Top 5 Most Reliable KYC Technology Providers

    https://liquidity-provider.com/app/uploads/2023/01/cover-10-300x203.png

    Alexander

    The Best Crypto Wallets of 2022: Top 5 Picks

    https://liquidity-provider.com/app/uploads/2023/01/cover-2-300x203.png

    Alexander

    Top 5 Most Reliable Forex Brokers of 2022

    https://liquidity-provider.com/app/uploads/2023/01/cover-1-300x203.png

    Constantine

    5 Top-Tier Breakthrough Trading, Crypto and Fintech Industries Software Solutions in 2022

    https://liquidity-provider.com/app/uploads/2023/01/cover-300x203.png

    Constantine

    5 Most Successful FinTech Industry Startups in 2022

    https://liquidity-provider.com/app/uploads/2022/12/cover-300x203.png

    Constantine

    Top 7 Liquidity Providers of 2022

    https://liquidity-provider.com/app/uploads/2022/12/liquidity-provider-3-300x203.png

    Alexander

    Top 5 Crypto Exchanges of 2022

    https://liquidity-provider.com/app/uploads/2022/12/liquidity-provider-1-300x203.png

    Constantine

    Top 5 Most Distinguished White Label Solutions in 2022

    https://liquidity-provider.com/app/uploads/2022/12/liquidity-provider-2-300x203.png

    Constantine

    What is Crypto Leverage Trading And How Does It Work?

    https://liquidity-provider.com/app/uploads/2022/12/oblozhka-5-300x203.png

    Constantine

    Top 5 Most Prospective Tokens in the Metaverse.

    https://liquidity-provider.com/app/uploads/2022/12/cover-7-300x203.png

    Constantine

    How to Mine Bitcoins? – Beginners Guide

    https://liquidity-provider.com/app/uploads/2022/11/cover-5-300x203.png

    Oliver

    Blockchain for Business. Pros & Cons

    https://liquidity-provider.com/app/uploads/2022/11/oblozhka-1-300x203.png

    Constantine

    The Future of Stablecoins and Central Bank Digital Currencies (CBDCs)

    https://liquidity-provider.com/app/uploads/2022/11/cover-3-300x203.png
    • News
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
    • Articles
      • Forex CRM
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
    [email protected]

    © 2023 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy