We are concerned about high temperature and its persistence, mainly because according to the situation in previous years, under the background of continuous high temperature, the electricity load in many places across the country has repeatedly reached record highs, and industrial production and household consumption have been negatively affected.

For example, in order to deal with the power load gap, many places have issued a series of power conservation advocacy and power restriction policies, and are currently promoting the resumption of work and the implementation of infrastructure policies. we believe that power constraints, industry seasonal factors and other factors may reduce industrial efficiency and further affect the slope of the upward curve of Q3 economy.

One of the main ways for the state to implement "power transmission from west to east" and "power transmission from Guizhou to Guangdong" is from the three Gorges Power Grid of the Yangtze River, and then to the East China Power Grid through the Central China Power Grid, so as to alleviate the power pressure in East China.

On the other hand, there is a downward trend in the "export electricity" of Sichuan and Hubei, which we believe may be caused by the following reasons: on the one hand, climate change has caused a decrease in precipitation in some years, and "low water" has a certain impact on power generation; second, superimposing the advantages of land, resources, and environment in the west, infrastructure construction has promoted the development of machinery, transportation, chemical, building materials, coal and other industries in Sichuan and Hubei, and local power consumption has gradually increased.

We expect the power gap to expand this year, mainly because the current policies of resuming work and production and infrastructure construction are advancing, the electricity demand of industrial enterprises is significantly higher than that of the same period in previous years, and the superposition is about to usher in the peak of residential electricity consumption in the second half of the year.

In accordance with the requirements of the "measures for the Management of orderly Power consumption" of the National Development and Reform Commission, on the whole, it ensures the four principles of "ensuring the safe operation of the power grid", "adhering to the combination of industrial policy, energy policy and environmental protection policy", "avoiding the peak before avoiding the peak" and "sub-regional independent control".

By combing the power restriction policies of various provinces and cities, we can see that, on the whole, the "three high and one low" industrial enterprises are more likely to stop production during the summer peak, such as: the iron and steel industry (there is a temporary electricity peak avoidance scheme); the chemical industry (there is a power restriction index); the special industrial production industry (there is a front avoidance scheme for construction units); department store retail (there is a peak avoidance scheme in shopping malls) Leisure and catering industry and commerce (peak avoidance scheme for hotels and restaurants), etc. However, because the principle of "regional self-control" means that the power restriction policy has greater flexibility, it will not be a whole game of chess in accordance with local conditions.

From the observation of the industry, infrastructure is an industry that is obviously affected by high temperature seasonally.The measures for the Management of Heat Prevention and cooling measures issued by the State Administration of work Safety stipulates that when the daily maximum temperature reaches more than 40 ℃, outdoor outdoor operations should be stopped. Affected by high temperature weather, the progress of the project is slow, the market demand continues to be weak, and cement building materials and other industries also usher in the off-season.

The seasonal effect of real estate and car sales is also obvious, mainly because the industry is largely affected by the process of looking at houses and cars. In the hot season, people's willingness to go out to see houses and cars is relatively low. The overall car sales and real estate sales area in July and August showed a certain downward trend, and the absolute value level is at a low level throughout the year.

High temperature can obviously promote the production and marketing of refrigeration equipment, in which the seasonal demand change of refrigeration equipment such as air conditioners and refrigerators is very obvious. According to the production and sales data from 2016 to 2022, the peak of air conditioning production is from March to June every year, and the peak of sales is from April to July every year.

Through the impact of high temperature climate and high-frequency observation of the industry, we believe that the economy may face seasonal challenges in the second half of the year. Although the annual results will not change, it is possible that Q3 will not exceed Q4 expectations.

Focus on the power gap, because we reduce the disturbance to industrial production by increasing power supply, while the impact of high temperature weather on industrial production and consumption choices cannot be changed. In terms of power supply, the national power supply and demand is basically balanced, but the regional power supply structure is out of balance. There is a large power gap in the Yangtze River Delta and Pearl River Delta with developed manufacturing industries, and except for places such as Sichuan and Hubei in the western region, other provinces and cities mainly use thermal power.

According to the energy consumption structure of the US power generation sector, coal is no longer the largest source of coal, replaced by natural gas, nuclear power, hydropower, wind power and solar energy, which actually contributed to the "carbon peak" of the United States to some extent.From this point of view, there is a lot of room for China to develop new energy sources such as hydropower, photovoltaic and wind power.