China drought impact widens, reaching Shanghai

China's worst drought in a half-century is deepening, with the parched conditions that have left millions in the Yangtze River region without enough drinking water pushing inflation higher and adding to widespread power shortages.

Shanghai's government promised Thursday that the city's 23 million residents would not face shortages at home, after the city's electricity utility warned that some stores and factories may have to close in the hottest days of summer to limit demand.

China's commercial center is scrambling to protect its drinking water from being overly tainted by salinity due to higher tides as the flow of the Yangtze River weakens. Upstream, conditions are worse, as crops wither and both people and livestock run short of drinking water.

The Three Gorges Dam, the world's largest hydroelectric complex, has been releasing larger-than-usual flows downstream in an effort to raise water levels brought so low by the lack of rain that inland shipping is being obstructed.

As farmers in much of central China's Hubei and Hunan provinces find themselves unable to plant summer crops or keep fish ponds stocked, and with little rain forecast until at least next month, many are abandoning their fields and heading to the cities to seek work, the newspaper China Business News reported Thursday.

More than 3.2 million acres (1.3 million hectares) of farmland have been affected in seven provinces that form China's "rice basket," state media have reported. The government has pledged to boost spending on irrigation and other water works by billions of dollars, but in the long term much of the country is facing chronic water shortages.

Drought has hit supplies of oil-bearing crops hard, prompting a bout of speculation in peanut prices, following earlier rounds of speculative hoarding of garlic, ginger, peppers and other commodities, the China Securities News reported Thursday.

Commerce Ministry figures show prices for pork and rice are already rising, partly due to the drought. That may counter efforts to help bring down inflation, which remained at a higher-than-forecast 5.3 percent in April.

Meanwhile, weaker hydroelectric output due to the drought has deepened a shortfall largely due to reduced output by power companies that are operating at a loss because they are barred from adjusting electricity rates to reflect surging costs for coal and oil.

Like many other cities, Shanghai often faces power shortages in summer and winter, when demand is high. The supply gap this summer is forecast to hit 1.1 gigawatts. But authorities have warned that in the Yangtze region, the gap could be as high as 40 gigawatts overall.

Shanghai is purchasing power from other provinces to help meet demand, but the shortages in those regions are limiting the amount of power available, said a statement posted on the city government website.

Despite the city's location in the Yangtze River delta, where the 3,900-mile (6,300-kilometer) waterway empties into the East China Sea, Shanghai faces a scarcity of usable water due to heavy upstream pollution.

The city relies heavily on reservoirs built along the Yangtze and is stepping up efforts to draw more heavily from the newest of those, Qingcaosha, which is reinforced well enough to prevent salt tide incursions for just over two months, the city says.

In the meantime, the stronger and longer than usual high tides are causing fish kills and affecting water supplies in some parts of the city.