PC: CNBC

China declared its first drought emergency of the year as the country faces the record-breaking weather, causing the Yangtze River to dry up in certain parts and placing stress on the power grid.

After China’s central and southern regions endured weeks of intense heat, with temperatures in dozens of cities above 40 degrees Celsius, or 104 degrees Fahrenheit, authorities issued the nationwide yellow alert late on Thursday.

The heatwave has hampered crop growth, put livestock in danger, and forced some enterprises to close in order to save energy for houses.

This week, the 94 million-person Sichuan province in China issued an order for all factories to close for six days in an effort to alleviate the area’s power problems. The shutdowns followed a drop in reservoir levels and a rise in air conditioning demand brought on by the heat.

Data from the Ministry of Water Resources show that rainfall in the Yangtze River basin region has also decreased by about 45% since the average in recent years. According to CCTV, the state broadcaster, as many as 66 rivers spread across 34 counties in the southwest of Chongqing had dried up.

The National Meteorological Center reported that the Beibei district in southwest China on Thursday had record high temperatures of 45 degrees Celsius, or 113 degrees Fahrenheit.

This week, Chinese officials presented plans to lessen the effects of the drought. These plans included shutting down some energy-intensive industries as well as cloud seeding to encourage rainfall and providing $44 million in disaster relief to the hardest-hit communities.

The chief economist of Hang Seng Bank China, Dan Wang, stated on Thursday’s episode of “Squawk Box Asia” of CNBC that the heat might have a major effect on China’s economy. The production of the nation’s steel, chemical, and fertilizer industries has already slowed, according to Wang.

It will have an impact on those significant energy-intensive businesses, as well as on the rest of the economy and even the global supply chain, according to Wang.

According to data issued on Thursday by China’s emergency ministry, harsh weather in July resulted in direct economic losses of 2.73 billion yuan, or $400 million, which affected 5.5 million people.