High time to reduce costs of floods

Weeks of torrential rain have caused a series of devastating floods in many parts of China. With economic losses soaring, the impact will be felt on GDP growth. The estimated loss of more than $44.7 billion makes this year's floods in China one of the costliest non-US weather disaster on record. Only the 1998 floods, which caused a loss of about $40 billion (at 2016 dollar rate), were the same damaging.

Economic growth is very sensitive to adverse impacts on roads, railways and supply disruptions, which can result in shortages. As transport infrastructure is paralyzed or impaired, factories close their doors in industrial provinces, along with offices in post-industrial cities.

Fruit and vegetable prices usually rise in flood-affected areas, where the government now closely monitors prices and implements price controls, if needed. In June, the consumer price index grew 1.9 percent year-on-year. Pork prices played a major role in annualized price increases, adding some 0.7 percentage points to the headline figure. This is not surprising as the seven provinces worst hit by the floods account for more than one-fourth of all hogs in China.