Summary: Natural disasters caused 241.6 billion yuan in direct losses in China in 2025, and 2026 has brought large, mostly uninsured losses again. This piece sets out why that matters for Chinese companies and investors, and how they can forecast and reduce the risk at home and in overseas facilities and supply chains.
Physical climate risk is now a balance-sheet issue for Chinese companies and investors. In 2025, natural disasters in China caused direct economic losses of 241.6 billion yuan (about $34.7 billion), according to the Ministry of Emergency Management. In August 2026, Typhoon Dolphin made landfall in Zhejiang, home to the Ningbo-Zhoushan port and dense manufacturing clusters, and disrupted transport across eastern China. August’s direct losses reached 36.03 billion yuan, mostly from Dolphin, but insured losses were only about 1.75 billion yuan, less than 5%. The rest stayed with the companies and public bodies that own the damaged assets.
Why should Chinese companies and investors pay attention now?
The cost of extreme weather falls mostly on the owners of the assets that are hit, due to limits on insurance coverage. Aon estimates that China’s seasonal floods in the first half of 2026 caused about $4.9 billion in economic losses, of which only about $100 million, roughly 2%, was insured. The remaining 98% was carried by companies, households, lenders and government budgets.
This hasn’t even included the global effects of climate change, affecting Chinese investments and assets abroad.
For state-owned enterprises (SOEs) and asset managers with large portfolios of factories, logistics hubs, and power and transport infrastructure, that gap matters. An uninsured loss reduces earnings and capital directly. Repeated losses at the same sites can raise insurance premiums, increase maintenance and capital spending, and reduce what an asset is worth when it is sold or refinanced.
How can companies forecast these risks?
Forecasting physical climate risk means moving from regional hazard maps to estimates of financial loss for each asset. A practical process has five steps:
- Locate every asset and critical supplier at address level, including overseas projects.
- Measure exposure to each relevant hazard, such as river and coastal flooding, typhoon wind, extreme heat and drought, both today and under future climate scenarios.
- Account for adaptation already in place. Flood defenses, drainage and building standards change how much damage a hazard causes. Resilience-adjusted risk is the risk that remains after existing adaptation is taken into account. It shows where exposure is truly unmanaged.
- Translate exposure into money: expected damage, downtime, higher operating costs and insurance costs.
- Rank the results across the portfolio, so that management and investment committees can see which assets and suppliers carry the most risk.
How can companies reduce the losses?
- Once exposure is measured, the response can be targeted:
- At the asset: raise critical equipment above flood levels, add flood barriers and backup power, and strengthen roofs and cladding against typhoon winds.
- Across supply chains: identify single points of failure, such as one port or one supplier in a flood zone, and add alternatives.
- In new investments: compare candidate sites on climate risk before committing capital, at home and abroad.
- In financing and insurance: use asset-level risk data to plan retained risk, negotiate cover, and report to lenders and regulators.
Early warning also matters. Knowing a few days ahead which assets lie in a typhoon’s path lets operators move stock, secure equipment and plan for staff safety.
What about overseas facilities and supply chains?
Climate risk for Chinese companies does not stop at the border. SOEs and private companies own or finance ports, power plants, roads, mines and factories abroad, and rely on overseas suppliers for raw materials and components.
These assets face the same hazards, but local climate data is often scarce and flood defenses may be limited, so the risk is harder to see. A flood at a supplier’s plant abroad can also stop production at home.
The approach is the same as for assets in China: one method across every country, so that a factory in Jiangsu and a project overseas can be compared on the same terms. That calls for:
- Global hazard data at address level, so overseas sites are not left out of the risk register.
- Information on adaptation already in place around each site, such as flood defenses, because protection varies widely between countries.
- Screening of candidate sites before capital is committed, and of key overseas suppliers before contracts are signed.
How does AlphaGeo help?
AlphaGeo is a Singapore-based location intelligence company that turns climate and location data into decision-ready intelligence for investors, corporates and governments.
AlphaGeo’s Climate Resilience Suite screens assets, measures resilience-adjusted risk at address level anywhere in the world, models the financial impact on operating costs, capital spending and valuation, and helps plan adaptation. A real-time hazard warning module is coming soon.
These tools are built for long-life, capital-intensive assets such as infrastructure, logistics and data centers, where generic platforms often miss operating factors like power, water and cooling. Because coverage is global, the same method applies to assets in China and to overseas projects and suppliers.
What comes next?
Floods and typhoons will keep testing assets and supply chains in China and abroad. Companies that measure their exposure asset by asset, and invest in adaptation where it avoids the most loss, will carry less uninsured risk and make better decisions about where to build and invest next.
See how the Climate Resilience Suite works: https://alphageo.ai/climate-resilience-suite/
