Economic

Xi stresses analysing China's economy from comprehensive, dialectical, long-term perspective- CPPCC 2020

Xi called for consolidating the fundamental role of agriculture, ensuring stability on the six fronts and security in the six areas, and accomplishing the targets and tasks of building a moderately prosperous society in all respects and winning the battle against poverty. The six fronts refer to employment, the financial sector, foreign trade, foreign investment, domestic investment, and expectations. The six areas refer to job security, basic living needs, operations of market entities, food and energy security, stable industrial and supply chains, and the normal functioning of primary-level governments. Reiterating the necessity to view current difficulties, risks and challenges from a comprehensive, dialectical and long-term perspective, Xi said efforts should be made to boost confidence of the whole society, especially market entities. China has the largest industrial system in the world with the most complete categories, strong production capabilities, complete supporting sectors, as well as over 100 million market entities and a talent pool of 170 million people, Xi said. He called for faster progress in advancing the development of digital economy, intelligent manufacturing, life and health, new materials and other strategic emerging industries, highlighting the creation of new growth areas and drivers.

Fed on hold to assess scale of pandemic trauma

Fed officials have strenuously denied any interest in moving to negative rates, saying they are content with the tools they have and are sceptical about the effectiveness of moving below zero. But they have been toying with ideas such as pledging not to raise rates until they reach certain economic milestones on unemployment and inflation, or until a certain date in the future. They have also been considering offering a more specific path for asset purchases, instead of the current open-ended, ad hoc policy.Yet the Fed does not appear to be in a hurry to settle on a specific option. Part of the reason is that the US central bank is still heavily focused on implementing the crisis-fighting devices already announced. These include schemes to prop up troubled municipal, county and state governments, and medium-sized businesses desperate for credit that are due to be launched by the end of the month. Fed officials have said they are willing to change the terms of those facilities, or implement additional ones if new strains emerged in markets. The Fed still sees the economic outlook as unsettled.

UK's Sunak authorises bailout to rescue strategically important companies

British Finance Minister Rishi Sunak has authorised a bailout plan to rescue companies that are seen as strategically important, with the Treasury saying it may step in to support crucial businesses on a “last resort” basis after other options run out. The Treasury told Reuters on May 24 it may try to save those companies whose failure will “disproportionately harm the economy”. “In exceptional circumstances, where a viable company has exhausted all options and its failure would disproportionately harm the economy, we may consider support on a ‘last resort’ basis,” a spokeswoman from the Treasury said in an emailed statement. Under the plan, which is named “Project Birch”, the finance minister has raised the UK Treasury’s capacity to handle bespoke bailouts of “viable” companies which have exhausted all options, including government loan schemes. It was also reported that the state could buy stakes in crucial businesses that are facing acute financial problems. However, it added the Treasury will not initially look at taking equity stakes in companies that are struggling, with the preferred option being extension of loans.

The Covid Surcharge: Companies Confront the Unforgiving Economics of Coronavirus

Companies from major retailers and package carriers to local restaurants and hair salons are awakening to a new economic reality in the age of the new coronavirus: Being open for business is almost as hard as being closed. Facing higher costs to keep workers and customers safe and an indefinite period of suppressed demand, businesses are navigating an ever-narrower path to profitability. Prices of food and other items have risen. Employees need protective equipment at work. Rising unemployment, safety concerns and limits on the number of customers a business is allowed to serve are setting a cap on sales. To make the math work, some businesses are cutting services and jobs. Others are raising prices, including imposing coronavirus-related fees aimed at getting customers to share some of the expenses.For large companies, the price—and perils—of operating in a pandemic are already coming into focus. Walmart Inc., Target Corp. and Home Depot Inc. this week said they absorbed more than $2 billion combined in added expenses for wages, bonuses and other benefits for workers during the early months of the pandemic.

Corporate safety net main focus of Japan’s second extra budget

The Japanese government has begun finalizing a coronavirus relief package of more than 100 trillion yen ($928 billion), aiming to strengthen the corporate safety net and follow up on last month's 117 trillion yen stimulus. Slated for cabinet approval on May 27, the second supplementary budget for fiscal 2020 will aid struggling enterprises and increase support for idled workers. More than 60 trillion yen will go toward unsecured financing to businesses, which will pay little or no interest. Tenant leases will be subsidized for small and midsize businesses, as well as sole proprietorships, that have seen their sales plunge. The ceiling will be raised on the employment adjustment subsidy, provided to enterprises that keep paying idled workers.Idled workers will also qualify for a new benefit paid directly by the government. Financial support to such workers will total about 330,000 yen a month. Direct allocations by the central government constitute only a portion of the new budget, which also includes funds from local governments and the private sector. The first supplementary budget, passed in April, included more than 48 trillion yen in central and local government spending.

Mainland support is Macao's biggest advantage for hub development: NPC deputy

The suggestion on a Guangdong-Macao "intensive cooperation zone" in Hengqin was raised at the ongoing two sessions by NPC deputy and president of Macau Development Strategy Research Center, Sio Chi Wai.The suggestion includes items of promoting free cross-border capital inflow, outflow, and exchanges within the zone, as well as launching a "single pass" financial management system between Hengqin and Macao and establishing a financial electronic monitoring system. Macao is establishing its cross-boundary renminbi-clearing center, bond market, and is considering a stock exchange and futures trading market. It could become a second offshore financial center for China and cultivate a sound financial market structure. Therefore, financial market connectivity between Macao and the Chinese mainland through Hengqin is necessary for the diversification of Macao's economy, but also an indispensable part of Macao's efforts to build a complete financial market.

World’s ONLY floating nuclear power plant project goes fully operational in Russia

A one-of-a-kind floating nuclear power plant, designed and built by Russia, has become the most northerly nuclear facility in the world, as it begins commercial operations in a remote region in the Arctic. The Akademik Lomonosov, in a small town called Pevek in the far eastern region of Chukotka, is now fully commissioned, Russia’s nuclear agency Rosatom reported on May 22. The completion of the plant, which will provide energy for the remote area, was one of the corporation’s main goals for this year. While the floating nuclear power plant had been supplying energy to local networks since the end of last year, the facility required additional permissions to become fully operational. After inspections at the facility, the plant was proven to adhere to all state norms and regulations, including safety and environmental ones. It has received approval from Russia’s technical, nuclear and environmental watchdog and other environmental authorities. The new source of energy is extremely important for those living in the small Arctic town, as it will replace a coal power plant that had been providing Pevek with energy and heat for over 75 years.

Contact-tracing apps gain global popularity

More than 60 countries and regions have introduced the apps in their fight against the pandemic, although the penetration rate -- or percentage of the population using the tech -- remains below 50% in many places, leaving their effectiveness in question. “Governments should strive to increase transparency, such as through communicating how the data will be used,” said Ichiro Satoh, a professor at Japan's National Institute of Informatics. Contact-tracing apps use Bluetooth technology to accumulate data when users come within a few meters with each other. When a user is infected with COVID-19, the app alerts those who were in contact with the person in the past two weeks and encourages them to visit a hospital.Such apps were first developed by Singapore in March, and spread across the world. According to the U.K.-based law firm Linklaters, contact-tracing apps have been introduced in 40 countries and regions as of May 14. Another 23 countries, including Japan, are preparing to rollout the technology. But concerns over privacy remain a hurdle.

Indonesia to impose VAT on internet giants from July

Southeast Asia’s largest economy will impose a 10 percent VAT on digital products sold by non-resident internet companies with a significant presence in the Indonesian market, including streaming services, applications and digital games, beginning July 1, according to a regulation published on the Finance Ministry’s website. Analysts say the COVID-19 pandemic has accentuated a push by governments around the world to tax internet giants, who could see a boost in revenues as people stay at home during global lockdowns. “In the absence of a global compact on digital taxation, unilateral moves will flourish,” said Chatham House Asia Fellow Vasuki Shastry. “The fiscal hole due to Covid-19 makes it unstoppable.” Nearly 140 countries from the Organization for Economic Cooperation and Development (OECD) are negotiating the first major rewriting of tax rules to take better account of the rise of big tech companies such as Amazon, Facebook, Apple and Google that often book profit in low-tax countries. France has also announced plans to impose a digital tax levy in 2020.

European consumers stockpile savings, adding to economic drag

Savings rates in four of Europe’s five largest economies rose sharply to well above long-run averages in March, according to recently published data from the European Central Bank and the Bank of England. French savers put aside nearly €20bn in March, well above the long-run average monthly change in bank deposits of €3.8bn. Separate figures from the Banque de France show that by mid-May, the total had risen to more than €60bn since the country’s lockdown began — indicating that the growth of savings accelerated as the crisis deepened. Italian savers put aside €16.8bn in March, the ECB data show, compared with a long-run monthly average of €3.4bn, while Spanish households saved €10.1bn, up from an average of €2.3bn. The UK household bank deposits jumped by £13.1bn in March, according to the BoE. Bank deposits in Germany fell sharply, but this was a sign that households had withdrawn cash. Germans tend to prefer to hold their savings in cash during a crisis and a similar phenomenon occurred at the height of the 2008 financial crisis. The German central bank reported that cash in circulation rose by €39.7bn between late January and early May.

Strategic

‘Political virus’ is spreading in US along with Covid-19, says Chinese Foreign Minister Wang Yi

China’s Foreign Minister Wang Yi said on May 24 both China and the United States needed to avoid a new cold war as he blamed ”a political virus” spreading in Washington for their worsening relationship. Wang Yi made the criticisms in his annual press conference, where he took a warmer tone towards neighbours such as Japan and South Korea, and sought to bolster ties with China’s partners in Asia and AfricaBut in spite of his comments about America, Wang also stressed that Beijing and Washington should still look for ways to cooperate and avoid a new cold war. “We need to be alert to efforts by some political forces in America to hijack China-US relations and who try to push the two countries towards a so-called ‘new cold war’. He said China and Russia would resolutely “oppose unilateral bullying tactics”, and emphasised cooperation with Europe despite their ideological differences. “There is no fundamental conflict of interest between China and Europe,” he said. “China and Europe are not systemic rivals but strategic cooperative partners.”

As coronavirus bites, Pakistan looks to China for belt and road economic boost

After a two-year slowdown in the execution of the China-Pakistan Economic Corridor (CPEC) following the 2018 election of Imran Khan as prime minister, Pakistan officials are finalising proposals for new infrastructure projects worth billions, ahead of a state visit by Chinese President Xi Jinping in July this year. After taking office in August 2018, Khan’s administration trimmed the overall size of CPEC to US$50 billion, from US$64 billion under his predecessor Nawaz Sharif, as part of efforts to counter a payments crisis brought on, in part, by the inability of Pakistan’s narrow economy to absorb a massive influx of Chinese plant and machinery imports under CPEC. Khan’s government also switched the focus of the CPEC away from big-ticket infrastructure projects to dedicated manufacturing zones, agriculture and social sector development. Asim Saeed Bajwa, the retired three-star general appointed as founding chairman of the CPEC Authority, said last month he expected to soon sign an agreement with the China Three Gorges Corp for the US$2.5 billion Kohala hydropower project, which would generate 1,124 megawatts of electricity.

US awakens to risk of China-Russia alliance in the Arctic

When the U.S. Senate Armed Services Committee convened a hearing to confirm the new Secretary of Navy Kenneth Braithwaite, the word "Arctic" was mentioned 35 times. It topped other hot topics such as "China" and "Russia," which each received 22 mentions, and far outweighed "North Korea," which was raised just six times, reflecting the new interest in the topic in Washington." The Chinese and the Russians are everywhere," Braithwaite told senators on May 7, referring to the Arctic region. "Especially the Chinese. You'd be alarmed at the amount of Chinese activity off the coast of Norway in the High North, and we need to be vigilant to that. We need to understand why." As the U.S. ambassador to Norway for the past two years, Braithwaite has had a front seat view of the activities of the two countries. His appointment to be the secretary of the navy itself is symbolic of the trend. "If you look at the northern sea route between Kirkenes, the most-northern city in Norway, coming across the top of Russia," Braithwaite said, it could reduce the amount of time needed to move commerce out of China to European markets "by half."

Japan seeks talks with China on rescheduling Xi's state visit

Japan plans to hold talks with Beijing to set a new date for Chinese President Xi Jinping's state visit, Chief Cabinet Secretary Yoshihide Suga told reporters on May 22. Xi had been slated to visit Japan in April, but the trip was postponed due to the coronavirus pandemic. "We plan to begin discussions" on the matter, the top government spokesman said. "We still see it as an opportunity to show, domestically and abroad, that we will together fulfil our responsibilities regarding the challenges faced by the region and the international community," Suga added. Beijing also signalled it wants to reschedule the trip. "The visit should take place during "the most appropriate time, environment and atmosphere for both China and Japan," Guo Weimin, spokesperson for the Chinese People's Political Consultative Conference, the country's top political advisory body, told reporters on May 20.

Netanyahu’s Trial Begins, Kicking Off Lengthy Legal Fight

Israeli leader Benjamin Netanyahu appeared on May 24 in a Jerusalem courtroom to hear charges of bribery and breach of trust levelled against him by prosecutors—the first time a sitting prime minister has been put on trial. Flanked by lawmakers wearing surgical masks, Mr. Netanyahu denounced the charges as well as Israel’s justice system. “Elements in the police and prosecution joined together with the left-wing media in order to fabricate against me ridiculous cases to get the nationalist camp out of the leadership of the country,” Mr. Netanyahu said Mr. Netanyahu’s court appearance represents a striking reminder to the Israeli public of how he must balance his own vigorous legal defense with his duties of leading the nation during a time of crisis. Mr. Netanyahu’s trial is expected to last for years and remain a constant feature of the country’s fractious politics. The early procedural steps could take months, and the trial with testimony isn’t expected to begin until the fall at the earliest. One of Mr. Netanyahu’s lawyers, Micha Fettman, said the team won’t be ready to present evidence before March. The court set the next hearing for July 19.

Iran Ships Fuel to Venezuela, Flouting U.S. Pressure on Its Foes

The first of five tankers carrying Iranian fuel has reached gasoline-starved Venezuela in a show of defiance by two U.S. adversaries flouting American sanctions aimed at unseating their authoritarian governments. Iran and Venezuela, both founding members of the Organization of the Petroleum Exporting Countries, sought to build an anti-U.S. alliance more than a decade ago under the leadership of Venezuelan firebrand Hugo Chávez and his Iranian counterpart Mahmoud Ahmadinejad. The two leaders signed business ventures including bicycle and tractor factories to housing construction in Venezuela. That relationship concerned U.S. authorities working to thwart Iran’s nuclear ambitions. Mr. Chávez once publicly boasted that Iran was helping explore for uranium in Venezuela—a mineral used in some nuclear weapons. There’s no evidence that Mr. Chávez’s plans moved forward. In 2009, American agents helped Turkey intercept Iranian vessels destined for Venezuela that were carrying nitrate and sulphite chemicals that could have been used for bombs or unmanned aerial vehicles prohibited under the arms-sale restrictions of the United Nations Security Council, according to a U.S. diplomatic cable made public by WikiLeaks.

Hong Kong police fire tear gas on protest against security law

Large-scale unrest has returned to the streets of Hong Kong for the first time since the spread of coronavirus as China seeks to impose a new national security law on the territory. Police fired tear gas, deployed armoured vehicles and water cannon in an effort to disperse thousands of demonstrators who had blocked roads in one of the city’s busiest shopping districts. The police said they had arrested about 120 people. “I am here because of the national security law,” said a 40-year-old woman, who asked not to be identified. “Hong Kong will have no more freedoms” she added. “You will be punished for what you say. I fear that Hong Kong will just become another Chinese city.”Members of Hong Kong’s pro-democracy camp also worry that the new national security law will erode Hong Kong’s prosperity and undermine its status as one of the world’s leading financial centres. On May 21, China’s legislature, now meeting for its annual rubber-stamp session, will pass a resolution authorising its standing committee to draft the legislation for Hong Kong. The law would prohibit treason, secession, sedition, subversion and the theft of state secrets, while also allowing China’s state security services to maintain a formal presence in the territory.

N. Korea's Kim holds meeting to discuss bolstering nuke forces

North Korea's leader Kim Jong Un convened a key military meeting to discuss bolstering its nuclear arsenal and putting the country's strategic armed forces on a high alert, state media reported on May 24, in his first known public appearance in about 20 days. In early May, Kim quelled intense rumours about his health by attending a ceremony marking the completion of a fertilizer factory in his first public activities in 20 days. But he hadn't again made any follow-up public appearance in about another 20 days until the state news agency said Sunday that he led a meeting of the Central Military Commission of the ruling Workers' Party. "Set forth at the meeting were new policies for further increasing the nuclear war deterrence of the country and putting the strategic armed forces on a high alert operation," the Korean Central News Agency said, without saying exactly when the meeting was held. The meeting also discussed increasing the capabilities for deterring "the threatening foreign forces," it said.

Cyclone Amphan loss estimated at $13 billion in India, may rise in Bangladesh

A powerful cyclone that tore through India’s eastern state of West Bengal this week has caused a damage of 1 trillion rupees ($13 billion) to infrastructure and crops, state officials said. Neighbouring Bangladesh, which also fell in Cyclone Amphan’s path on May 20, initially said it had suffered a loss of 11 billion taka ($130 million). But this could rise, government officials said. The two countries have lost at least 102 people in the cyclone, the most powerful in over a decade, mostly because of house collapses and electrocution. More than 3 million people were evacuated before Amphan made landfall, preventing a large number of deaths. The cyclone has affected more than 13 million people - some losing houses, crops and lands - and over 1.5 million houses have been damaged, two West Bengal government officials told Reuters.

Medical

COVID-19 patients not infectious after 11 days of getting sick, finds study

Coronavirus patients are not infectious after eleven days of getting sick, according to a study. However, there are chances that some patients may still test COVID-19 positive, Bloomberg reported citing the study by infectious disease experts in Singapore. The study was based on 73 patients in the city-state. According to the joint research paper by Singapore's National Centre for Infectious Diseases and the Academy of Medicine, Singapore, a positive test "does not equate to infectiousness or viable virus". It also said that the virus "could not be isolated or cultured after day 11 of illness."

Polio and Measles Could Surge After Disruption of Vaccine Programs

The widespread interruption of routine immunization programs around the world during the coronavirus pandemic is putting 80 million children under 1 year old at risk of contracting deadly, vaccine-preventable diseases, according to a report May 22 by the World Health Organization, UNICEF and Gavi, the Vaccine Alliance. The groups surveyed 129 poor and middle-income countries and found that 68 had some degree of disruption of vaccine services through clinics and through large inoculation campaigns.Measles initiatives, for example, have been suspended in 27 countries, including Chad and Ethiopia, and polio programs are on hold in 38, including Pakistan and the Democratic Republic of Congo.Many public health experts say they are worried that deaths from diseases including cholera, rotavirus and diphtheria could far outstrip those from Covid-19 itself. The report highlighted warnings about polio, which had recently been all but eradicated, a hard-won victory that resulted from mass immunization programs that reached millions of children.

For Further Reading:

• Xi Focus: Xi stresses analyzing China's economy from comprehensive, dialectical, long-term perspective, http://www.xinhuanet.com/english/2020-05/24/c_139082057.htm
• Fed on hold to assess scale of pandemic trauma, https://www.ft.com/content/6728e10b-4986-468d-8448-8b5d62400e3e
• UK's Sunak authorises bailout to rescue strategically important companies, https://in.reuters.com/article/health-coronavirus-britain-treasury/uks-sunak-authorises-bailout-to-rescue-strategically-important-companies-idINKBN23106I
• The Covid Surcharge: Companies Confront the Unforgiving Economics of Coronavirus, https://www.wsj.com/articles/the-covid-surcharge-companies-confront-unforgiving-economics-of-coronavirus-11590139802
• Japan moves forward with $1tn in new coronavirus relief, https://asia.nikkei.com/Spotlight/Coronavirus/Japan-moves-forward-with-1tn-in-new-coronavirus-relief
• Mainland support is Macao's biggest advantage for hub development: NPC deputy, https://www.globaltimes.cn/content/1189377.shtml
• World’s ONLY floating nuclear power plant project goes fully operational in Russia (PHOTOS, VIDEO), https://www.rt.com/business/489551-russia-floating-nuclear-plant/
• Privacy in a pandemic? Contact-tracing apps gain global popularity, https://asia.nikkei.com/Business/Technology/Privacy-in-a-pandemic-Contact-tracing-apps-gain-global-popularity
• Indonesia to impose VAT on internet giants from July, https://www.arabnews.com/node/1679566/business-economy
• European consumers stockpile savings, adding to economic drag, https://www.ft.com/content/ccccaed4-d82c-4856-963d-5197878fdd0d
• ‘Political virus’ is spreading in US along with Covid-19, says Chinese Foreign Minister Wang Yi, https://www.scmp.com/news/china/diplomacy/article/3085840/china-and-us-must-find-ways-get-along-and-avoid-new-cold-war
• As coronavirus bites, Pakistan looks to China for belt and road economic boost, https://www.scmp.com/week-asia/economics/article/3085523/coronavirus-bites-pakistan-looks-china-belt-and-road-economic
• US awakens to risk of China-Russia alliance in the Arctic, https://asia.nikkei.com/Politics/International-relations/US-awakens-to-risk-of-China-Russia-alliance-in-the-Arctic
• Japan seeks talks with China on rescheduling Xi's state visit, https://asia.nikkei.com/Politics/International-relations/Japan-seeks-talks-with-China-on-rescheduling-Xi-s-state-visit
• Netanyahu’s Trial Begins, Kicking Off Lengthy Legal Fight, https://www.wsj.com/articles/netanyahus-trial-begins-kicking-off-lengthy-legal-fight-11590320842?mod=hp_listb_pos2
• Iran Ships Fuel to Venezuela, Flouting U.S. Pressure on Its Foes, https://www.wsj.com/articles/iran-ships-fuel-to-venezuela-flouting-u-s-pressure-on-its-foes-11590356201?mod=hp_listb_pos3
• Hong Kong police fire tear gas on protest against security law, https://www.ft.com/content/40856bc6-8e95-45e0-a540-779c04249a46
• N. Korea's Kim holds meeting to discuss bolstering nuke forces, https://mainichi.jp/english/articles/20200524/p2g/00m/0in/032000c
• Cyclone Amphan loss estimated at $13 billion in India, may rise in Bangladesh, https://in.reuters.com/article/us-asia-storm-india/cyclone-amphan-loss-estimated-at-13-billion-in-india-may-rise-in-bangladesh-idINKBN22Z0HE
• Coronavirus update: COVID-19 patients not infectious after 11 days of getting sick, finds study, https://www.businesstoday.in/latest/trends/coronavirus-update-covid-19-patients-not-infectious-after-11-days-of-getting-sick-finds-study/story/404800.html
• Polio and Measles Could Surge After Disruption of Vaccine Programs, https://www.nytimes.com/2020/05/22/health/coronavirus-polio-measles-immunizations.html