China Press Review – February 5, 2020

Press review

A China-centric 21st century
With the U.S. paralyzed by political gridlock and western institutions stagnating, China is positioning itself as the primary architect of new power structures in the 21st century.

China’s services sector growth hits three-month low in January: Caixin PMI
Growth in China’s services sector slowed for a second straight month in January, a traditionally busy sales season, hitting a three-month low as companies cut prices and new orders dipped, a private sector survey showed on Wednesday.

China January exports, imports seen falling, virus risks global trade disruptions: Reuters poll
China’s exports and imports likely fell in January after a brief rebound at the end of last year, a Reuters poll showed, and a rapidly spreading virus outbreak could disrupt its global trade for months to come.    Exports from the world’s second-largest economy are expected to have dropped 4.8% in January from a year earlier, according to a median estimate from the survey of 18 economists, compared with a 7.9% gain in December and marking the steepest fall since February 2019.Imports likely fell 6% from a year earlier in January, a sharp contrast with 16.5% growth in the previous month.

Huawei promises ‘made in Europe’ 5G, as it announces plans for new manufacturing bases
Move comes days after new security guidelines stop short of barring Chinese telecoms giant from EU next-generation infrastructure    Huawei is seeking to fight off US pressure on European allies to ban it from 5G networks

China’s ‘economic growth miracle’ fades into the past as northern city’s new rail lines only paper over the cracks
Hohhot, the capital of China’s autonomous region of Inner Mongolia, opened its first underground rail line in December   But the 17.5 billion yuan (US$2.5 billion) project only goes to highlight the problems of China’s debt-financed growth model

Chinese GDP growth could fall below 2%, economist warns
China’s economy could grow by less than 2% year-over-year, according to Pantheon Macroeconomics Chief Asia Economist Freya Beamish. … Beijing said last month that its economy grew by 6.1% in 2019, in line with expectations, but Beamish suggested that growth at the end of the year was already “extremely weak.

US-China tech war may ‘de-Americanize’ global supply chains: report
Ongoing trade tensions and a technology cold war between the US and China may spur a “de-Americanization” of global supply chains, according to a report by global trade nonprofit Hinrich Foundation.     US export restrictions on major Chinese tech companies such as Huawei will force global semiconductor companies to source non-American parts, causing a reconfiguration of supply chains to meet thresholds set by the US government, according to the report

China May Ease Shadow-Bank Crackdown to Bolster Slowing Economy
The virus that’s put China’s economic recovery at risk may ease a crackdown on the shadow banking market, which has shrunk by $1.7 trillion in the past three years.     As the virus spreads, the death count mounts and markets tumble, signs are emerging that policy makers are willing to take a gamble on stepping back from reining in the risky sector, giving the world’s second-biggest economy more breathing room.

As Coronavirus Hampers Business Activity, China Seeks to Ease Financial Pressure
On February 3, Shanghai Municipal Human Resources and Social Security Bureau (HRSSB) announced measures to reduce the financial burden on enterprises affected by the coronavirus epidemic.   These measures include refunding unemployment insurance premiums paid, delaying the adjustment period of social insurance contribution base, extending the social insurance payment period, and providing training subsidies.  The measures aim to shore up the confidence of small and medium-sized enterprises (SMEs) in the short-term as their production and operations have been affected by the coronavirus situation and to ensure stable employment in the city. As far as we are aware, these measures apply to both local and foreign-invested enterprises.

China Epidemic Threatens a Broader Wave of Defaults in 2020
China’s biggest health crisis since at least 2003 has worsened the outlook for defaults in the world’s second-biggest bond market, likely tipping a raft of distressed borrowers over the edge this year.

Chinese President Xi Jinping ‘confident’ coronavirus outbreak can be contained
Leader makes first public appearance since January 28 to say that measures taken to control outbreak are working    Xi also welcomes Cambodian Prime Minister Hun Sen to Beijing, saying Cambodians stuck in Wuhan will be well looked after

Coronavirus: over 70 per cent of Chinese businesses will have returned to work by next week, survey shows
According to the survey by Chinese recruitment site covering 1,644 companies, one in five firms in China remain unsure when they will return  Due to the outbreak of the coronavirus, which had killed nearly 500 people in mainland China by Wednesday, the Lunar New Year holiday had been extended

Coronavirus threatens EU-China agreement in 2020
Concluding an EU-China investment deal this year could be a “real challenge” and the coronavirus outbreak will make it even more difficult as it will force both sides to cancel negotiation rounds, the EU Chamber of Commerce in China has warned.     Chinese vice-prime minister, Liu He, is scheduled to visit Brussels on 20-21 February for an Economic dialogue but his visit is still in the air, EU officials said.   According to Wuttke, the virus could bring China’s GDP growth close to 0% during the first quarter, while the output growth for the whole year could fall below 6%. But he expected that China would try to make up in the second half of the year for the ground lost in the early months of 2020.

Production halts at China factories lead to worldwide shortages in components as coronavirus outbreak spreads
South Korea’s Hyundai Motor became the first global carmaker to halt production outside China because of component shortages caused by stop-works and lockdowns to combat the coronavirus    General Motors, Volkswagen, Toyota Motor are among companies that have closed their China plants at least through February 9

As virus fallout widens, China readies more measures to stabilize economy – sources
The People’s Bank of China (PBOC) has already pumped in hundreds of billions of dollars into the financial system this week as it attempted to restore investor confidence and as global markets shuddered at the potentially damaging impact of the virus on world growth. In the past two days, the PBOC has injected 1.7 trillion yuan ($242.74 billion) through open market operations.  In order to minimize job losses, China’s stability-obsessed leaders are likely to sign-off on more spending, tax relief and subsidies for virus-hit sectors, alongside further monetary easing to spur bank lending and lower borrowing costs for businesses, according to the policy insiders.

How China’s economic might is coming in the way of fighting coronavirus
Developing countries reliant on China are taking softer approach to fighting coronavirus as they balance health concerns and the potential economic fallout.

The Markets Are Discounting A Return To Normal In China Next Week. That Is A Very Risky Bet.
The most disturbing news today was the effective quarantine of Hangzhou, a major city in Zhejiang province, adjacent to Shanghai. Hangzhou is only 180km from Shanghai, and if a city of 9.8 million can be shuttered–this has already happened in Wuhan, which has a population of 11 million–then investors need to understand the risks facing China’s economy. “Everything will return to normal next Monday, and the one week extension of the holiday will be a minor nuisance to China-dependent companies such as Tesla, Apple Disney and Nike.” That’s a hell of a risky bet to make. It’s almost as if the markets are betting that China’s President Xi is willing to prioritize economic growth over public safety. That would be more plausible if the Chinese government’s reaction to the initial outbreak of nCoV-2019, now pegged to have begun on or about December 1st, hadn’t been slow, opaque and utterly ineffective.

Coronavirus to test just how reliant the world is on Chinese manufacturers, with Asia braced for shock wave
With regions of China accounting for 80 per cent of exports on lockdown, factories around Asia are being forced into looking for alternative supplies    Workers trapped in China amid travel bans, while trade watchers as far afield as California wait for boats from China to stop arriving

Coronavirus: Cathay Pacific asks all 27,000 employees to take turns on three weeks unpaid leave
Airline struggling in face of deadly virus has already announced cuts to its flying schedule   CEO says situation faced by Cathay ‘just as grave’ as 2009 global financial crisis

Epidemic’s Nonhuman Toll May Be Many Chinese Businesses
As governments cut taxes, rents and other obligations, small and medium-sized employers say they may be unable to shoulder fixed costs during mandated extended shutdowns

How the coronavirus outbreak could trigger a rise in global food prices
With China focused on averting a pandemic and the US Fed fretting over weak inflation, authorities in both countries look set to keep monetary policy settings accommodative for longer. That may well prompt capital to flow into soft commodities
Coronavirus myths vs facts: Dogs, vaccines, causes and more
To curb misinformation and fears about coronavirus, the World Health Organisation has listed out all the myths and facts.  How to prevent the spread of the virus among workers is the biggest concern for companies. With face masks in shortage across the country, it will be challenging for employers to adequately protect workers, business people told Caixin.

In Wuhan’s shadow, smaller coronavirus-hit Chinese cities scramble for medical supplies
Stockpiles of protective equipment are running low in places like Xiaogan and Huanggang, little-known cities with millions of people    Residents look for sources of disinfectant to clean their homes but lockdowns hamper influx of deliveries

Europe could consider US-style coronavirus travel ban, say ministers
Authorities seek ‘coherent vision’ on possible restrictions on visitors amid deadly outbreak   Beijing has accused US of spreading ‘panic’ by denying entry to foreigners who have recently been to China

German study on coronavirus carrier with ‘no symptoms’ was flawed
Four people fell ill after Chinese businesswoman visited company near Munich but researchers didn’t talk to her directly, Science magazine says  Other patients said ‘she had been well’ at the time – but that wasn’t the case The study was based on a cluster of infections in Germany – the first four cases of the new virus strain there – that emerged after the Shanghai woman visited a company near Munich on January 20 and 21, where she met business partners.

Coronavirus: Bans on travellers from the mainland a risky ‘overreaction’, China’s UN envoy in Geneva tells WHO
‘Isolation is not beneficial to international collaboration and may interfere with prevention and control efforts,’ Chen Xu says    Echoes World Health Organisation Director General Tedros Adhanom Ghebreyesus

Hong Kong announces quarantines for mainland China arrivals
Hong Kong announced Wednesday a mandatory two-week quarantine for all travelers from mainland China, in a bid to stop more cases of the deadly new coronavirus. The quarantine order, which will come into force on Saturday, will apply to Hong Kong residents and foreigners, chief executive Carrie Lam told reporters. Lam gave few other details about how the quarantine would be implemented, such as where and how arrivals would be isolated but said it was designed to stop them coming. “The measure is harsh. But I believe after we say all arrivals have to be quarantined for 14 days from February 8 the number of arrivals will reduce,” Lam said.

China’s smartphone giants sending smaller contingent to world’s biggest mobile show amid coronavirus crisis
Companies like Huawei and Oppo are each sending a smaller contingent to MWC Barcelona Staff from some of the major Chinese smartphone brands are being sent to Spain nearly three weeks ahead of the event

Statement by Commissioner for Crisis Management Janez Lenarčič on EU support to China for the Coronavirus outbreak
Following information from China about the need for protective equipment, the EU’s Emergency Response Coordination Centre is in contact with all EU Member States to facilitate the delivery of needed personal protective equipment. As President von der Leyen said last week following her call with Chinese Premier Li Keqiang, the EU stands ready to provide any assistance necessary to assist China in its efforts to contain the spread of the Coronavirus. As an immediate first response, Member States have so far mobilised a total of 12 tons of protective equipment, already en route to China.

China says Xi Jinping is directing its Wuhan coronavirus response, but he’s nowhere to be seen
Since he first intervened in the Wuhan coronavirus crisis in late January, ordering “all-out efforts” to contain its spread, Chinese President Xi Jinping has been personally directing the country’s response.
At least, that’s what state media has been repeatedly emphasizing — Xi himself has not been seen for several days, missing from his usual place of prominence on the front page of the state-owned People’s Daily newspaper and in the nightly newscast on state broadcaster CCTV.

Coronavirus crisis shows a need to track donation dollars. Here’s how China’s tech industry, through blockchain and AI, can help
History repeats itself with a scandal over the handling of public donations, this time amid a deadly virus outbreak in China, damaging public confidence  Crisis relief operations are time-sensitive and complex, but the technology to improve them is available and should be deployed

Coronavirus: cruise ship carrying 3,700 quarantined in Japan after 10 test positive
Infected passengers removed from Diamond Princess and taken to hospital

A Fashion Week Season Without China
A host of Chinese fashion editors, designers, buyers, celebrities, and influencers will not be able to attend the 2020 Fall Fashion Weeks due to travel restrictions imposed by the government’s of the US, UK, Italy, and France, as reported by WWD. To prevent the coronavirus from spreading further, dozens of nations have imposed entry restrictions for Chinese travelers, while many airlines have scaled back flights or outright stopped flying to and from China. Moreover, Chinese travelers are suggested to adopt a “self-quarantine” for 14 days before being exposed to public places.

Alain Gillard
Information Officer
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