Schools have reopened in Shaanxi. We are literally holding our breath here hoping we don't see a second wave. The silver lining is that more school bathrooms are immaculate and disinfected. They don't have the overpowering stench of piss and shit that usually causes people to gag the first time they go inside.
We often hear that China’s political system hasn’t been tested in a scenario of low economic growth. Would this new economic reality challenge the “social contract” in China? If not economic growth, where would political legitimacy come from?
There have been ongoing long-term structural shifts in the Chinese economy - aging population and rising labor costs, namely - that have been driving businesses to be more productive. I would be curious to hear anyone's thoughts as to how Covid will accelerate these and whether China is better positioned than other countries?
interesting readout from the politburo meeting, they sound very stressed, about the continuing risk from imported cases, a second wave, and the economic damage:
"The meeting stressed that the challenges facing economic development are unprecedented. It is imperative to fully assess the difficulties, risks and uncertainties, increase the sense of urgency and focus on all aspects of economic and social development." v stressed..
The meeting pointed to greater macro - policy efforts to hedge the impact of the outbreak. We will adopt a proactive fiscal policy, increase the deficit to GDP ratio, issue special government bonds to combat the epidemic, increase the number of local government bonds
and use funds more efficiently so as to truly play a key role in stabilizing the economy. We will adopt a prudent monetary policy that is more flexible and appropriate. We will use measures such as reserve requirement ratio cuts, interest rate cuts and re-lending
to maintain reasonably sufficient liquidity, guide interest rates in the lending market to fall, and use funds to support the real economy, especially small, medium and micro businesses."...the stresses are getting intense, forcing policymakers hands
Yes, I would like to hear more about what I heard are recent developments of Chinese expansion in San Fran area. Some parks or etc other developments are being constructed in Chinese themes? I heard about this from our condo building manager in Hawaii who knew about it. They say it is expansive and readily observeable even for the visitor in the area.
This is a murky area, even in western countries. For example: How do you classify, what corona positive person died of? His pre-existing heart condition? His fat liver? His chain smoking? Was it cardiac arrest that killed him, or was it the corona stress that caused the cardiac arrest? Was it really corona that pushed him over the edge? It is a tough call, and these numbers are easy to use for political gaming.
The number for total cases is a meaningless number, unless you also publish the numbers of how many individuals you tested. This way you can at least guess, just how many infected are out there.
Simple reality is, the more people you test, the more "cases" you will find in absolute numbers, while the relative percentage of positive vs. tested individuals cases most probably goes down (if not, only divine intervention can help mankind).
Also the relevance of "how many" is rather limited, because already one super spreader is one too many. In an unrestricted environment, a single super spreader can produce more than 2000 infections within 7-10 days, and that escalates rapidly thereafter.
Our scientists seem to be confident, that the infectious period of a super spreader is 2 weeks, during which he either falls ill or recovers without ever falling seriously ill. Either way he is out of the infection risk. So if you lock down a city and ban person-to-person contacts for at least 4 weeks, you can get a grip on it, probably without ever really knowing, how many infected had actually been out there.
GDP numbers do not stack up. Retail sales alone should have reduced year-year GDP by over 8% given that they were 41% of Q1 19 GDP on their own. Fixed asset investment for the quarter was down 16.1% YoY and industrial production down 8.4% YoY. Moreover, the trade surplus in Q1 fell from $73bn in 2019 to less than $13bn. Government expenditure clearly increased but the overall picture of -6.8% YoY for GDP looks more like a Goldilocks BS number so that China gives itself a chance of poistive GDP for the year.
As for urban unemployment it's nonsense to suggest it fell to 5.9%. SMEs account for 80% of urban employment. At best they are only back to 80% employment - I believe much lower, implying an unemployment rate that is at least 15%.
Related to some of the questions already asked, I wonder what role experts see China playing in providing debt relief to poor countries. The G20 has suspended debt payments for the world’s poorest countries. I’ve seen bits of confusing information on this topic.
Best proxy measures (viral weibo posts, etc) that provide insights into how the Chinese public feels about the CCP's response to the crisis as compared to the US's?
What's everyone's views on the 50% increase in death numbers in Wuhan? Are we getting closer to the truth? How suspicious can we be given that the number is so precise (0.5 people off of 50.0000%)?
As is clear with any data from China (and this from a very senior economist at the World Bank) has 'zero' reliability. Government data is quite cooked up and even listed companies data is suspect (Luckin coffee is a good example). Population of Wuhan -11M, Population of NYC -8M. Variance in deaths - no statistician would try to put some calculation on that.
Honestly I'm not so sure. Their data may not be fake but I've seen years of execs pushing a positive spin and endlessly optimistic outlook. Many are still in denial that economic problems may persist because of structural problems that they're not addressing. The balance sheet may be okay, but the average person doesn't get to see that. We only see cheering press releases.
I would also like to hear if the Phase 1 trade deal signed by both countries has an exception clause specific to 'pandemic' conditions. Not to promote any silly conspiracy theories - but to see if the PRC / Party figured out what was taking place in Wuhan in January and decided to sneak in an out clause for the so called 'purchases' from the US.
I think the right wing conspiracy theorists may be referring to clause 7.6 Section 2, which doesn't say anything about pandemic. It is much more harmless than any force majeure ("Act of God" you can't use with communists) clause in regular, boring commodity contracts that I have seen in 35 years in foreign trade business:
"In the event that a natural disaster or other unforeseeable event outside the control of the Parties delays a Party from timely complying with its obligations under this Agreement, the Parties shall consult with each other."
The core issue with all these allegations and conspiracy theories is, that nobody ever goes through the simple effort to google the relevant documentation and read the relevant parts.
Fascinating, how shallow and gullible people are, in believing twisted stories.
Im confused about the -6.8% gdp report. normally when we say for instance that the american economy grew 2% in the third quarter, we mean it grew at a RATE of 2% not by a whole 2% CHUNK. But the chinese gdp report suggests the country lost a whole 6.8% CHUNK, which, if we followed convention, would be like declining at 24% or so. Is this correct?
I think it's very misleading to report year-on-year earnings when clearly the 6.8% decline is concentrated in just the last few months alone. So really (and normallly), they would've announced that China shrank by 24% in the first quarter (and by that, they would normally mean at a rate of 24% annualized).
At least that's what we mean when we say the US economy is expected to take a -30% hit this quarter.
I thought your question was interesting so I fished around a bit, but it looks like most sites including business/finance related sites are treating this number as they treat all year-on-year quarterly earnings announcements. If the announcement used some novel method of calculation I would think they would mention that.
That being said, it's kind of missing the forest for the trees. On the order of priorities for the people "calculating" this data, I imagine accuracy and transparency were pretty far down the list.
There are two competing narratives right now in the context of China's relations with Latin America and Africa. One says China is going to gain influence by acting as savior amid the pandemic, providing aid and debt relief. The other says China's reputation is going to take a big hit over its responsibility for coronavirus spread and its harsh response. Two article links below offering two sides. Which side of that spectrum do you think is more likely to be correct?
So far the only people I see buying the first narrative are CCP state media and credulous Western journalists.
There is, however, plenty of evidence the second narrative is a reality, helped along in Africa by stories about racism in Guangzhou. Many African politicians and diplomats have reacted quickly and in ways that run counter to their usual soft-touch approach with Beijing, which seems to indicate a considerable amount of public anger.
Seems like circumstantial evidence rather than a smokng gun, but given the lack of regulation in other biomedical cases, say He JianKui and crispr, maybe more compelling?
It's been touched upon, but are there any substantial actions or long term plans being made between Japan and the U.S. to seriously increase Japan's regional power, economically, politically or otherwise? Who in the U.S. would we look towards for an indication of this?
Anybody have any thoughts on why the CCP seems so extra sensitive over perceptions of where COVID-19 came from? This isn't the first virus to come out of China. Why would the CCP seek to obfuscate its origins this time?
It detracts from the message that China is the world's hope for surviving the pandemic. Can't be seen as magnanimous if the problem started with you (China) to begin with).
It makes me suspicious when people get testy in otherwise innocuous situations. From experience that reaction tends to come from either trying to hide something or they don't know something.
Regarding Bill’s posts yesterday, please the attached link, a documentary by Epoch Times, which is a Falun Gong-owned platform. It’s very disturbing and this type of narrative has gone mainstream.
I've been having people send me this link and others to ask about genetic warfare and I'm not clear enough on the science or the actors involved (or what the Falun Gong interest would be other than the evil CPC message?) to know how to respond. How do you make sense of this conspiracy theory?
Some technician may have bribed his supervisor to let him sell some infected test animals in the Wet Market to make some side money, instead of safely disposing of them.
If even parts are true, it would be very disturbing. The PRC is surely doing their investigation. But so are western (including US) intelligence agencies. Possible scenarios include:
1. Accidental release
2. Deliberate release by a lone wolf, disgruntled lab employee (e.g. Insider Threat), think Dr Bruce Ivins, anthrax 2001. Very scary.
3. Deliberate release by an employee manipulated by a foreign rogue agent or group. Example: Aum Shinrikyo 1995 Sarin release in Tokyo.
4. Deliberate state-sponsored release. Very unlikely and suicidal, to be frank. Nobody gains, everybody loses. And states, even authoritarian ones, are rational actors.
None of the above hypotheses (some of which are now in the mainstream media) are good. And the public may never know the truth. Any findings are likely to be classified.
I don't think scenarios 2-3 are viable. In all cases, the perpetrator would be endangering their own friends and family. Scenario 1 could also include a low-level employee not cognizant of the sensitive nature of the lab's business who needed to earn some New Year's cash, so sold animal samples instead of destroying them. This scenario implies incompetence, vice intent.
Bill, to what extent can we read into the +50.0% increase in covid19 attributed deaths in Wuhan? Is this likely in response to pressure for greater transparency? How is this increase playing out in Chinese media?
Apparently the WHO is praising China's effort to "leave no case undocumented" regarding the new figures in their Friday presser. Seems a little tin eared given what has been going on.
Caixin has a story about it on the front page, Xinhua has nothing (of course). SCMP has it covered under a subheader but they are blocked in China.
I think it's likely this was done in response to pressure about transparency, as were various other changes to counting practices and numbers in February.
Ah you beat me to it. Tbh first thing I thought was someone said "increase the number to be more realistic but Def don't exceed 50%", and that's what they did. Cynical, I know.
I would be curious to see what the biggest issues are for business now. From our members, the top three we’re working on from an advocacy perspective:
(1) export restrictions of PPE following the March 31 《关于有序开展医疗物资出口的公告》[2020年第5号]). As of April 1, exports of these products are now required to have both Chinese medical device product registration certificates and comply with the quality standards of the importing country. The intention of the policy was to respond to European criticisms of the quality of medical supplies shipped from China, but the unintended consequences have curtailed American company exports of PPE. We’ve begun to see some loosening here. for contracts signed before 4.1, MOFCOM will review the contract info and issue a letter to Customs to get products released without the certification; 2) for contracts signed after 4.1, MOFCOM will collaborate with industrial experts to review and issue letter to Customs. Not perfect but going in the right direction.
(2) Return restrictions for non-Chinese visa holders is a very difficult challenge for companies. We expect that these are unlikely to be lifted before NPC (which seem likely to be delayed to mid-late March) raising uncertainty for senior executives at our companies. We understand that MOFCOM has tried to facilitate the process a bit within their system, encouraging local commerce commissions in China to work with companies to “certify” the importance of certain expat staff (e.g. country presidents or CEOs), and companies giving that certification to local embassies for obtaining new visas. E.g. we hear that some European companies have been able to do this with the Beijing commerce commission.
Hey Jake, did you mean NPC would be delayed to mid-May? You wrote March. Just wondering. Saw the announcement today the Standing Committee of the NPC will meet April 26-29.
Nr 2 sounds good, but does it work for "normal" employees? For example, a large multinational company may have 100+ foreign employees in their China headquarter, surely these are not only CEOs but simply professionals on all levels, however also important to the company
Third item is price gouging. Another of the unfortunate side effects of No. 1 is that its greatly narrowed the market of qualified PPE. Those that can meet the standard have raised prices to unaffordable levels for companies that need to buy quantities in the millions.
Yes, any executive who is able to return still needs to undergo the 14 day quarantine. There no longer appears be an option for home quarantine, instead will need to be done at a central facility.
For the companies without existing domestic manufacturing contacts, the China Council for Promotion of International Trade (CCPIT/贸促会）is working as a platform between some foreign companies and authorized Chinese sellers of PPE. We understand they have a list of suppliers approved by the Chinese government for export.
As Thomas notes below, a number of international firms are conducting due diligence on supplies before the final purchase is made. Control Risks we know for sure, I suspect there are many many others.
In my opinion, a democratic President will be tougher toward China in a more reasonable and logic way. Under current circumstance, the Sino-US relationship will be worsen regardless who is the President. US, in fact, is in a passive or defending role.
This decoupling thing has elements of North Korean "Juche" (self-reliance) policy, a mind-over-matter principle edged in stone (and necessity, owing to sanctions), that doesn't serve the country well, as it forces the nation to replicate at enormous expense, what other countries can do faster/better/cheaper. It is a simple fact of life, that one country is better at this thing, and another country is better at another thing. It is inconceivable, if not delusional, that 2 countries with each double digit shares in global GDP can minimise trade with each other and prosper at the same time. Politicians everywhere should take great care, not to fall victim to their own dogma and become Kim Jong Un knock-offs.
the momentum has increased significantly since the phase one trade deal, mostly but not solely due to the pandemic, but it is incredibly complex and expensive to truly decouple supply chains in any material way
I think there’s a good argument that global supply chains were a good thing in this crisis. The west kept going when the crisis started and now CHina is going while the west is peaking and beginning to recover. Diversity should be the name of the game going forward.
Does anybody know how accepting the Chinese public is of official COVID-19 numbers coming out of Beijing? Gotta think most folks can compare per capita numbers around the world and come to the conclusion that either the CCP has magical powers, China was statistically very lucky, or the overall numbers are artificially low.
From my conversations it seems that most locals are skeptical, but that's not unexpected - people don't believe the official numbers on anything else either. Regardless of what the actual numbers are, i do think the general feeling here is that the CPC dealt with this better than other governments. The propaganda line is that China is the safest country in the world. As a foreigner, the standard numbers question locals ask has switched from "how high are the salaries in your country?" to "how bad is the virus in your country?"
I have some new data from the Tsinghua U Internet Finance Laboratory for SMEs (up to RMB 100 million turnover). The data are from multiple sources and seem very comprehensive. Here are January, February, and March 2020 sales as percentages of 2019 sales: January 60.8%, February 33.3%, March 41.1%.
One thing I look at is oil refinery utilisation rates. Shandong province is home to most of China’s independent refineries, and they are still below pre-CNY rates. There are other parameters involved - storage capacity, crude oil price bargains etc - but run rates have picked up from February
One thing to understand was that the oil war was about China. The Saudis weren't about to let the shale players in the US take Chinese market share. China is now buying crude for strategic reserves - from Saudi Arabia
Could you elaborate a little bit? That's an interesting take. I had heard that it was mostly Russia worrying about propping up crude prices benefiting the U.S. that precipitated the stand-off between them and the Saudis.
Bill, you just tweeted that now, just 44% of US businesses believe decoupling to be "impossible," down from 66% last October. If the US decided wholeheartedly to decouple (I understand there is a strong trend in that direction but it is still a long way from what could be called "wholehearted"), what would that policy look like? I had in mind also that Japan earmarked significant funds to assist their companies with moving manufacturing back to Japan.
How much fiscal appetite will there be for a "wholehearted" policy with the more immediately pressing need to prop up and stimulate the American economy as currently structured? Is there sufficient overlap between decoupling measures and stimulating the American economy? Or would they work at cross purposes?
I think you’ll see some moves to stockpile goods and re-shore and diversify some medical supplies. Reality is there is a limit to investment capital. Do we want to spend it reshoring antiquated industries or building a 5G economy? Isn’t China itself trying to get out of a lot of these lower tech fields? Let’s not meet them in the middle.
great question, i do not think it is feasible for any serious decoupling of complex manufacturing/tech supply chains any time in the near future. A US policy would have to include tax breaks and subsidies, one test case may be whether or not the US federal and/or state governments can offer enough to TSMC to make it viable for them to open a plant in the US
I think decoupling is unlikely. It's not simply a matter of multinationals exploiting low-cost labor abroad anymore, but also a matter of proximity to large consumer markets. Having factories in China allows multinationals to get better access to the country's massive consumer market and save on transportation costs and tariffs. I don't see how any company which decides to relocate to the states can compete against those which continue having a physical presence in China.
When you factor in security concerns a la 5G, medicine dependence, etc. it will take precedence to the purely commercial concerns of the past. You should not use the lens of the past. Those days are over.
I agree. I assume most of these guys are not treasonous and are very aware of all these issues, I am just curious as to what the actual consensus is as that will have a big impact on what US policy is.
I see, thanks. What then are you hearing are the the real, private, internal views at major US companies with key manufacturing/tech supply chains in China about future operations there? As it seems they are in an impossible position with operations in a China where the CCP is now openly anti-foreigner and especially anti-American, and a Washington that is united in seeing the political and economic dangers of engagement with the CCP?
In terms of scenario planning how plausible is the prospect of civil unrest in China? We’ve always been told that maintaining fullish employement and rising living standards were crucial to order there. Moreover, Covid-19 might have dented popular views of government competence (fairly or not) and how well the government provided for public safety (presumably crucial to any social contract). Or put another way, there must be a lot of anger at all of this does that mean anything? What do you think?
Traditionally, China has several tenthousand so-called mass incidents per year, non-consequential for the leadership of the party. It is probably not realistic to assume, that any political upset may happen outside the party organisation or that some general appears on TV to announce that the people's leader is unwell and that generals take over for the time being. The propaganda machine can report somewhat freely about foreign countries and makes great strides to tell the Chinese citizen, that anywhere in the world people are worse off than China.
I agree with the vice versa, to an extent. It is a legitimate topic - maybe the most legitimate - for this Presidential campaign, but unfortunately the discussion itself will lead some to take it to very personal extremes for which the candidates themselves are not responsible, and for which the state itself is not complicit. Of course, contrast with Beijing that is only too happy to step up xenophobia for its own benefit, including subjugation of vulnerable minorities, transference of blame for Party failures, weaponization of tourism against other states, etc.
Biden campaign trying to say it is an understatement to call Trump weak on China, that he "rolled over in a way that has been catastrophic for our country" and "put himself and his political fortunes first."
I think that's right. I have never felt Trump is particularly ideological in his view of China but if China can replace Russia and the evil empire in the presidential campaign, I have a sense he will be quite pleased by that. For some strange reason, he has never felt comfortable talking tough on Russia. I hope someday we can better understand why that is.
I would think the indicator for that is how strongly they attack the US and West. The more pressure they are under domestically the more they’ll try to channel that rage outward.
Good point. Could get very ugly if that happens while Trump is using China as the external enemy he thinks he needs for his campaign. They both might need that —an external enemy to point to. Scary prospect.
Exactly, and the Trump-Pence re-election campaign will be making China a major line of attack for the campaign. We already see that. Check out the campaign ad attacking Beijing Biden. It's going to get ugly and will have the effect of raising even further Americans' anger toward China on being the source of the virus and the early missteps that made it muuch worse in China and across the globe (resulting in more Americans dying).
To what extent do you consider the so-called Chinese "wolf-warrior diplomacy" a western media's exaggeration or instead a new reality to cope with? Do you know further reading about that? Thanks, Bill.
After having to sit through interminable lectures from Chinese government officials, factory bosses, and party figures while I was in China, I tend to look at this "wolf warrior" phenomenon as the CCP simply extending the way that business is done in China generally to their diplomatic efforts.
No conference or meeting was complete without the most powerful person in the room standing up and issuing a lengthy diatribe, often insulting and filled with glaring prevarications, simply to show that they can and that no one is able to challenge them. It's a power play that you encounter often there and it looks a lot like a Zhao Lijian or Hua Chunying press conference.
and this from hua chunying in study times last summer, about more effectively, and aggressively, telling China's story and defending it 华春莹在学习时报撰文：占据道义制高点，提升国际话语权 https://www.thepaper.cn/newsDetail_forward_3900567
Hi. What I am struggling with is that these new wolf ambassadors don’t need to dissipate fake news to be agressive. Do you think Trump constant distortion of the truth is influencing their communication. It’s works for him, why not for us? And what is the underlying reason is your view for all the bs coming out of officials mouths?
I think that gives trump too much credit. the CCP has a department of propaganda, disinformation and distortion of the truth is in the Party's DNA and control of information, and the "truth", has always been one of the key pillars of power for the CCP
There are talks of more punitive duties on exports to China and imports from China, there are also calls for debt repudiation, increased banking and financial oversight of China, lots of more creative ways.
All it takes is a judge willing to entertain the FSIA exceptions, some of which are arguably applicable...first claims have already been filed in Florida and Nevada on behalf of private individuals seeking redress for economic harm. Someone will need to make an appearance on behalf of the PRC, and oh, if you ever got to the point where there are damages, maybe having a bunch of state-owned enterprises with assets in the USA wasn't such a good idea? It's a long-shot for sure, but there are plaintiffs law firms in the US already laying the groundwork, compliant members of Congress who are interested in broadening / confirming the FSIA exceptions and other legal avenues, and think tanks that are already publishing supporting theories that will undoubtedly be well-cited.
I heard of a crazy thing today. Is 钟绍军 == 彭德怀的私生子?
Schools have reopened in Shaanxi. We are literally holding our breath here hoping we don't see a second wave. The silver lining is that more school bathrooms are immaculate and disinfected. They don't have the overpowering stench of piss and shit that usually causes people to gag the first time they go inside.
We often hear that China’s political system hasn’t been tested in a scenario of low economic growth. Would this new economic reality challenge the “social contract” in China? If not economic growth, where would political legitimacy come from?
There have been ongoing long-term structural shifts in the Chinese economy - aging population and rising labor costs, namely - that have been driving businesses to be more productive. I would be curious to hear anyone's thoughts as to how Covid will accelerate these and whether China is better positioned than other countries?
interesting readout from the politburo meeting, they sound very stressed, about the continuing risk from imported cases, a second wave, and the economic damage:
http://www.xinhuanet.com/politics/leaders/2020-04/17/c_1125871992.htm
"会议强调，当前经济发展面临的挑战前所未有，必须充分估计困难、风险和不确定性，切实增强紧迫感，抓实经济社会发展各项工作"...会议指出，要以更大的宏观政策力度对冲疫情影响。. 积极的财政政策要更加积极有为，提高赤字率，发行抗疫特别国债，增加地方政府专项债券，提高资金使用效率，真正发挥稳定经济的关键作用。稳健的货币政策要更加灵活适度，运用降准、降息、再贷款等手段，保持流动性合理充裕，引导贷款市场利率下行，把资金用到支持实体经济特别是中小微企业上。
"The meeting stressed that the challenges facing economic development are unprecedented. It is imperative to fully assess the difficulties, risks and uncertainties, increase the sense of urgency and focus on all aspects of economic and social development." v stressed..
The meeting pointed to greater macro - policy efforts to hedge the impact of the outbreak. We will adopt a proactive fiscal policy, increase the deficit to GDP ratio, issue special government bonds to combat the epidemic, increase the number of local government bonds
and use funds more efficiently so as to truly play a key role in stabilizing the economy. We will adopt a prudent monetary policy that is more flexible and appropriate. We will use measures such as reserve requirement ratio cuts, interest rate cuts and re-lending
to maintain reasonably sufficient liquidity, guide interest rates in the lending market to fall, and use funds to support the real economy, especially small, medium and micro businesses."...the stresses are getting intense, forcing policymakers hands
Yes, I would like to hear more about what I heard are recent developments of Chinese expansion in San Fran area. Some parks or etc other developments are being constructed in Chinese themes? I heard about this from our condo building manager in Hawaii who knew about it. They say it is expansive and readily observeable even for the visitor in the area.
my question is: to what extent can we trust the numbers from China re total cases, new cases, total deaths, etc. Clyde Prestowitz
This is a murky area, even in western countries. For example: How do you classify, what corona positive person died of? His pre-existing heart condition? His fat liver? His chain smoking? Was it cardiac arrest that killed him, or was it the corona stress that caused the cardiac arrest? Was it really corona that pushed him over the edge? It is a tough call, and these numbers are easy to use for political gaming.
The number for total cases is a meaningless number, unless you also publish the numbers of how many individuals you tested. This way you can at least guess, just how many infected are out there.
Simple reality is, the more people you test, the more "cases" you will find in absolute numbers, while the relative percentage of positive vs. tested individuals cases most probably goes down (if not, only divine intervention can help mankind).
Also the relevance of "how many" is rather limited, because already one super spreader is one too many. In an unrestricted environment, a single super spreader can produce more than 2000 infections within 7-10 days, and that escalates rapidly thereafter.
Our scientists seem to be confident, that the infectious period of a super spreader is 2 weeks, during which he either falls ill or recovers without ever falling seriously ill. Either way he is out of the infection risk. So if you lock down a city and ban person-to-person contacts for at least 4 weeks, you can get a grip on it, probably without ever really knowing, how many infected had actually been out there.
GDP numbers do not stack up. Retail sales alone should have reduced year-year GDP by over 8% given that they were 41% of Q1 19 GDP on their own. Fixed asset investment for the quarter was down 16.1% YoY and industrial production down 8.4% YoY. Moreover, the trade surplus in Q1 fell from $73bn in 2019 to less than $13bn. Government expenditure clearly increased but the overall picture of -6.8% YoY for GDP looks more like a Goldilocks BS number so that China gives itself a chance of poistive GDP for the year.
As for urban unemployment it's nonsense to suggest it fell to 5.9%. SMEs account for 80% of urban employment. At best they are only back to 80% employment - I believe much lower, implying an unemployment rate that is at least 15%.
Related to some of the questions already asked, I wonder what role experts see China playing in providing debt relief to poor countries. The G20 has suspended debt payments for the world’s poorest countries. I’ve seen bits of confusing information on this topic.
Best proxy measures (viral weibo posts, etc) that provide insights into how the Chinese public feels about the CCP's response to the crisis as compared to the US's?
What's everyone's views on the 50% increase in death numbers in Wuhan? Are we getting closer to the truth? How suspicious can we be given that the number is so precise (0.5 people off of 50.0000%)?
As is clear with any data from China (and this from a very senior economist at the World Bank) has 'zero' reliability. Government data is quite cooked up and even listed companies data is suspect (Luckin coffee is a good example). Population of Wuhan -11M, Population of NYC -8M. Variance in deaths - no statistician would try to put some calculation on that.
The only reliable data is being reported by US / European companies operating in China - GM, Starbucks, Apple to take a few examples.
Honestly I'm not so sure. Their data may not be fake but I've seen years of execs pushing a positive spin and endlessly optimistic outlook. Many are still in denial that economic problems may persist because of structural problems that they're not addressing. The balance sheet may be okay, but the average person doesn't get to see that. We only see cheering press releases.
I would also like to hear if the Phase 1 trade deal signed by both countries has an exception clause specific to 'pandemic' conditions. Not to promote any silly conspiracy theories - but to see if the PRC / Party figured out what was taking place in Wuhan in January and decided to sneak in an out clause for the so called 'purchases' from the US.
I've seen that rumor also. When do we ever get to see the actual taext?
Here is the full text of the phase one trade agreement: https://ustr.gov/sites/default/files/files/agreements/phase%20one%20agreement/Economic_And_Trade_Agreement_Between_The_United_States_And_China_Text.pdf
I think the right wing conspiracy theorists may be referring to clause 7.6 Section 2, which doesn't say anything about pandemic. It is much more harmless than any force majeure ("Act of God" you can't use with communists) clause in regular, boring commodity contracts that I have seen in 35 years in foreign trade business:
"In the event that a natural disaster or other unforeseeable event outside the control of the Parties delays a Party from timely complying with its obligations under this Agreement, the Parties shall consult with each other."
The core issue with all these allegations and conspiracy theories is, that nobody ever goes through the simple effort to google the relevant documentation and read the relevant parts.
Fascinating, how shallow and gullible people are, in believing twisted stories.
Thanks. Typical boiler plate contract legalise
Like the majority of 1.4 billion Chinese?
Do you mean in terms of real-existing whataboutism? What is your point?
Im confused about the -6.8% gdp report. normally when we say for instance that the american economy grew 2% in the third quarter, we mean it grew at a RATE of 2% not by a whole 2% CHUNK. But the chinese gdp report suggests the country lost a whole 6.8% CHUNK, which, if we followed convention, would be like declining at 24% or so. Is this correct?
I think it's very misleading to report year-on-year earnings when clearly the 6.8% decline is concentrated in just the last few months alone. So really (and normallly), they would've announced that China shrank by 24% in the first quarter (and by that, they would normally mean at a rate of 24% annualized).
At least that's what we mean when we say the US economy is expected to take a -30% hit this quarter.
I thought your question was interesting so I fished around a bit, but it looks like most sites including business/finance related sites are treating this number as they treat all year-on-year quarterly earnings announcements. If the announcement used some novel method of calculation I would think they would mention that.
That being said, it's kind of missing the forest for the trees. On the order of priorities for the people "calculating" this data, I imagine accuracy and transparency were pretty far down the list.
There are two competing narratives right now in the context of China's relations with Latin America and Africa. One says China is going to gain influence by acting as savior amid the pandemic, providing aid and debt relief. The other says China's reputation is going to take a big hit over its responsibility for coronavirus spread and its harsh response. Two article links below offering two sides. Which side of that spectrum do you think is more likely to be correct?
https://www.politico.com/news/2020/04/16/coronavirus-china-africa-191444
https://www.americasquarterly.org/content/could-china-be-white-knight-again-latin-america
So far the only people I see buying the first narrative are CCP state media and credulous Western journalists.
There is, however, plenty of evidence the second narrative is a reality, helped along in Africa by stories about racism in Guangzhou. Many African politicians and diplomats have reacted quickly and in ways that run counter to their usual soft-touch approach with Beijing, which seems to indicate a considerable amount of public anger.
There is also the issue of Brazil, where Bolsonaro's government has explicitly pointed the finger at China to stave off valid criticism of their own disastrous response. https://www.washingtonpost.com/world/2020/04/14/its-not-just-trump-whos-angry-china/
Please read this article in the journal Nature- Science. I would like to hear everyone,s comments.
From December 2015 - linked to the Wuhan Virology Lab.
https://www.nature.com/news/engineered-bat-virus-stirs-debate-over-risky-research-1.18787?WT.mc_id=TWT_NatureNews&utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosfutureofwork&stream=future
Seems like circumstantial evidence rather than a smokng gun, but given the lack of regulation in other biomedical cases, say He JianKui and crispr, maybe more compelling?
It's been touched upon, but are there any substantial actions or long term plans being made between Japan and the U.S. to seriously increase Japan's regional power, economically, politically or otherwise? Who in the U.S. would we look towards for an indication of this?
How is this crisis likely to impact the trajectory of promising candidates for promotion in the leadup to the 20th Party Congress?
Anybody have any thoughts on why the CCP seems so extra sensitive over perceptions of where COVID-19 came from? This isn't the first virus to come out of China. Why would the CCP seek to obfuscate its origins this time?
I think they must know it came from one of the Wuhan labs. Didn't Xi talk about the need to beef up lab security at one point back in February?
It detracts from the message that China is the world's hope for surviving the pandemic. Can't be seen as magnanimous if the problem started with you (China) to begin with).
Xi
It makes me suspicious when people get testy in otherwise innocuous situations. From experience that reaction tends to come from either trying to hide something or they don't know something.
Regarding Bill’s posts yesterday, please the attached link, a documentary by Epoch Times, which is a Falun Gong-owned platform. It’s very disturbing and this type of narrative has gone mainstream.
https://www.theepochtimes.com/coronavirusfilm
Also, regarding decoupling, see these 2 superb links by Kevin Rudd.
https://asiasociety.org/policy-institute/decouple-or-not-decouple
https://www.economist.com/open-future/2020/04/15/by-invitation-kevin-rudd-on-america-china-and-saving-the-who
I can't seem to access the Epoch Times documentary. It says click here to watch but I can't get it to work.
I was able to download it. You may have to google and download it separately.
I've been having people send me this link and others to ask about genetic warfare and I'm not clear enough on the science or the actors involved (or what the Falun Gong interest would be other than the evil CPC message?) to know how to respond. How do you make sense of this conspiracy theory?
Some technician may have bribed his supervisor to let him sell some infected test animals in the Wet Market to make some side money, instead of safely disposing of them.
If even parts are true, it would be very disturbing. The PRC is surely doing their investigation. But so are western (including US) intelligence agencies. Possible scenarios include:
1. Accidental release
2. Deliberate release by a lone wolf, disgruntled lab employee (e.g. Insider Threat), think Dr Bruce Ivins, anthrax 2001. Very scary.
3. Deliberate release by an employee manipulated by a foreign rogue agent or group. Example: Aum Shinrikyo 1995 Sarin release in Tokyo.
4. Deliberate state-sponsored release. Very unlikely and suicidal, to be frank. Nobody gains, everybody loses. And states, even authoritarian ones, are rational actors.
None of the above hypotheses (some of which are now in the mainstream media) are good. And the public may never know the truth. Any findings are likely to be classified.
I don't think scenarios 2-3 are viable. In all cases, the perpetrator would be endangering their own friends and family. Scenario 1 could also include a low-level employee not cognizant of the sensitive nature of the lab's business who needed to earn some New Year's cash, so sold animal samples instead of destroying them. This scenario implies incompetence, vice intent.
Bill, to what extent can we read into the +50.0% increase in covid19 attributed deaths in Wuhan? Is this likely in response to pressure for greater transparency? How is this increase playing out in Chinese media?
Apparently the WHO is praising China's effort to "leave no case undocumented" regarding the new figures in their Friday presser. Seems a little tin eared given what has been going on.
Caixin has a story about it on the front page, Xinhua has nothing (of course). SCMP has it covered under a subheader but they are blocked in China.
I think it's likely this was done in response to pressure about transparency, as were various other changes to counting practices and numbers in February.
Fire break to prevent total immolation.
Ah you beat me to it. Tbh first thing I thought was someone said "increase the number to be more realistic but Def don't exceed 50%", and that's what they did. Cynical, I know.
I would be curious to see what the biggest issues are for business now. From our members, the top three we’re working on from an advocacy perspective:
(1) export restrictions of PPE following the March 31 《关于有序开展医疗物资出口的公告》[2020年第5号]). As of April 1, exports of these products are now required to have both Chinese medical device product registration certificates and comply with the quality standards of the importing country. The intention of the policy was to respond to European criticisms of the quality of medical supplies shipped from China, but the unintended consequences have curtailed American company exports of PPE. We’ve begun to see some loosening here. for contracts signed before 4.1, MOFCOM will review the contract info and issue a letter to Customs to get products released without the certification; 2) for contracts signed after 4.1, MOFCOM will collaborate with industrial experts to review and issue letter to Customs. Not perfect but going in the right direction.
(2) Return restrictions for non-Chinese visa holders is a very difficult challenge for companies. We expect that these are unlikely to be lifted before NPC (which seem likely to be delayed to mid-late March) raising uncertainty for senior executives at our companies. We understand that MOFCOM has tried to facilitate the process a bit within their system, encouraging local commerce commissions in China to work with companies to “certify” the importance of certain expat staff (e.g. country presidents or CEOs), and companies giving that certification to local embassies for obtaining new visas. E.g. we hear that some European companies have been able to do this with the Beijing commerce commission.
Hey Jake, did you mean NPC would be delayed to mid-May? You wrote March. Just wondering. Saw the announcement today the Standing Committee of the NPC will meet April 26-29.
Ah yes Paul, apologies, meant May. Slip of the fingers.
Nr 2 sounds good, but does it work for "normal" employees? For example, a large multinational company may have 100+ foreign employees in their China headquarter, surely these are not only CEOs but simply professionals on all levels, however also important to the company
My niece who is British returned recently and spent two weeks in quaratine.
re 2, will the foreigners on the exception list still have to spend 14 days in quarantine? also, what's the third issue? thanks
Third item is price gouging. Another of the unfortunate side effects of No. 1 is that its greatly narrowed the market of qualified PPE. Those that can meet the standard have raised prices to unaffordable levels for companies that need to buy quantities in the millions.
Yes, any executive who is able to return still needs to undergo the 14 day quarantine. There no longer appears be an option for home quarantine, instead will need to be done at a central facility.
so how do big deals get done? will HQ trust big investments to the PRC team with no due diligence from outside the country?
For the companies without existing domestic manufacturing contacts, the China Council for Promotion of International Trade (CCPIT/贸促会）is working as a platform between some foreign companies and authorized Chinese sellers of PPE. We understand they have a list of suppliers approved by the Chinese government for export.
As Thomas notes below, a number of international firms are conducting due diligence on supplies before the final purchase is made. Control Risks we know for sure, I suspect there are many many others.
There is a myriad of consulting- and legal companies loco in China, who are after such jobs, involving hefty fees.
What would a New Democrat President mean for the current trajectory of China - US relations
In my opinion, a democratic President will be tougher toward China in a more reasonable and logic way. Under current circumstance, the Sino-US relationship will be worsen regardless who is the President. US, in fact, is in a passive or defending role.
Has US/China decoupling gone beyond the point of no return?
This decoupling thing has elements of North Korean "Juche" (self-reliance) policy, a mind-over-matter principle edged in stone (and necessity, owing to sanctions), that doesn't serve the country well, as it forces the nation to replicate at enormous expense, what other countries can do faster/better/cheaper. It is a simple fact of life, that one country is better at this thing, and another country is better at another thing. It is inconceivable, if not delusional, that 2 countries with each double digit shares in global GDP can minimise trade with each other and prosper at the same time. Politicians everywhere should take great care, not to fall victim to their own dogma and become Kim Jong Un knock-offs.
the momentum has increased significantly since the phase one trade deal, mostly but not solely due to the pandemic, but it is incredibly complex and expensive to truly decouple supply chains in any material way
I think there’s a good argument that global supply chains were a good thing in this crisis. The west kept going when the crisis started and now CHina is going while the west is peaking and beginning to recover. Diversity should be the name of the game going forward.
Does anybody know how accepting the Chinese public is of official COVID-19 numbers coming out of Beijing? Gotta think most folks can compare per capita numbers around the world and come to the conclusion that either the CCP has magical powers, China was statistically very lucky, or the overall numbers are artificially low.
From my conversations it seems that most locals are skeptical, but that's not unexpected - people don't believe the official numbers on anything else either. Regardless of what the actual numbers are, i do think the general feeling here is that the CPC dealt with this better than other governments. The propaganda line is that China is the safest country in the world. As a foreigner, the standard numbers question locals ask has switched from "how high are the salaries in your country?" to "how bad is the virus in your country?"
What signs of economic recovery or lack there of in China might inform the US and the West about the near term future after we open.
I have some new data from the Tsinghua U Internet Finance Laboratory for SMEs (up to RMB 100 million turnover). The data are from multiple sources and seem very comprehensive. Here are January, February, and March 2020 sales as percentages of 2019 sales: January 60.8%, February 33.3%, March 41.1%.
One thing I look at is oil refinery utilisation rates. Shandong province is home to most of China’s independent refineries, and they are still below pre-CNY rates. There are other parameters involved - storage capacity, crude oil price bargains etc - but run rates have picked up from February
One thing to understand was that the oil war was about China. The Saudis weren't about to let the shale players in the US take Chinese market share. China is now buying crude for strategic reserves - from Saudi Arabia
Could you elaborate a little bit? That's an interesting take. I had heard that it was mostly Russia worrying about propping up crude prices benefiting the U.S. that precipitated the stand-off between them and the Saudis.
I saw a US expat in Beijing estimate that 30-40% of small businesses have yet to reopen. They are possibly gone.
The expat or the small businesses?
Unfortunately the small businesses. Hope that stat is better in the US but fear it isn’t
Bill, you just tweeted that now, just 44% of US businesses believe decoupling to be "impossible," down from 66% last October. If the US decided wholeheartedly to decouple (I understand there is a strong trend in that direction but it is still a long way from what could be called "wholehearted"), what would that policy look like? I had in mind also that Japan earmarked significant funds to assist their companies with moving manufacturing back to Japan.
How much fiscal appetite will there be for a "wholehearted" policy with the more immediately pressing need to prop up and stimulate the American economy as currently structured? Is there sufficient overlap between decoupling measures and stimulating the American economy? Or would they work at cross purposes?
I think you’ll see some moves to stockpile goods and re-shore and diversify some medical supplies. Reality is there is a limit to investment capital. Do we want to spend it reshoring antiquated industries or building a 5G economy? Isn’t China itself trying to get out of a lot of these lower tech fields? Let’s not meet them in the middle.
great question, i do not think it is feasible for any serious decoupling of complex manufacturing/tech supply chains any time in the near future. A US policy would have to include tax breaks and subsidies, one test case may be whether or not the US federal and/or state governments can offer enough to TSMC to make it viable for them to open a plant in the US
I think decoupling is unlikely. It's not simply a matter of multinationals exploiting low-cost labor abroad anymore, but also a matter of proximity to large consumer markets. Having factories in China allows multinationals to get better access to the country's massive consumer market and save on transportation costs and tariffs. I don't see how any company which decides to relocate to the states can compete against those which continue having a physical presence in China.
When you factor in security concerns a la 5G, medicine dependence, etc. it will take precedence to the purely commercial concerns of the past. You should not use the lens of the past. Those days are over.
I agree. I assume most of these guys are not treasonous and are very aware of all these issues, I am just curious as to what the actual consensus is as that will have a big impact on what US policy is.
I see, thanks. What then are you hearing are the the real, private, internal views at major US companies with key manufacturing/tech supply chains in China about future operations there? As it seems they are in an impossible position with operations in a China where the CCP is now openly anti-foreigner and especially anti-American, and a Washington that is united in seeing the political and economic dangers of engagement with the CCP?
It means separate blocs. There’s a fundamental conflict of values.
In terms of scenario planning how plausible is the prospect of civil unrest in China? We’ve always been told that maintaining fullish employement and rising living standards were crucial to order there. Moreover, Covid-19 might have dented popular views of government competence (fairly or not) and how well the government provided for public safety (presumably crucial to any social contract). Or put another way, there must be a lot of anger at all of this does that mean anything? What do you think?
Traditionally, China has several tenthousand so-called mass incidents per year, non-consequential for the leadership of the party. It is probably not realistic to assume, that any political upset may happen outside the party organisation or that some general appears on TV to announce that the people's leader is unwell and that generals take over for the time being. The propaganda machine can report somewhat freely about foreign countries and makes great strides to tell the Chinese citizen, that anywhere in the world people are worse off than China.
i am worried about scenario planning for increasing xenophobia and violence against foreigners, and especially Americans, in China
Agree, but also vice versa. Anger toward China in the US will increase substantially alongside the rhetoric coming out of the Presidential campaign.
I agree with the vice versa, to an extent. It is a legitimate topic - maybe the most legitimate - for this Presidential campaign, but unfortunately the discussion itself will lead some to take it to very personal extremes for which the candidates themselves are not responsible, and for which the state itself is not complicit. Of course, contrast with Beijing that is only too happy to step up xenophobia for its own benefit, including subjugation of vulnerable minorities, transference of blame for Party failures, weaponization of tourism against other states, etc.
sadly yes, as I have been saying in the newsletter for a while. have you seen https://www.beijingbiden.com, by the biggest PAC for Trump I believe?
Biden campaign trying to say it is an understatement to call Trump weak on China, that he "rolled over in a way that has been catastrophic for our country" and "put himself and his political fortunes first."
I have and I also saw Biden's campaign is planning a counterattack. https://www.axios.com/dnc-memo-trump-biden-china-f914e9d1-37fd-48d0-b579-4f94d0e72b69.html
China never seems to really matter in us presidential elections, as heated as the rehtoric can get get. this time it feels different
I think that's right. I have never felt Trump is particularly ideological in his view of China but if China can replace Russia and the evil empire in the presidential campaign, I have a sense he will be quite pleased by that. For some strange reason, he has never felt comfortable talking tough on Russia. I hope someday we can better understand why that is.
I would think the indicator for that is how strongly they attack the US and West. The more pressure they are under domestically the more they’ll try to channel that rage outward.
I agree with you on that Alan. We see this dynamic (i.e. Hong Kong, Xinjiang)
Good point. Could get very ugly if that happens while Trump is using China as the external enemy he thinks he needs for his campaign. They both might need that —an external enemy to point to. Scary prospect.
Exactly, and the Trump-Pence re-election campaign will be making China a major line of attack for the campaign. We already see that. Check out the campaign ad attacking Beijing Biden. It's going to get ugly and will have the effect of raising even further Americans' anger toward China on being the source of the virus and the early missteps that made it muuch worse in China and across the globe (resulting in more Americans dying).
To what extent do you consider the so-called Chinese "wolf-warrior diplomacy" a western media's exaggeration or instead a new reality to cope with? Do you know further reading about that? Thanks, Bill.
After having to sit through interminable lectures from Chinese government officials, factory bosses, and party figures while I was in China, I tend to look at this "wolf warrior" phenomenon as the CCP simply extending the way that business is done in China generally to their diplomatic efforts.
No conference or meeting was complete without the most powerful person in the room standing up and issuing a lengthy diatribe, often insulting and filled with glaring prevarications, simply to show that they can and that no one is able to challenge them. It's a power play that you encounter often there and it looks a lot like a Zhao Lijian or Hua Chunying press conference.
and this from hua chunying in study times last summer, about more effectively, and aggressively, telling China's story and defending it 华春莹在学习时报撰文：占据道义制高点，提升国际话语权 https://www.thepaper.cn/newsDetail_forward_3900567
Hi, this from the global times is worth reading West feels challenged by China’s new ‘Wolf Warrior’ diplomacy - Global Times https://www.globaltimes.cn/content/1185776.shtml as this this from the SCMP China wants its diplomats to show more fighting spirit. It may not be intended to win over the rest of the world https://www.scmp.com/news/china/diplomacy/article/3079493/china-wants-its-diplomats-show-more-fighting-spirit-it-may-not and this from Ketih Zhai at Reuters China demands 'fighting spirit' from diplomats as trade war, Hong Kong protests simmer https://www.reuters.com/article/us-china-diplomacy/china-demands-fighting-spirit-from-diplomats-as-trade-war-hong-kong-protests-simmer-idUSKBN1Y80R8
Hi. What I am struggling with is that these new wolf ambassadors don’t need to dissipate fake news to be agressive. Do you think Trump constant distortion of the truth is influencing their communication. It’s works for him, why not for us? And what is the underlying reason is your view for all the bs coming out of officials mouths?
I think that gives trump too much credit. the CCP has a department of propaganda, disinformation and distortion of the truth is in the Party's DNA and control of information, and the "truth", has always been one of the key pillars of power for the CCP
What is your view of the talk of suing Chin for COVID-19 damages?
in what court under what law?
There are talks of more punitive duties on exports to China and imports from China, there are also calls for debt repudiation, increased banking and financial oversight of China, lots of more creative ways.
No idea. Which probably says it all
All it takes is a judge willing to entertain the FSIA exceptions, some of which are arguably applicable...first claims have already been filed in Florida and Nevada on behalf of private individuals seeking redress for economic harm. Someone will need to make an appearance on behalf of the PRC, and oh, if you ever got to the point where there are damages, maybe having a bunch of state-owned enterprises with assets in the USA wasn't such a good idea? It's a long-shot for sure, but there are plaintiffs law firms in the US already laying the groundwork, compliant members of Congress who are interested in broadening / confirming the FSIA exceptions and other legal avenues, and think tanks that are already publishing supporting theories that will undoubtedly be well-cited.