Spike in new cases; Hubei leadership changes; New Huawei indictment
The National Health Commission changed the way it classifies confirmed cases of the COVUD-19 virus in Hubei and so there was a huge spike of 14,840 new cases in the province. The reclassification is good for all the people who are sick but were not confirmed under the previous method.
Chen Yixin, the deputy head of the “central guiding group” in Wuhan, admitted that the government has not yet finished counting all the infected cases in the city and “the number could be quite large”-陈一新：武汉感染人数未摸清 潜在被感染基数或较大
The situation remains very grim in Hubei and more cities in the province are going into quarantine lockdown. Do not be surprised for significantly higher case numbers to come.
The announcement of the surge in new cases coincided with the replacement of the Hubei provincial and Wuhan municipal party secretaries. Ying Yong, previously mayor of Shanghai, replaced Jiang Chaoliang as provincial party secretary. Wang Zhonglin, previously party secretary of Jinan, replaced Ma Guoqiang as Wuhan party secretary. Announcing the much higher number just before the appointments is of course politically beneficial to the new leaders.
Wednesday also saw the appointment of Xia Baolong to replace Zhang Xiaoming as head of the Hong Kong and Macau Affairs Office.
Both Ying Yong and Xia Baolong have long histories working with Xi Jinping and are considered members of what is known as the “New Zhijiang Army 之江新军” of Xi acolytes.
Once again, the evidence points to Xi being in control and putting even more of his personal credibility at stake, in spite of all the rumors that have swirled in the last couple of weeks, as I discussed last week.
Thanks for reading.
The Essential Eight
1. Political fallout
Jiang Chaoliang, party chief of Hubei, has been replaced by Shanghai Mayor Ying Yong, and Ma Guoqiang, party chief of Wuhan, the provincial capital, has been succeeded by Wang Zhonglin, party secretary of Jinan, East China’s Shandong province, state media said...
It also followed the sacking on Tuesday of two top health officials in Hubei — Zhang Jin, party chief of the Hubei Health Commission, and Liu Yingzi, provincial health commission director — over their flaws in responding to the epidemic.
News of the reshuffle coincided with a State Council meeting on Thursday when it was announced the draconian control measures currently in place in Wuhan – the epicentre of the outbreak – would be expanded to other Hubei cities including Huanggang and Xiaogan.
“Hubei province and Wuhan must further strengthened management and control over exits from the areas ... to put a stop of the spread [of the disease],” state broadcaster CCTV quoted a read out of the meeting as saying...
The new appointments could help mend ties with the public, but it remained to be seen whether the newcomers could end the crisis soon, said Qin Qianhong, a law professor at Wuhan University.
“They could help calm public anger over the incompetence of local officials, but there’s too much still unknown with the virus and how bad the situation really is,” Qin said...
“Sending Ying Yong and Wang Zhonglin to Hubei shows the central government is determined to fix Hubei and give people an answer. The cadres there have been really disappointing,” said a person familiar with the developments in the province who was not authorised to speak publicly on the matter. “The outbreak cost the party dearly. Those who are responsible will be held accountable.”
Ying Yong said the appointment shows the party central and Xi Jinping “highly trusts” him, and that the new job has “heavy responsibility”, and will be a “major test” for him.
Ying Yong on his first appearance in the new job:
Faced with the sudden CODIV-19 outbreak, problems such as sloppiness and poor management of work have been exposed among Wuhan and Hubei authorities, reflecting severe loopholes in local governance. The appointment of new officials will not only enhance prevention and control measures against the outbreak but also aim to highlight the urgency of improving crisis-handling capability among officials, analysts said.
Zhao Suisheng, a political scientist at the University of Denver, said there was much less diversity of domestic public opinion about the causes of this crisis than for the trade war or the Hong Kong protests.
“Many Chinese sympathised with the government on the trade war, but the mainstream public opinion now is almost one-sided against the government,” said Zhao, who has written several books on Beijing’s control of information and public opinion. “This is something I haven’t seen since 1989.”..
Zhao from the University of Denver said despite all this, it did not amount to a legitimacy crisis for Beijing. “As long as the economic growth does not see a steep fall, it’s still a key pillar for the party’s legitimacy,” Zhao said. “There’s also overreactions from other countries, including a level of racism abroad, that could be fed into the party’s nationalistic narrative.”
2. The outbreak
China's Hubei Province, center of the novel coronavirus (COVID-19) outbreak, reported 14,840 new confirmed cases and 242 new deaths on Wednesday, the highest daily increases so far, local health authorities said Thursday….
Clinically diagnosed cases are unique to Hubei statistically. The inclusion of those cases drives the surge in the number of new confirmed cases.
Any suspected cases with pneumonia-related computerized tomography (CT) scan results are counted as clinically diagnosed cases, according to the latest version of the diagnosis and treatment scheme released by the National Health Commission.
The provincial health commission said the diagnosis criteria revision has been made to give those who have been clinically diagnosed the timely standard treatment of confirmed cases to further improve the treatment success rate.
Chinese authorities have played down a dramatic jump in confirmed cases of Covid-19 in Hubei province, saying most of the over 14,000 cases added overnight came from changed diagnostic criteria that allowed chest x-rays to be used alongside standard laboratory tests.
Xinhua says "don't be terrified by the sharp increase in new cases", says the goal is to make sure that everyone who needs to rounded up and treated is, and by classifying all those as confirmed cases they will be able to get the epidemic under control faster and prevent its spread. It also motes that the number of suspected cases continues to drop and that that the channels for transmission are narrowing quickly
Taoran Notes says the revised classification methods reflect “seeking truth from facts” and progress in rounding up everyone who should be rounded up
Zeng Guang, a prominent epidemiologist affiliated with the Chinese Center for Disease Control and Prevention, cautioned on his Weibo account Wednesday that even if the outbreak’s turning point had been reached, the epidemic could pick up speed after 160 million people return from their hometowns, to which many had traveled for the Lunar New Year holiday, to where they work.
“What I worry most is that the downward trend we saw lately is because the statistical data was behind the time of infection, and thus has masked the actual upward trend caused by the return trips, making people relax their vigilance,” Mr. Zeng said.
Fox News reporter on the Trump Administration view of the numbers:
A bullet train cleaning staff member tested positive for the new coronavirus, now known as Covid-19, fueling fears that the virus might have been spread to passengers on more than a dozen trains.
China is dragging its heels in accepting help on the ground from international health specialists, diplomats and experts said on Thursday, noting four days after a World Health Organization (WHO) advance team arrived in Beijing no details have been released on how and when the full mission will deploy.
Chinese tech company Baidu said today that it has developed the first free open-source facial scanning model that uses artificial intelligence to identify people who are not wearing protective masks despite the outbreak of fatal novel coronavirus in the country, The Paper reported.
People's Daily has made a short video "Righteously go into battle" on the fight against the epidemic, with quite the soundtrack
Chinese provinces of Anhui, Jiangsu and Jilin, as well as the cities of Shanghai, Chongqing and Hangzhou have approved guidelines to blacklist those who violate quarantine or conceal coronavirus symptoms, travel history in key virus-hit regions or history of contact with confirmed and suspected patients.
Those in violation will not only be subject to legal liabilities in accordance with the law but be blacklisted on the local credit information platform, according to the guidelines.
Two separate research groups led by China's top scientists said they had isolated novel coronavirus strains from samples of infected patients' feces, but further study is needed to prove the existence of fecal-oral transmission
Caixin reports that Beijing had its first COVID-19 patient on January 12, Guangdong's first was January 4, Shanghai's was January 15
After 2,500 kilometers (1,600 miles), 15 checkpoints, and countless temperature screenings, we had reached Beijing. We swung the car into a parking lot just on the corner of an intersection close to the Drum and Bell Tower.
3. How bad is it in the rest of Wuhan?
As more personnel go into smaller cities in the province we may see another spike in cases.
The national health commission says cities with an “epidemic outbreak” must immediately adopt similarly draconian quarantine measures as those in Wuhan.
Several cities and districts in Hubei (Shiyan, Xiaogan, Xiangyang and Huangang) have enacted similar “wartime restraint orders”, asking all everyone to stay at home. These measures will be reviewed and reconsidered every two weeks.
Huanggang, Hebei has issued notices banning all traffic in the city, says everybody must stay at home and groceries and food will be delivered to their doors by neighborhood committee workers.
To further support medical work in Hubei, more than 1,000 doctors, 1,681 nurses and 213 experts from 17 provincial-level regions including Tianjin, Hebei and Shanxi, were dispatched on Wednesday to 16 cities and prefectures other than the provincial capital city of Wuhan, such as Enshi and the Shennongjia forestry district, to assist with the local anti-epidemic fight.
4. Sending in more PLA support
top story on Thursday CCTV Evening News - Xi approves deployment of an additional 2600 PLA medical personnel to Wuhan
The reinforcement medics come from healthcare institutions affiliated with the Army, Navy, Air Force, Rocket Force, Strategic Support Force and Joint Logistic Support Force, as well as the Chinese People's Armed Police Force.
Of them, a first group of 1,400 medical and nursing professionals are set to arrive in Wuhan Thursday before starting treating patients there immediately.
So far, the armed forces have dispatched healthcare professionals in three batches, totaling 4,000, to support Wuhan in the fight against the COVID-19 outbreak.
The arrival of the homemade strategic aircraft has become another confidence boost to the Chinese people, and showed China's determination to eliminate the coronavirus threat as quickly and effectively as possible, analysts said.
5. Economic Impact
Party center’s big fear is mass unemployment.
Chinese Vice Premier Hu Chunhua has called for all-out efforts to ensure stable employment amid the novel coronavirus outbreak.
Hu, also a member of the Political Bureau of the Communist Party of China Central Committee, made the remarks Thursday at a teleconference on employment work amid the epidemic...
Stable employment is significant to resuming production, guaranteeing and improving people's livelihood, and maintaining sound market expectations, Hu said...
Massive layoffs must be prevented via efforts to help businesses keep their payrolls stable, while aid should be offered in a timely manner to those in need, he said.
Recruitment site Zhaopin said this week that around 10 per cent of firms they surveyed were “on the verge of death”, with around 30 per cent planning job cuts and another 30 per cent saying they could not pay their employees on time...
In 2003, which included the severe acute respiratory syndrome (Sars) outbreak, around 8 million people lost their jobs, according to official Chinese data, although real job losses may have been much higher because government data did not cover most migrant workers.
People’s Daily front page commentary asking the cadres to “strive to win the two victories on both controlling the epidemic and realizing the economic and social development goal”. It said, “Taking into account the general situation, we still insist on the economic and social development goal this year. All the economic and social development work decided and planned by the party central shall be done properly, all the goals and tasks set by the party central must be accomplished. There must not be ideas of slowing down or waiting it out.”
While ordering Wuhan to speed up hospital admission and suspected case quarantine, the leading group instructed hard-hit cities in Hubei such as Xiaogan and Huanggang to carry out equally strict measures as in Wuhan in surveillance, quarantine and treatment.
The demand for more medics in Hubei and Wuhan should be fulfilled, and the departure channels of the city and the province need further control, according to the meeting...
Each province is responsible for formulating differentiated epidemic prevention and control strategies based on their own conditions, according to the meeting.
Comment: The local officials are under huge pressure to prevent an outbreak in their areas while at the same time getting their local economy up and running again. It is almost a no-win choice for them, but so far most seem more focused on stringent measures to prevent the spread of the virus.
Even before the outbreak, many small businesses were already grappling with shrinking sales as China’s economy logged some of its slowest growth in decades. With business now at a standstill during the outbreak, many are facing existential liquidity crises. Large numbers say they are having difficulties just paying salaries, adding they can only survive for a matter of months using their current resources, even if Beijing provides support...
A survey (link in Chinese) of 995 small and midsize companies conducted by Tsinghua University and Peking University after the outbreak began showed the vast majority couldn’t survive for more than three months with their current savings. About a third said they could survive for only one month, another third said they could survive for two months, and 17.91% said they could last three months.
A prolonged crisis in which factories and shops are unable to do business would add as much as Rmb5.6tn in new bad debt for lenders, trebling non-performing loans, according to S&P Global Ratings, as companies struggle with repayments.
Bad debt across the banking system could rise from less than 2 per cent at the end of last year to 6.3 per cent of total assets, S&P research shows — a level not seen for two decades.
The ban on dining in applies to restaurants, but employees can continue to have meals at their company canteens. And while residents can still get takeaways from restaurants, they have been encouraged to do this online, and have their meals delivered, rather than collecting their orders.
Chief Financial Officer Maggie Wu told investors that the company’s China retail and local consumer businesses would be hit hardest. Both will bear the brunt of reduced demand and the challenge of delivering products. Customer management revenue and commissions will most likely decline, she said...
Chief Executive Officer Daniel Zhang described the epidemic and resulting widespread quarantine as a Black Swan event. The message: This will hurt, but it will be a one-off.
A Chinese national park operator risks becoming the first high-profile victim of the coronavirus outbreak in the country’s nascent asset-backed securities market, warning against a weakening ability to generate cashflows.
Slender West Lake Tourism Development Group Co., which runs a top-rated national park in the eastern city of Yangzhou, said a statement Wednesday that the epidemic is having a negative impact on its 2.2 billion yuan ($320 million) asset-backed notes.
Hengdian World Studios, one of China’s largest, cautiously reopened for business today after it shut down all production in recent weeks to prevent the spread of the deadly coronavirus.
6. Hong Kong
Beijing has for the first time put a state leader, Xia Baolong, in charge of the cabinet-level office that oversees Hong Kong affairs, strengthening direct supervision over the implementation of its policies in the city while reducing incumbent chief Zhang Xiaoming’s authority in an unexpected demotion...
He has a reputation for being hard-handed and is widely regarded as a trusted ally of President Xi Jinping, as they worked together for more than four years in Zhejiang province in the mid-2000s – Xi as Communist Party chief and Xia his deputy...
The HKMAO, being the group’s secretariat, plays a facilitator role between the two special administrative regions and the central government, which often overlaps with Beijing’s liaison offices in the two cities.
Besides Xia’s appointment, Beijing’s top envoys to Hong Kong and Macau will take up new roles in the HKMAO, too – directors Luo Huining and Fu Ziying, of the Hong Kong and Macau liaison offices respectively, will double as deputy directors of Xia’s office and report to him.
Xia was Xi’s deputy when he was the Communist party’s secretary of the affluent province of Zhejiang from 2003 to 2007. Xia was known for his hardline ideology in a 2014 campaign to tear down thousands of crosses and many underground churches in the province while he later took charge of Zhejiang as its party secretary – a post he held until 2017. He became a vice chairman and secretary general of the Chinese People’s Political Consultative Conference in 2018.
Analysts say Xia’s appointment is a signal that China wants to tighten its control over Hong Kong and further curb its civil society.
Willy Lam, adjunct professor at Chinese University of Hong Kong, said Xia’s appointment is “bad news for Hong Kong”. “It signals that China will bring Hong Kong under closer scrutiny and tighten control over all aspects of the city,” he said.
“With new senior appointments of people not associated particularly with Hong Kong in the past, any policy rethink could be less burdened by set paths or preconceived views and interests.”
A source close to the Hong Kong government also noted Xia’s and Luo’s lack of previous exposure to Hong Kong and foreign affairs.
“There is little ground to expect Xi to relax controls over Hong Kong,” the source said.
“We’re more than willing to work with the UN [and] WHO on this and they won’t let us. I don’t know what their motives are. I do know that apparently more and more people are suffering over there.”'
“Is the Politburo really being honest with us?” he asked, referring to communist China’s top leadership body.
“We’ve offered the Chinese the opportunity to have American doctors from CDC, NIH and others,” National Security Adviser Robert O’Brien said Tuesday evening in Washington. “That offer’s not been accepted at this point, but it’s an outstanding offer.”
The proposed U.S. delegation includes virologists, immunologists and clinical trial design experts from the NIH’s National Institute of Allergy and Infectious Diseases, experts in vaccines and epidemiology, and staff who worked on past outbreaks such as SARS and Ebola, according to a person familiar with the matter.
While the world is joining China’s efforts in fighting the novel coronavirus and rooting for the country with great warmth, some U.S. politicians are smearing China again and again.
They attacked on the country and its system and sowed discord between China and other countries. They sabotaged the bottom line of morality and civilization, created ideological prejudice and spread the virus of Cold-War mentality. What they did has damaged international relations...
Obviously, the U.S. has caused huge damage for itself by its own evil deeds, and such damage is also a serious threat to the Uncle Sam. It should be recognized that ideological prejudice and the Cold-War mentality are destined to be the scourge of international relations.
The same think tank cited in Secretary Pompeo's speech last weekend that ranked US governors in their views towards China also ranks US Executive Branch members. The three considered "friendly 友好" are Stephen Mnuchin, Sonny Perdue and Elaine Chao
Admiral Philip Davidson--commander of the U.S. Indo-Pacific Command--said the United States "was all in" to counter China in the Pacific, citing its "excessive territorial claims, debt trap diplomacy, violations of international agreements, theft of international property, military intimidation and outright corruption."
"The Communist Party of China seeks to control the flow of trade, finance, communications, politics and the way of life in the Indo-Pacific," Davidson said in a speech in Sydney.
The US-China Business Council (USCBC), the National Committee on US-China Relations and the George H. W. Bush Foundation for US-China Relations have organized a shipment to China containing much needed medical supplies, including 2 million masks.
In a letter to Harvard dated Tuesday and posted on the Education Department website, officials cited the recent Justice Department case and asked the school to disclose records of gifts or contracts involving the governments of China, Qatar, Russia, Saudi Arabia and Iran. It also requested records regarding telecommunications giants Huawei Technologies Co. and ZTE Corp. of China; the Kaspersky Lab and Skolkovo Foundation of Russia; and the Alavi Foundation of Iran, among others.
The Education Department said Yale had failed to disclose at least $375 million in foreign funding after filing no reports from 2014-17, according to a document viewed by the Journal. The department, also in a letter Tuesday to the university, sought records regarding contributions from Saudi Arabia, China and its telecom giants, Peking University’s Yenching Academy, the National University of Singapore, Qatar and others. It also asked the university to detail foreign funding of Yale Law School’s Paul Tsai China Center and the new Yale Jackson School of Global Affairs.
Question: isn’t the funding all foreign via Canadian Joe Tsai?
The US Department of Justice announces new charges against Huawei and the US Defense Department now supports tougher restrictions on the company.
The 16-count superseding indictment also adds a charge of conspiracy to steal trade secrets stemming from the China-based company’s alleged long-running practice of using fraud and deception to misappropriate sophisticated technology from U.S. counterparts.
The indicted defendants include Huawei and four official and unofficial subsidiaries — Huawei Device Co. Ltd. (Huawei Device), Huawei Device USA Inc. (Huawei USA), Futurewei Technologies Inc. (Futurewei) and Skycom Tech Co. Ltd. (Skycom) — as well as Huawei’s Chief Financial Officer (CFO) Wanzhou Meng (Meng). The new superseding indictment also contains the charges from the prior superseding indictment, which was unsealed in January 2019.
As revealed by the government’s independent investigation and review of court filings, the new charges in this case relate to the alleged decades-long efforts by Huawei, and several of its subsidiaries, both in the U.S. and in the People’s Republic of China, to misappropriate intellectual property, including from six U.S. technology companies, in an effort to grow and operate Huawei’s business. The misappropriated intellectual property included trade secret information and copyrighted works, such as source code and user manuals for internet routers, antenna technology and robot testing technology. Huawei, Huawei USA and Futurewei agreed to reinvest the proceeds of this alleged racketeering activity in Huawei’s worldwide business, including in the United States.
The full indictment (PDF)
Pentagon officials in the department’s research and engineering division had initially opposed the rule over concerns that it would hurt the ability of U.S. semiconductor companies to remain a dominant force in the industry, according to people familiar with the issue...
The Defense Department's undersecretary for policy, John Rood, has overruled those concerns, the people said...
Currently, a foreign-produced good that contains 25 percent U.S.-origin content can be exported to a company on the entity list. The Commerce rule would cut that threshold down to 10 percent for any goods exported to Huawei or its in-house semiconductor business HiSilicon...
Commerce is also weighing a separate proposal that would subject to U.S. export controls any products going to Huawei that are made in other countries and based on U.S. technology. The proposal would broaden the current rule, which applies only to sensitive U.S. technology controlled for national security reasons.
Commerce Secretary Wilbur Ross recently called Defense Secretary Mark Esper to discuss the issue and a meeting on it is expected next week, the source said. A higher-level meeting will take place on Feb. 28, when U.S. officials will discuss further curbing technology exports to China and Huawei.
Business, Economy and Trade
China’s Overseas Energy Financing Plummets to Lowest in a Decade - Bloomberg The nation’s foreign energy financing dropped by 69% to $3.2 billion in 2019, according to data from Boston University’s Global Development Policy Center. Only three nations received financing for new projects from China’s policy banks last year, compared with five the previous year.
China’s 58 Home Is Said to Delay U.S. IPO as Virus Hurts Demand - Bloomberg 58 Home, the maid and home-maintenance service owned by China’s Craigslist equivalent 58.com Inc., has delayed its planned U.S. initial public offering, according to people familiar with the matter, as the coronavirus outbreak cripples customer demand.
Yicai Global - China Huiyuan Juice's Crisis Spirals as Founder, Daughter Quit The founder of China Huiyuan Juice Group and his daughter have both resigned from their positions on the board of the country's largest private juice provider, as a mountain of debt threatens to engulf the business empire they started from scratch.
Politics and Law
【评论】向习近平总书记看齐，为早日夺取胜利而忠诚英勇斗争！ A think tank under the National Radio and Television Administration praised Xi as “a great proletarian revolutionist 伟大的无产阶级革命家”
Prosecutors Sign Off on Arrest of Former Boss of Policy Bank CDB - Caixin An arrest warrant has been issued for Hu Huaibang, a former chief of policy lender China Development Bank (CDB), who is under suspicion for taking bribes, the country’s top prosecutor said Thursday.
Foreign and Defense Affairs
Chinese military never engages in cyber espionage：Defense Spokesperson - China Military “The Chinese military has never engaged in any form of cyber theft. The US accusation is groundless and totally hegemonic,” said Senior Colonel Wuqian, spokesperson for China's Ministry of National Defense, in a written statement published on Thursday.
China issues regulations on military flags - China Military he Regulations aim at giving full play to the role of military flags as an inspiration to the troops and establishing the military flags management system for the new era.
Belt and Road actors brace for coronavirus shock – Panda Paw Dragon Claw The SOEs’ concerns go beyond just inconvenience at their overseas bases. The severe chokehold on the movement of personnel, goods and supplies is already threatening to delay project progress and trigger non-compliance clauses in project contracts. In more than one case, SOEs referred to such risk in their instructions to staff.
Markham, Ont., rejects proposal to end hoisting foreign flags outside City Hall - The Globe and Mail The flag of the People’s Republic of China will still be permitted to fly outside City Hall in one of Ontario’s fastest-growing municipalities after a proposal to ban the hoisting of foreign flags on special occasions was defeated.
Hong Kong and Macao
Hong Kong teen who ‘received HK$48,000’ from financial supporter of anti-government protesters arrested for money laundering, drug trafficking | South China Morning Post An 18-year-old man who police said received HK$48,000 (US$6,200) from activists raising money for anti-government protesters facing Hong Kong’s justice system has been arrested on suspicion of money laundering and drug trafficking, the force announced on Wednesday.
Taiwan says it didn't need China's permission for WHO meeting - Reuters in a small diplomatic breakthrough for the island, its health experts were this week allowed to attend an online technical meeting on the virus. China’s Foreign Ministry said that was because China gave approval for Taiwan’s participation. Taiwan Foreign Ministry spokeswoman Joanne Ou said China was trying to take credit for something it didn’t deserve.
Tech and Media
Yicai Global - Tencent Becomes Top Shareholder of Chinese Video Streamer Bilibili Tencent Holdings, the world's largest gaming company, has increased its stake in Bilibili to 18 percent, becoming the largest shareholder in China's equivalent of Youtube.
Society, Arts, Sports, Culture and History
2019-nCoV — A Teaching Moment, Spring Term 2020 – China Heritage The following remarks were addressed to senior high school students by a Chinese Language teacher at the Linyin Campus of High School No.7 in Chengdu, Sichuan province 四川成都七中林蔭校區 as schools opened in the second week of February after an extended Spring Festival holiday occasioned by the outbreak of the coronavirus (2019 novel coronavirus or 2019-nCoV) in Wuhan, the capital of Hubei province.