Driving the Day
1. Global health experts prep everyone for the worst
On Thursday, Hubei, the epicenter of the coronavirus epidemic, recorded 4,823 new confirmed cases of the coronavirus.
That’s significantly fewer than the 13,000+ reported on Wednesday.
It’s a positive development, but global health experts are laying out worst case scenarios that are truly scary:
- “A top infectious-disease scientist warns that things could get far worse: Two-thirds of the world’s population could catch it.”
- “So says Ira Longini, an adviser to the World Health Organization who tracked studies of the virus’s transmissibility in China.”
Hold up: We caution readers to remember that the job of public-policy minded health experts is to prepare policymakers for the worst.
Some context: In 2014, leading health experts estimated that one million people would die from the Ebola outbreak in West Africa. In the end, 11,000 people died.
Get smart: It’s quite likely that cases are still under-reported in Hubei. But so far, we haven’t seen credible any evidence that cases outside of that province are materially under-reported.
What to watch: Next week will be critical as over 100 million people return to work after the Spring Festival.
Driving the Day, CONT’D
2.Li urges differentiated measures to control epidemic
On Thursday, Premier Li Keqiang chaired a meeting of the Central Leading Small Group (CLSG) for the Work to Counter the Novel Coronavirus Pneumonia Epidemic.
Some context: Whereas the State Council executive meeting only convenes once a week (see yesterday’s Tip Sheet), the CLSG has been meeting almost daily since its establishment on January 25.
The CSLG reports directly to the Politburo Standing Committee (PBSC) – and Xi Jinping himself.
It consists of nine prominent members:
- Chair: Premier Li Keqiang
- Deputy chair: propaganda czar (and PBSC member) Wang Huning
- Ding Xuexiang, Xi’s chief of staff
- Sun Chunlan, vice premier in charge of healthcare
- Huang Kunming, head of the CCP’s Propaganda Department
- Cai Qi, Beijing Party secretary
- Wang Yi, state councilor and minister of foreign affairs
- Xiao Jie, secretary general of the State Council
- Zhao Kezhi, state councilor and minister of public security
Thursday’s CSLG meeting called for:
- Setting epidemic control and prevention measures based on differentiated local conditions
- Improving procedures for diagnosing and treating the coronavirus
- Accelerating the research and development of treatment drugs
Get smart: The differentiated measures have two main purposes. First, control the outbreak at its epicenter, and second, get the economy humming again in areas where it’s less of a concern.
Gov.cn:李克强主持召开中央应对新冠肺炎疫情工作领导小组会议 部署进一步分级分类有效防控 要求优化诊疗加快药物攻关科学防治
3. Coronavirus whacks the auto market
One part of the economy that we know is getting wholloped by virus-related shutdowns is the auto market.
The latest numbers are grim (Eastmoney):
- “In January, China’s automobile sales volume was 1.9 million, down 18% year on year.”
That’s the biggest monthly y/y drop on record, and things looks set to get worse (Bloomberg):
- “Full-year sales may decline 5%, provided that the virus outbreak starts to steadily fade in April, PCA said.”
That’s a big if – especially given that dealerships are still on lockdown (Yicai global):
- “A little over 80 percent of China’s car dealerships have not yet reopened after the extended Chinese New Year holiday…the findings of a new industry survey showed.”
What’s more, with most auto companies yet to resume operations, overall output will also take a big hit (Eastmoney):
- ““As of February 12, of the 183 vehicle production bases [in China], 59 have started to resume production – accounting for 32.2%.”
- “According to calculations, [which assume enterprises start production] 10 days late [after Chinese New Year],…it is estimated that industry output will be reduced by more than one million vehicles.”
Get smart: This is the last thing the already ailing auto industry needed.
Bloomberg: China Car Sales Plunge to Fresh Depths as Virus Spreads
Yicai:Four-Fifths of China’s Car Dealers Are Still Shut Due to Epidemic, Industry Group Says
4.Sweet relief…for some
China’s financial regulators are asking banks to ramp up targeted cheap financing to help individual businesses.
This begs the question: Who exactly is eligible for that sweet government quiche?
According to regulators, the following types of business are eligible for financing:
- Those that produce key epidemic control supplies
- Those that have been hit hard by the outbreak
Reuters tells us that China’s big tech firms are applying, including:
- Food delivery giant Meituan Dianping,
- Smartphone maker Xiaomi
- Ride-hailing provider Didi Chuxing
- Internet security business Qihoo 360
Applicants are hamming up their business woes in order to make their case. (Reuters)
- Facial recognition start-up Megvii applied for 100 million yuan to develop technology including means to improve the accuracy of identifying masked individuals in crowds
Episodes like this one have folks wondering whether government relief is really going to make to the companies that need it the most.
But according to a joint stock bank executive, banks are still leaning towards safe bets: (Yicai)
- [We are] mainly looking at industry leaders. After all, we must consider the risks.
Get smart: As with the government’s uphill battle to get financing to SMEs, getting banks to help smaller businesses weather the outbreak will be difficult.
5. Employment worries mount
On Thursday, Vice Premier Hu Chunhua chaired a meeting to discuss how to ensure stable employment amidst the coronavirus outbreak.
Hu echoed other top leaders and told businesses to get back to work:
- “He encouraged enterprises to resume production in a well-organized and safe manner while carrying out epidemic prevention and control work.”
The government looks to be using a two-pronged approach to support employment:
- Give support to small businesses so that they can keep people employed.
- Allocate more resources to taking care of those who have lost their job.
Hu singled out two groups for particular concern:
- “Specific efforts should be made to take care of key groups such as college graduates and migrant workers.”
Get smart: Government credibility has already been damaged by the botched response to the epidemic. The last thing that the Party needs now is millions of disgruntled unemployed workers.
Xinhua:Vice premier stresses stable employment amid epidemic
6.CCDI lays down the law
If you’re a Hubei-based slacker, loafer, shirker, malingerer, layabout, or slugabed—beware.
Because the Central Committee for Discipline Inspection (CCDI) has got your number.
On Thursday, CCDI secretary Zhao Leji convened a meeting of the organization’s standing committee to launch a campaign against poor official performance in the wake of the coronavirus outbreak and get the epidemic under control.
The body’s new mission:
- “[S]trictly enforce discipline and law enforcement, pursue accountability, and investigate and deal with such…issues as perfunctory performance, fraud…passive response, embezzlement, misappropriation of rescue funds and materials…and dereliction of duty.”
- “[R]ectify formalism and bureaucracy…deal with the problem of failing to take responsibility.”
- “Focus on strengthening…discipline inspection and supervision in Hubei Province and Wuhan city.”
The CCDI also wants to get the economy back on track, vowing to:
- “Focus on the current market supply, resumption of work and production, construction of major projects, [and] implementation of tax and fee reduction policies.”
Get smart: Beijing wants to prevent a recurrence of the local-level bungling that led to an inefficient early response to the coronavirus.
Get smarter: Fear of the higher-ups was major contributing factor to said bungling. We’re not sure a top-down disciplinary push is the way to fix that.