Driving the Day
1. Li yearns for a normal life
On Monday, Premier Li Keqiang chaired yet another meeting of the Central Leading Small Group for the Work to Counter the Novel Coronavirus Pneumonia Epidemic.
For all you cool kids: Those in the know call it the CLSGftWtCtNCPE.
Li heard reports via video conferencefrom the central steering group in Hubei, led by Vice Premier Sun Chunlan.
Li assured Hubei leaders that the central government has got their back:
- “We will send as much [medicine and medical equipment] to Hubei as you need.”
For other provinces, Li wants local governments to prepare people to go back to work and normal life.
- Provinces that have lowered their emergency response level will have more policymaking discretion to get their jurisdictions back ontrack.
Instead of keeping people at home, local governments should:
- Implement proper protective measures in public facilities, such as office buildings and shopping malls
- Provide the public with easily digestible virus protection guidelines they can follow in their day-to-day life
Some context: New confirmed cases outside of Hubei dropped to nine yesterday. That’s the first single digit increase since the outbreak’s early days.
Get smart: The quicker lifegets back to normal, the smaller the hit to the economy.
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 推动武汉市进一步加强防疫和救治工作 部署落实分区分级差异化疫情防控策略
2.The PBoC’s moral hazard
The central bank’s (PBoC) efforts to help key industries weather the coronavirus outbreak through an RMB 300 billion re-lending program has come under scrutiny (See February 10 Tip sheet).
Some context: The loans have interest rates of between 2% and 3.15%, which the PBoC estimates will lower average financing costs for companies by around 150 basis points.
More context: To be eligible, companies need to apply to industry regulators. Banks then go and pick the companies they want to lend to from the regulators’ lists and apply for reimbursement from the PBoC.
The promise of cheap financing has found lots of takers:
- There are over 3,000 companies on government’s list that are eligible for the loans.
And the requests keep rolling in, raising concerns that RMB 300 billion just ain’t gonna cut it.
According to an insider from a big bank, things are getting a bit out of hand (Caixin).
- “The central bank is a in a bit of a bind as companies’ appetite grows larger and larger.”
Get smart: There are many ways that companies, industry regulators, and banks can game the system.
3. NPC postpones and prohibits
Yesterday, the National People’s Congress Standing Committee (NPCSC) held an all-day meeting in Beijing.
Well, kinda: In order to minimize travel during the epidemic, 57 of the 170 legislators attended via videolink.
The big news: As expected (see February 17 Tip Sheet), the NPCSC decided to postpone the annual Two Sessions to a later, as yet unannounced, date.
- This is the first time the gathering has been postponed since the government started setting a fixed date for it in 1999.
But that’s not all: The meeting also adopted a decision on prohibiting trade in wild animals, amounting to a near total ban on the consumption of wildlife.
The meeting also previewed its 2020 legislative agenda in response to the coronavirus epidemic, which will include:
- Revising the Wild Animals Protection Law and the Animal Epidemic Prevention Law
- Expediting its consideration of the Biosecurity Law
- Improving the Infectious Diseases Prevention and Control Law
- Improving the public health emergency management system in general
Get smart: The government is scrambling to address the structural issues behind the coronavirus outbreak, but there’s still lots more to be done.
4.Big manufacturers want better logistics
Do you harbor a sneaking suspicion that the government’s work resumption rates are a bit too high?
Then you mightbe interested in a recently released survey of 342 big Chinese manufacturing companies by the China Enterprise Confederation (CEC)(see February 12 Tip Sheet).
As of February 20:
- Over 97% ofmanufacturers had resumed work.
- But only 66% of employees were back at their jobs.
- On average, the companies operated at around 59% of their full capacity.
It’s good to be an SOE: Private companies face more obstacles to reopening than their state-owned peers.
Coastal provinces are hardest-hit:
- Guangdong, Zhejiang, and Jiangsu hadlower capacity utilization rates than inlandprovinces, mainly due tolabor shortages.
This explains the government’s direct involvement in transporting migrant workers back to coastal areas (see February 18 Tip sheet).
The largest manufacturers are also facing a logistics nightmare (21st Century Biz):
- “Poor inter-provincial transportation is the biggest obstacle to the normal operation of the industrial chain.”
Get smart: The logistics industry is still only operating at one-third of its normal capacity.
Get smarter: The survey’s results are in line with official stats.
21st Century Biz:中企联最新调查报告：中国制造业500强企业复工复产率达97%，产能利用率近60%
5.Chinese internet officially rated PG-13
Better get all those Lei Feng memes out of your system: Expanded censorship regulations governing online content are set to come into effect on March 1.
The regulations encourage content platforms to promote family-friendly, state-positive material, and prohibit the production or dissemination of content which:
- Contravenesconstitutional principles
- Endangers national security
- Harms national honor and interests
- Denigrates national heroes
- Incites terrorism and extremism
- Incites ethnic discrimination
- Promotes cults and feudal superstitions
- Spreads rumors that disrupt economic or social order
- Contains obscenity, pornography, violence, gambling, murder, terror, or criminal activity
- Is slanderous or infringes on privacy
Some context: Similar rules have been in place for over a decade, but the new regulations are more expansive and specific, increasing the burden of compliance on content platforms, and even pinpointing where in interface layouts encouraged content should appear.
Get smart: Though the regulations were released back in December, the implementation is particularly timely for the Party, given the increasing focus on maintaining social order in the wake of public discontent surrounding the government response to COVID-19.