Driving the Day
1. Li advocates local responsibility
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: By our count, this is the 12th CLSG meeting since its establishmenton January 25.
At the meeting, Li called for greater efforts to:
- Enhance care for frontline community workers
- Push for agricultural companies to resume normal operations in time for spring farming
- Expedite RD for treatment drugs and vaccines
Li also stressed the importance of using locally-targeted measures to deal with the continuing epidemic.
For Hubei and Wuhan:
- Li wants strict epidemic prevention and control measures to continue.
For Beijing and other major cities with large population flows:
- Li wants each business entity and community to take responsibility for epidemic prevention.
For other provinces, Li wants local governments to:
- Adjust their emergency response levels according to the on-the-ground epidemic situation
- Apply differentiated control measures in each county based on local conditions
- Resume normal life and work, while avoiding unnecessary gatherings
Get smart: Top officials are worried about the economy and keen to getareas with no new cases back to work as soon as possible.
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 部署做好下一步防控工作 加强对防控一线社区工作者关心关爱 统筹推进疫情防控和春耕生产
2.Economy showing (small) signs of life
China’s economy remains severely depressed.
But there are some signs of life (Shine):
- “Shanghai streets on Monday morning were almost as busy as they were before the coronavirus outbreak, traffic police said.”
- “Meanwhile, the number of Metro passengers was also on the rise, with 1.1 million people transported by 9am, 334,000 more than Monday last week, although still 63 percent less than on working Mondays before the epidemic, Shanghai Metro said.”
Most hotels have opened their doors again (Travel Daily):
- “According to qunar.com, the number of hotels [operating] in Guangzhou and Shenzhen has returned to the level of early January.”
- “More than 95% of hotels in Shanghai, Chengdu and other popular cities have resumed operations.”
- “In the past week, hotel bookings increased 34% compared with the week before.”
And Starbucks also appears to be perking up (Bloomberg):
- “[Starbucks] Chief Executive Officer Kevin Johnson said in a letter posted online Thursday [that] Starbucks now has opened 85% of its 4,292 China locations.”
Get smart: Although activity is picking up, we estimate that the economy is only running at about 40% of its normal level.
What to watch: Any uptick in virus cases will severely impede efforts to get the economy ticking again.
Shine: Monday commuting traffic approaches normal levels
Travel Daily: 国内酒店超九成恢复营业，商务人士为主要客群
Bloomberg: Starbucks Says 85% of China Stores Now Open, Sees Virus Impact Waning
Sina Finance:央企全力复工复产 履约国际订单
3. COVID-19 is coming, look busy
On Monday, Xi Jinping paid a visit to the Academy of Military Medical Sciences and the School of Medicine at Tsinghua University to speak with medical researchers.
Xi took the opportunity to make some suggestions on the fight against the coronavirus (CGTN).
- “There are two main task fronts in this battle, one is disease prevention on the front-line, another is research and medical supply.”
He also had some thoughts on the role of technology in addressing the epidemic (Xinhua and CGTN):
- “Science and technology are the most powerful weapon [sic]in humanity’s battle against diseases.”
Then Xi offered a game-changing piece of advice (Xinhua):
- “Xi urged prompt efforts to develop safe and effective vaccines, drugs and testing kits to help fight the virus.”
Xi also used the occasion to repeat one of his favorite messages:
- “We need to command more core technologies with our own intellectual property.”
Get smart: Xi’s a savvy politician who will try to leverage the crisis to push forward his political program.
4.Public pushback on revised green card rules
Last week, the Ministry of Justice releasednew draft rules on permanent residence for foreigners.
Some context: The current rules are famously stringent and make it impossible for most foreigners to apply.
More context: Even so, the number of foreigners applying for permanent residence in China is growing fast.
- The most recent numbers come from H1 2018, when 2,409 foreigners succeeded in obtaining premanent residence.
- That was109% y/y growth.
The new draft rules (slightly) lower the bar for foreigners to apply for a Chinese green card.
- Foreigners without a previous history of living in China can now apply.
- Foreigners can now apply on the basis of certain salary and education thresholds.
The draft rules have caused a public backlash.
The public is concerned that:
- Foreigners will take away opportunities and resources from locals.
- Certain vagaries in the draft rules may allow officials to game the system.
- The government may give foreigners special treatment.
Get smart:Despite its tiny number of immigrants, China is facing the same anti-immigrant sentiment cropping up in other major economies. That makes it hard for the government tap into global talent pools.
The big picture: China’s demographic outlook is grim, meaning they will need more immigrants if they want to sustain economic growth over the medium term.
5.MoF revises fiscal spending rules
Yesterday, the Ministry of Finance (MoF) released new administrative rules on fiscal spending.
This is a big deal: The rules cover all projects funded by the public budget – about RMB 10 trillion worth.
Compared to the 2011 version, there are a few key changes.
First, more funding will be evaluated:
- Evaluation is now required for projects funded by the general public budget as well as the budgets for government-managed funds and state-owned assets.
- Moreover, performance evaluations are required for projects funded by government investment funds, sovereign wealth funds, public-private partnerships (PPP), government procurementservices, and government debt, among others.
Second, evaluations will be more stringent:
- Projects are now evaluated on their performance in several categories – including quality, timelines, cost, sustainable impact, economic, social, and ecological benefits, among others.
- For each category, three target levels are specified to make the rules more operational and practical.
And to make sure the new rules are followed:
- Those agencies who receive a poor performance evaluation and don’t do enough to rectify the situation will see their budgets cut.
Get smart: This is the central government’s latest effort to ensure that increasingly scarce funds go where they are most needed – making every fen count.