Driving the Day
1.Xi urges continued vigilance
On Wednesday, Xi Jinping chaired a meeting of the Politburo Standing Committee.
Top of the agenda: Preventing the spread of the coronavirus.
Wednesday’s meeting came against the backdrop of some cheering news:
- “[Official] figures showed that for the first day since the virus took hold late last year…China has recorded no locally transmitted cases.”
The main risk now comes from imported cases:
- “Beijing recorded 21 new cases of infections from abroad on Wednesday, mostly people traveling from Spain and Britain.”
- “The Beijing infections accounted for the bulk of the 34 new imported cases in mainland China.”
Xi warned officials that that the crisis is not over (Xinhua):
- “The risk of outbreak rebounding still exists in other regions due to increasing personnel mobility and crowd gathering, he said.”
- “Xi particularly noted the mounting risk of imported cases as COVID-19 rapidly spread across the world.”
Get smart: No new locally transmitted cases shows that China’s extreme measures have succeeded in halting the spread of the virus.
Get smarter: As life returns to normal, the risk of a second wave increases. That risk is further heightened by the rapid spread of the virus outside China.
CPC People: 中共中央政治局常务委员会召开会议 中共中央总书记习近平主持会议
Reuters:Beijing hit by record imported coronavirus cases, no China transmissions
Xinhua:Xi chairs leadership meeting on epidemic control, economic development
2.Global headwinds cloud economic outlook
Wednesday’s Politburo Standing Committee meeting had a second focus – getting the economy going again.
The official readout admitted the outlook is not pretty:
- “Downward pressure on the economy continues to increase.”
To combat that pressure, the top leadership wants low-risk areas to resume normal business operations.
- Officials are tasked with helping companies address shortages oflabor, capital, and raw materials.
Medium-risk areas should promote the “orderly” resumption of work, while also remaining vigilant in preventing a resurgence of the virus.
This was interesting: Top leaders acknowledged that the international situation represents a major headwind.
- “The meeting stressed that [we] must strengthen our study and analysis of the international economic situation, and formulate targeted policy measures in a timely manner.”
Get smart: Even if the virus remains contained in China, the economic outlook is bleak given the looming global recession.
CPC People: 中共中央政治局常务委员会召开会议 中共中央总书记习近平主持会议
3.The four key policy support buckets
Chinese authorities are rolling out new policy efforts to get the economy up and running on a daily basis.
Over the past five days, we’ve noticed those efforts increasingly falling into four clear buckets, which we highlighted in our most recent note for clients (Trivium):
- “It has become clear in recent days that the government has trained its attention on stabilizing support for four key areas of the economy, including:
- Logistical services
- Consumer purchases
- Inbound foreign investment
- Bank liquidity”
Want to know more? We’ve decided to make the piece available to all Tip Sheet readers. So do yourself a favor and read the whole thing.
We’re also tracking any provincial economic data we can get our hands on.
Here’s an excerpt for Guangdong – a key province leading the economic recovery:
- “March 17: all industrial enterprises with annual revenues of RMB 20 million or more have resumed operation.”
- “March 14: all of the province’s top 100 electronics manufacturers have resumed work, operating at 83% of normal levels, with 89% of their workforces having returned.”
- “March 13: 80% of the 1,704 ongoing provincial water projects have resumed operation.”
- “March 10: 99.1% of delivery service workers have resumed work.”
Get smart:Read the whole note.
Trivium: Shifting concern from supply to demand
4.Slowly and orderly
As the spread of COVID-19 precipitates a shut down in the rest of the world, China’s economy is getting back to normal bit by bit.
For more, check out the Trivium Business Activity Index!
Here are our estimates as of March 19:
- The Trivium National Business Activity Index indicates that China’s economy is operating at 72.6% of typical output. That’s up from 71.5% on March 18.
- The Trivium National Large Enterprise Activity Index indicates that China’s large enterprises are operating at 74.9% of typical output. That’s up from 74.8% on March 18.
- The Trivium National SME Activity Index indicates that China’s small businesses areoperating at 71% of typical output. That’s up from 69.4% on March 18.
Resumption is trending up in China, but the rest of the world is going the other way.
Our question: Are we going to see a global demand shock?
Trivium: Trivium Business Activity Index
With COVID-19 increasingly under control in China, the Chinese leadership is
increasingly looking to leverage the crisis to bolster China’s standing in the world.
How they are doing it:By providingmedical teams and material to countries fighting the virus.
President Xi Jinping and Premier Li Keqiangcontinued the trend this week with calls to Spanish Prime Minister Pedro Sánchez and President of the European Commission Ursula von der Leyen, respectively.
- Both Xi and Li pledged moral and material support to help Europe manage the crisis.
- Sanchez and von der Leyen thanked China for its support and expressed hope for future cooperation.
Additionally, China agreed to furnish Europe with two million surgical masks, 200,000 advanced masks, and 50,000 testing kits.
Get smart: After a wave of international opprobrium following its initial botched response, China is now winning global plaudits for its generosity in the global fight against COVID-19.
Get smarter: China is eager to show itself as a responsible and benevolent global power. COVID-19 is an opportunity to do just that.
NYT:Its Coronavirus Cases Dwindling, China Turns Focus Outward