Driving the Day
1. Few asymptomatic carriers in Wuhan
This morning, the NHC dropped the latest numbers for domestic COVID-19 cases.
Between April 17 and 19 (NHC):
- There were 55 new COVID-19 cases, of which 34 were imported.
- 16 locally transmitted cases were recorded in Heilongjiang andthree in Guangdong.
The government believes that human error may be to blame for the virus’s spread in Harbin, the capital city of Heilongjiang and epicenter of regional cases (Xinhua).
- Last Friday, provincial authorities penalized 18 officials and medical staff, including the vice mayor of Harbin, for lax enforcement of epidemic protocols.
Guangzhou, capital of Guangdong and another regional hotspot, also heightened the risk level of two districts.
As a result (21st Century Biz):
- Guangzhou shut down some tourist sites again.
- Other provinces started to restrict access to visitors from Guangzhou.
According to the NHC, between April 17 and 19, there were also 147 new asymptomatic cases, of which 11 were imported.
There was some troubling news out of Wuhan (Yicai):
- Between April 8 and 15, the Wuhan government did 275,400 tests and discovered 182 asymptomatic cases.
- That’s a ratio of 0.066/100.
Do the math: In a city of 11 million, that means there are over 7,000 asymptomatic cases.
Get smart: Chinais nowhere near done with COVID-19.
21st Century Biz:
Driving the Day, Cont’d
2.Politburo still focused epidemic control
On Friday, the Politburo held its monthly meeting.
Surprise, surprise–controlling the COVID-19 epidemic remains the top priority (CPC People):
- “It is an arduous task to…prevent a rebound in the epidemic.”
Hubei continues to be the frontline for epidemic control (Xinhua):
- “The meeting stressed continuous epidemic response measures in hard-hit Hubei Province and its capital city of Wuhan, including extensive nucleic acid testing among key population groups and those who volunteer to get tested.”
But Beijing is also a concern:
- “Epidemic prevention and control work in Beijing should be further strengthened.”
The recent surge in cases in Heilongjiang (see previous entry), which borders Russia, also has leaders concerned:
- “The meeting also called for building a stronger defense at border cities against the virus, stressing better allocating medical resources and improving quarantine and testing capacities in these cities.”
The meeting also signaled that its mask diplomacy will continue:
- “We must further promote international cooperation in epidemic prevention and control, deepen exchanges and cooperation with the World Health Organization, [and] continue to provide as much assistance as possible to relevant countries.”
Get smart: The leadership’s top priority remains controlling COVID-19. They know that if the virus is not contained, it will be impossible to carry out other policy initiatives.
CPC People: 中共中央政治局召开会议 中共中央总书记习近平主持会议
Xinhua: Xi Focus: Xi chairs leadership meeting on regular epidemic control, economic work
Driving the Day, Cont’d
3. Leaders signal more economic support
Friday’s Politburo meeting also discussed economic policy.
Some context: The Politburo discusses economic policy every quarter afterquarterly economic data is released.
The official readout was decidedly downbeat:
- “The first quarter of this year was extremely unusual.”
- “The unexpected novel coronavirus epidemic has had an unprecedented shock on our economy.”
- “The current challenges to economic development are unprecedented.”
Economic policy has shifted focus from the supply side to the demand side:
- “The meeting stressed that we must actively expand domestic demand.”
The government will do its part:
- “Proactive fiscal policy must become more proactive.”
- “[We will] increase the deficit rate, issue special sovereign epidemic bonds, and increase local government special project bonds.”
- “Stable monetary policy must become more flexible.”
- “[We must] use RRR reductions, lower interest rates, re-lending and other measures to preserve adequate liquidity and guide the loan prime rate downwards.”
But leaders were also quick to signal that they are not taking their eyes off the bigger picture:
- “[We] must lose no time in advancing reforms, and be adept at using reform measures to solve development challenges.”
Get smart: Economic policy is in a high state of flux. Everybody agrees that support needs to be stepped up, but there is significant debate on what measures are most appropriate.
CPC People: 中共中央政治局召开会议 中共中央总书记习近平主持会议
China’s economy suffered the worst downturn on record in the first quarter of 2020 (see April 17 Tip Sheet).
Within the broader economic data dump, one stat stands out – incomes were slashed during Q1 (SCMP):
- “Per capita disposable income dropped 3.9 per cent to 8,561 yuan (US$1,209) in the first quarter from a year ago, the first fall since the series began in 2013.”
The distribution of the pain isn’t surprising:
- “China’s rural population suffered the most, with incomes dropping 4.7 per cent…while urban residents saw their earnings fall by 3.9 per cent.”
What’s more, migrant workers – the lifeblood of China’s export machine – saw unemployment skyrocket:
- “Friday’s data also showed that the number of rural migrant workers taking jobs outside their hometowns at the end of February plummeted by 30 per cent to 122.5 million, meaning about a third of China’s migrant workers were unemployed.”
Get smart: The fact that the stats guys have been allowed to publish such dire data may be a positive sign that data manipulation for political purposes is receding – emphasis on “may.”
Get smarter: It’s going to be real hard to get people out and spending given the hammering that incomes have taken.
5.PBoC testing new digital currency
The economic volatility and uncertainty from the COVID-19 outbreak hasn’t stopped the central bank (PBoC) from moving forward with plans to launch their digital currency.
The latest: The PBoC has started trialing the new currency, known as DCEP, with four banks in four cities.
Caixin has the details:
- “The central bank is conducting closed-system trials in Suzhou, Xiong’an, Chengdu and Shenzhen, as well as testing hypothetical scenarios for the 2022 Winter Olympics, to optimize and improve the currency’s functionality.”
Here are the key players:
- “The four state-owned banks ―Industrial and Commercial Bank of China (ICBC), China Construction Bank, Agricultural Bank of China, and Bank of China ― the three telecom companies ― China Telecom, China Mobile, and China Unicom ― and Tencent Holdings are all involved in the development of the digital currency.”
How do we know it’s happening?
- “Screenshots of a purported pilot version of a wallet app for China’s forthcoming digital currency have been circulating on social media.”
- “The People’s Bank of China (PBOC) confirmed that the tests are underway but said that doesn’t mean the digital currency is being officially launched.”
Get smart: This digital currency could be a game changer for officials’ ability to track and supervise financial transactions in China.
6.No news on Two Sessions from top legislators
Mark your calendars!
On Friday, the National People’s Congress Standing Committee (NPCSC) – China’s legislature – decided to hold its next bi-monthly session from April 26-29.
Seven legislative bills are up for review (Xinhua):
- Biosecurity Law
- Revision to the Animal Epidemic Prevention Law
- Revision to the Law on the Prevention and Control of Environmental Pollution by Solid Waste
- Law on Governmental Sanctions for Public Employees
- Amendment to the Copyright Law
- Revision to the People’s Armed Police Law
- Decision to authorize the suspension of certain statutory provisions in the Hainan Free Trade Zone
Get smart: Those first two items are a direct response to the COVID-19 outbreak.
What was missing: The meeting failed to mention anything about the NPC’s annual meeting, the Two Sessions.
Important context: The Two Sessions were originally scheduled for March 5 this year, but was postponed indefinitely due to the COVID-19 outbreak (see February 17 Tip Sheet).
Our take:We still think the NPCSC will set a date for the Two Sessions when it meets at the end of the week.