driving the day
1. It’s baaaack…
This morning, the National Health Commission (NHC) released the official COVID-19 numbers for yesterday.
On Thursday (NHC):
- China reported 10 new confirmed COVID-19 cases – nine of which were imported from abroad.
- The one domestically-transmitted case was in Xinjiang (see yesterday’s Tip Sheet).
But things got real in the afternoon.
On Friday afternoon, the Xinjiang Health Commission reported that the virus had spread in its capital Urumqi, so far finding (Xinjiang NHC):
- Five new confirmed cases
- Eight new asymptomatic cases
Some context: The Xinjiang outbreak comes seemingly out of nowhere – after 149 days of reporting no infections.
While its origin remains unknown, Urumqi authorities have rushed to respond to the outbreak by:
- Putting 135 people in quarantine
- Suspending the operation of the subway, buses, shopping malls, and hotels
- Cancelling 326 inbound and 302 outbound flights
- Imposing lockdown measures on all residential compounds
- Requiring outside visitors to quarantine at centralized facilities for seven days
Get smart:Expect Xinjiang to follow the model pursued by Beijing when there was an outbreak there last month. That means expansive testing and tracing and targeted lockdowns.
2. SMIC’s big debut
There’s a new rising star on the STAR Market.
On Thursday, China’s leading chipmaker Semiconductor Manufacturing International Corp. (SMIC) had its trading debut on Shanghai’s high-tech board.
It went well. Real well (Caixin 1):
- “SMIC shares opened at 95 yuan ($13.59) on their first trading on Shanghai’s…STAR Market, representing a 246% gain from their listing price of 27.46 yuan.”
- “The company initially raised about 46.3 billion yuan from the share sale.”
Investor enthusiasm probably has a lot to do with geopolitics:
- “Investors are betting that SMIC will become one of the biggest beneficiaries of Beijing’s recent drive to make China more self-sufficient in the high-tech chips.”
- “That drive has taken on extra urgency over the past two years, following moves by Washington to cut off supplies of such U.S-made chips to leading Chinese telecom equipment makers ZTE and Huawei.”
Get smart: As we’ve pointed out in the Tip Sheet before, China’s leaders have been obsessed with self-sufficiency ever since the US started putting the screws to Chinese tech companies in 2018.
Get smarter: China’s chipmakers are still years behind the world leaders.
3. Action and reaction
During the past two weeks, we’ve been following the newest phase of Washington’s full court press against Beijing.
By way of a recap, in the past couple weeks, the US has:
- Announced sanctions against officials involved with Xinjiang repression
- Signed the Hong Kong Autonomy Act into law and ended Hong Kong’s autonomous status
- Rejected China’s South China Sea claims
- Vowed to restrict visas for Huawei employees
On Thursday, foreign ministry spokeswoman Hua Chunying issued China’s response:
- Hua came out swinging, blasting Washington for its hypocrisy on the Huawei and Xinjiang issues.
But when asked if the phase one trade deal was still on, Hua had an interesting reply (Reuters):
- “We always implement our commitments but we know that some in the U.S. are oppressing…and bullying China.”
- “China must respond to the bullying practices by the U.S. side; we must say no, we must make responses and take reactive moves to it.”
Get smart: The key word here is “reactive.” China does not want to expand its conflict with the US and it desperately wants the trade deal to go forward.
Get smarter: Beijing must respond so as to not be seen as being pushed around by Washington, but it also wants to keep from escalating the situation.
4. Xi reaches out to MNC CEOs
On Thursday, Xi Jinping wrote a letter to his good friends at the Global CEO Forum.
Some context (SCMP):
- “[The council], a group of senior executives from 39 big multinational companies, was set up in 2013 by the Chinese People’s Association for Friendship with Foreign Countries, one of Beijing’s diplomatic arms.”
- “Xi held a meeting with delegates from the group in Beijing June 2018.”
Xi sought to reassure on China’s economy (Xinhua):
- “The fundamentals of China’s long-term sound economic growth have not changed and will not change.”
He told foreign CEOs they are welcome in China:
- “China will keep deepening reform and expanding opening-up, and provide a better business environment for the investment and development of Chinese and foreign enterprises.”
- “[He added] that those CEOs have made the right choice to stay rooted in China.”
Xi’s not on board with the decoupling craze:
- “[China] will be unswervingly committed to … making economic globalization more open, inclusive, balanced and beneficial to all, and promoting the building of an open world economy.”
Get smart: Foreign companies have felt increasingly unwelcome over the past decade. It’s going to take a lot more than a nice letter to make them feel welcome again.
Xinhua:Xi voices confidence in China’s economy, pledges wider opening-up
SCMP:China President Xi Jinping promises foreign firms reform, opening up amid heightened US tensions
5. Li’s all about ’em snakes
On Wednesday, National People’s Congress (NPC) chairman Li Zhanshu wrapped up a four-day inspection tour to Guangxi.
Top of the itinerary: Wildlife protection.
Some context:In February the NPC banned the trading and consumption of wild animals (see February 25 Tip Sheet).
Li got close and personal with a range of animals on his visit. He:
- Toured the breeding farms for snakes and bamboo rats
- Went to a flower and birdtrading market
- Listened to the treatment of smuggled wild animals at a customs office in Pingxiang, bordering Vietnam
- Hiked in the Chongzuo National Nature Reserve, home of the white-headed langur
Li acknowledged that the ban could hurt some poor farmers (Xinhua):
- “Support should be given to farmers concerned to help them shift and upgrade their businesses in an orderly manner.”
- “[We must] prevent farmers who are being lifted out of poverty from incurring economic losses and falling back into poverty.”
Get smart: Passing laws to ban the trade of wildlife is the easy part. Implementation is the real challenge.