1. COVID-19 breezes through towns
China’s latest COVID-19 outbreak continues to spread.
On Thursday, China reported (NHC):
- 21 new domestically transmitted symptomatic cases – down from 24 on Wednesday
- Eight new domestically transmitted cases – up from two on Wednesday
The virus spread further.
Of the 29 new infections identified on Thursday, there were:
- 13 in Nanjing, Jiangsu
- Four in Yangzhou, Jiangsu
- Four in Huai’an, Jiangsu
- One in Wuxi, Jiangsu
- Two in Changsha, Hunan
- One in Changde, Hunan
- Two in Zhuzhou, Hunan
- One in Zhangjiajie, Hunan
- One in Beijing
Don’t overlook Zhangjiajie, even though only one infection was reported there.
- At least 18 people later identified as having COVID had recently traveled to this tourist hotspot, a mountainous park that inspired the movie Avatar.
- Local authorities have ordered all tourist sights to close in Zhangjiajie, and told travelers not to visit.
Zhangjiajie is not alone.
- Multiple local governments have told residents to postpone vacation and travel plans – urging caution without imposing hard lockdowns.
Get smart: Tourism and related service sectors were already looking to take a hit as local governments prepare further restrictions.
What to watch: Can authorities bring this round of outbreaks under control by the end of September and minimize the economic impact on the week-long October national holiday?
2. Pan shares his thoughts on yuan reform
On Thursday, Pan Gongsheng, head of the State Administration of Foreign Exchange (SAFE) and deputy governor of the People’s Bank of China (PBoC), published a column in which he outlined how he envisions currency reform proceeding.
Writing in China Forex, a magazine published by SAFE, Pan wrote that regulators will strive to strengthen the role of the market in deciding how foreign exchange is used.
They will also:
- Prevent risks posed by large fluctuations in cross-border capital flows
- Promote efficient, safe, and low-cost cross-border trade settlement
- Relax or remove restrictions on the scale of cross-border investment and use of funds
- Maintain a zero-tolerance policy for illegal behavior in the FX market
- Develop a system that uses big data and AI to monitor cross-border flows
Pan not only affirmed China’s commitment to the internationalization of the yuan, but said that there’s no turning back.
- “The opened window won’t be closed again.”
Get smart: While liberalization is progressing far more quickly than in the past, regulators are still obsessed with control and stability.
- That means that there are limits as to how far and how fast regulators will move on opening the capital account.
3. Return of the iron rice bowl?
On Thursday, the SCMP reported a leap in fresh graduates aspiring to work for the government this year.
According a poll by Zhaopin, a website for job seekers (SCMP):
- The number of fresh grads indicating they hope to find government jobs doubled in 2021 – reaching 11.4%.
A glance at economic data makes it easy to see why:
- Many private companies remain hesitant to hire, with consumption lagging and much of the service sector poised to lock down at any moment.
- There are a few more government jobs available than last year – making the official examination slightly less competitive (Huatu).
And the public sector may offer a better work-life balance:
- Many young people are chafing against the 9-9-6 work culture, whereby they endure 12 hour days, six days each week.
But we think it’s simpler than that.
Keep in mind:
- Even after interest doubled, government jobs were still the lowest-ranked option among respondents to the Zhaopin survey.
- And there are more than 9 million fresh graduates coming onto the job market this year.
Get smart: It’s not that government jobs are great, just better than nothing.
Get smarter: Once private sector hiring revives, and fewer bankruptcies and bailouts make headlines, expect the trend to reverse.
4. More like (data security) guidelines than actual rules
Thank heavens: More clarity is coming on data security.
On Wednesday, Zuo Xiaodong, vice president of the China Academy of Information Security, revealed that new guidelines on identifying “important data” will soon be released.
Some context: “Important data” can be understood as sensitive data relevant to national security.
- Under China’s emerging data governance regime, what companies can and can’t do with “important data” will be heavily regulated.
The problem: “Important data” has only been vaguely defined, frustrating companies as they try to assess how much of their data will be subject to restrictions.
The bigger problem: That’s because policymakers themselves haven’t completely sorted it out.
- Exactly what constitutes “important data” for specific industries has not been decided.
These guidelines should (hopefully) help policymakers close the gap. According to Zuo, the guidelines will provide a framework that officials can reference as they work to define “important data” for their own sectors.
- This will be especially helpful for less technically savvy corners of government.
Fun fact: These guidelines will replace a 2017 document which attempted to identify examples of important data across 28 specific sectors. Zuo says the new guidelines take a higher-level approach, including:
- Eight categories of “important data”
- A comprehensive consideration of national security risk, instead of narrowly focusing on confidential and secret information
Get smart: This is big news for companies, too.
- The guidelines should give them a head start in assessing their data security compliance.
5. The electric slide
To talk climate, you need to talk power. So get nerdy with us, from the peaks to the valleys.
On Thursday, China’s macro planner, the NDRC, doubled down on electricity market reforms.
Shocking news: China is the world’s largest electricity consumer. And power is its largest source of greenhouse gas emissions.
Here’s the situation:
- China has different prices for electricity at “peak” and “valley” (off-peak) hours.
- But it doesn’t charge nearly enough during peak demand.
The results? Peak hour electricity users are effectively subsidized – and more coal is burned.
Hence these reforms (NDRC):
- Beijing will let prices slide closer to electricity’s real economic value in each period – shifting demand accordingly.
- Electricity prices for end-users may further rise by at least 20% during peak demand hours.
- The NDRC expects action by the end of December.
Higher prices may be bad news for business, but great news for energy storage, which is the key technology needed to facilitate renewable-sourced electricity meeting peak demand.
And the more energy storage China develops, the more renewables it can deploy.
Get smart: These reforms pave China’s path to a carbon-free grid, and a better chance of reaching Xi Jinping’s carbon goals.