1. The virus just keeps on coming
COVID-19 infection numbers are growing.
On Tuesday, China reported (NHC):
- 71 new domestically transmitted symptomatic cases – up from 61 on Sunday.
- 15 new domestically transmitted asymptomatic cases – down from 23 on Sunday.
Get this: The outbreak that started from Nanjing has now spread to 16 provinces.
Of the total 86 new infections, there were:
- Three in Nanjing, Jiangsu
- 32 in Yangzhou, Jiangsu
- 12 in Zhuzhou, Hunan
- 12 in Wuhan, Hubei
- Nine in Zhengzhou, Henan
- One in Kaifeng, Henan
- One in Zhumadian, Henan
- Six in Yantai, Shandong
- Three in Zhangjiajie, Hunan
- One in Xiangtan, Hunan
- Two in Yiyang, Hunan
- Three in Ruili, Yunnan
- One in Xiamen, Fujian
Local travel restrictions are emerging as a result:
- The transport ministry banned ride hailing services from crossing city borders in medium and high risk regions.
- Jiangsu province closed 83 highways.
- Train stations in 23 cities have been ordered to suspend passenger services to Beijing.
Some context: Before we went to press, China had four areas designated as high-risk regions and over 140 medium-risk regions.
Get smart: More travel restrictions are in the works. Brace for impact, and stay safe.
2. Get yo body movin’
On Tuesday, the State Council issued a new five-year plan (FYP) on exercise.
Warm up with some context: FYPs to get China moving kicked off in 1995.
Now race to this goal: Facility investment is a new, key priority.
By 2025, the government will increase the public’s access to sporting facilities by:
- Ensuring that a fitness facility lies within a 15-minute walk for everybody in counties, towns, and villages
- Building or expanding 2,000 sports parks, public fitness centers, and public stadiums
And this caught our eye – the government is also looking at gamifying exercise (Gov.cn 1):
- “We will explore the establishment of a unified national ‘sports bank’ system,…develop a unified scientific sports score system,…and encourage the issuance of sports consumption vouchers to the masses.”
Slow down a sec: Who’s gonna pay for all the shiny new stuff?
- Unlike the 2016 FYP, the new plan did not include any mention of fiscal policy support.
Get smart (and fit): Focusing on infrastructure investment is a smart move.
- Lowering the threshold of entry for us couch potatoes greatly increases our chances of leaving the couch.
The bigger picture: This is a sweaty, win-win policy. Getting more people to exercise regularly not only improves their well-being but boosts the services sector and domestic consumption.
3. Don’t want none unless it’s home-spun, hun
On Monday, international media outlets were abuzz over a mysterious document quietly issued by the Ministry of Finance (MoF) and the Ministry of Industry and Information Technology (MIIT) back in May.
- Titled “Document 551,” the notice reportedly contains procurement guidelines for public hospitals, companies, and other state-owned entities.
- The MoF and MIIT have not made the document public.
What everybody is talking about: The document sets local content requirements on some 315 products.
According to an anonymous former US official who obtained a copy of the catalogue, products on the list include (Reuters):
- Medical equipment
- Ground-based radar equipment
- Testing machinery
- Optical instruments
- Items used for animal husbandry
- Marine and geological equipment
The US response: It’s outrageous, it’s unfair!
- The anonymous official said it violated China’s commitments under the World Trade Organization and the US-China phase one trade deal.
But hold on a second: Government local product procurement requirements have been on the books for decades.
- In 2002, China’s legislature mandated that government funds should only buy foreign when domestic products were not available.
- In 2016, the State Council explicitly required public hospitals to prioritize procurement of domestic medical equipment.
Get smart: We’ll need to see the doc to assess if it really represents a tightening of procurement rules, but buy-local rules are not new in China.
Get smarter: As US-China relations grow ever-more strained, Beijing has a good reason to try to source key products locally.
The irony: This will probably further hurt trade ties with the US.
- One often meets one’s destiny on the road one takes to avoid it.
4. SAMR probes auto chip price gouging
On Tuesday, the market regulator (SAMR) launched a probe into price gouging by auto chip distributors.
Some context: There’s been a global shortage in auto chips since late last year, as carmakers were ill-prepared for the quick rebound in automobile demand following the worst of the pandemic.
- Carmakers are desperate for auto chips and willing to pay a high price.
Surprise, surprise: Some auto chip brokers took the opportunity to jack up prices (Yicai).
- Vroom, vroom. Prices have seen 10-fold increases, with some brokers pocketing ten years’ profits in just six months, according to industry insiders.
SAMR’s solution (SAMR):
- “[We] will further strengthen supervision and law enforcement and crack down on illegal activities such as hoarding, price-gouging and collusion to drive up prices.”
Get smart: This investigation may relieve short-term pain for some carmakers, but will do nothing to resolve the wider shortage in auto chips.
The big picture: China imports roughly 95% of its auto chips, and still has a looong way to go in securing the supply chain.
5. Don’t expect any changes
Everyone wants to know what China will do about climate change.
Some context: Countries were supposed to submit updated 2030 climate targets to the UN by July. But China missed the deadline.
That’s why we were curious to hear what China’s climate envoy Xie Zhenhua had to say at a webinar on Tuesday.
The big reveal: There will be no big reveal, despite US and UK officials urging China to act faster.
Xie said that China wouldn’t be changing its climate targets:
- China will stick with its goal of peaking carbon emissions by 2030.
- The government will soon release policy papers and detailed implementation plans, ahead of the COP26 summit in November.
More context: The State Council – the government’s highest body – has promised to release a peak emissions action plan by the end of 2021.
At COP26, countries are expected to try to reach a new agreement to limit global warming to 1.5 degrees Celsius, lower than the currently agreed-upon 2 degrees.
But China’s not on board, according to Xie (SCMP):
- “Now is the time for action and implementation of our commitments, not the time to argue whether it should be 1.5 or 2 degrees.”
Get smart: China wants to position itself as a global leader on climate change. Arguing against more aggressive targets isn’t the best way to do that.