Trade War

Newsletter 13 - March 3, 2020

Welcome to the 13th edition of Trade War (and apologies for its late arrival.) This week’s newsletter will be the last one before Trade War goes on a likely several week-long hiatus. I will be busy with various launch events for my new book “The Myth of Chinese Capitalism”, on sale starting March 10, and so will need to focus on that.

And hey, as long as we are on the topic, for those of you in New York City next week please consider joining me and The New Yorker’s Jiayang Fan at the Asia Society on March 12. We will be talking about my book, the coronavirus, trade and more on the U.S.-China relationship. See details below.

If you miss that, I will also be speaking at the Overseas Press Club of America on March 17 (St. Patrick’s Day, but no green beer available). Please consider attending that as well.

China’s great Return-to-Work

Even as factories begin to reopen and employees come back, it is hardly an easy process. Here is a Bloomberg News piece on the great Return-to-Work.

Providing breathing space for struggling banks

Taking a leaf from the U.S. in 2009 when mark-to-market accounting was eased to help banks get through the financial crisis, China is delaying recognition of its banks’ growing bad loans.

“This will provide breathing space,” Harry Hu, of S&P Global Ratings told Bloomberg News. “It will also likely undermine standards, making some Chinese banks less creditworthy in the long run.”

“An unexpected boon”

Not everyone is doing badly. One big winner is the online education industry. E-learning companies are doing brisk business as schools remain closed and students study from home. The big winner is TAL Education and its founder Zhang Bangxin. Here is a good piece on this trend from Yue Wang in Forbes.

Buy the dip

Stocks may be suffering but that won’t last forever. UBS is telling its clients that now is the time to buy, reports Bloomberg News.

But run far away!

At the same time, multinationals are looking far afield as they try to diversify their supply chains out of China. Both the trade war and the coronavirus are “pushing multinationals to move production to places that are as uncorrelated with China's cycle as possible,” writes economist Alicia Garcia Herrero in the Nikkei Asian Review, mentioning Mexico, Turkey and Eastern Europe as possibilities.

First negative growth since the Cultural Revolution?

Fears are growing that China will report negative growth in GDP in the first quarter; that would the first time since the Cultural Revolution, reports the South China Morning Post.


Citing China fears, Marcio Rubio is urging a CFIUS review of an AT&T media deal, reports Bethany Allen-Ebrahimian of Axios. AT&T wants to sell its stake in a European media company to a Czech private equity firm that has been implicated in a CCP influence scandal, Allen-Ebrahimian writes.

“Propaganda can’t move mountains”

Chinese officials are privately complaining that Xi Jinping is putting them in an impossible position as they try to control the virus but also boost economic growth, Lingling Wei writes in the Wall Street Journal.

Here comes spending

Beijing has announced big spending on urban projects to boost growth. “The city government said a special team would be set up to ensure the construction of the key projects and would not be affected by the ongoing coronavirus epidemic,” reports the official Xinhua News Agency.

Notable/In Depth

My latest take on the crisis as well as a nice plug for my book, here in the Missoulian newspaper.

Three articles suggest there was a coverup in China of the coronavirus, reports Jeremy Goldkorn for SupChina.