Trade War
Newsletter 114 - May 14, 2022
Welcome to the 114th edition of Trade War.
WHO chief calls China’s zero-Covid policy ‘unsustainable’ then gets censored. Beijing considers limits on Chinese travel overseas. And debate emerges within China over cost of pandemic controls.
Three Chinese universities pull out of global rankings following Xi speech. Well-off residents eye life abroad. And BlackRock downgrades China stocks and bonds.
WHO chief says China’s zero-Covid “not sustainable”
The World Health Organization chief called China’s zero-Covid policy “not sustainable,” but warned of the possibility of a “tsunami” of infections that could kill 1.6 million people, if controls are lifted, reports the Financial Times.
“As we all know, the virus is evolving, changing its behaviors, becoming more transmissible. With that changing behavior, changing your measures will be very important. When we talk about the zero-Covid strategy, we don’t think it’s sustainable,” WHO director-general Tedros Adhanom Ghebreyesus said.
Tedros comments came as a new study from Shanghai’s Fudan University published in the journal Nature predicted that a surge in Omicron could cause as many as 112 million symptomatic infections, 2.7 million intensive care admissions, and 1.6 million deaths between May and July.
“Whether and for how long a zero-Covid policy can remain in place is questionable,” given the spread of Omicron, the study concluded.
Indiana University’s School of Public Health professor Marco Ajelli, a contributor to the study, said China should consider vaccinating more elderly people and allowing the use of overseas vaccinations rather than China’s less effective Sinovac and Sinopharm shots to “chart a path away from zero-Covid.”
Beijing hits back calling remarks ‘irresponsible’
Beijing has responded with anger to the WHO chief’s comments on zero-Covid, attacking his remarks as “irresponsible,” reports Bloomberg News
“We hope the relevant individual will make objective and reasonable views of China’s epidemic protocol and policy and try to get a better understanding of the facts and refrain from making irresponsible remarks,” Foreign Ministry spokesman Zhao Lijian said at a press briefing in Beijing.
“The dispute is notable because the WHO, and Tedros in particular, has provided a source of support for President Xi Jinping since the coronavirus was first discovered in the central Chinese city of Wuhan,” reports Bloomberg.
“Tedros was among the world leaders who attended the Beijing Winter Games earlier this year, even as the U.S. and other Western countries waged diplomatic boycotts over human rights issues. The WHO’s decision to skip over the letter “xi” in the Greek alphabet while naming the omicron variant also fueled claims that it was attempting to protect the Chinese president.”
WHO Tedros censored on Weibo
“WHO Chief says China’s zero-Covid-Policy is unsustainable - WHO’s official post gets censored on Weibo. And the entry ‘Tedros’ in Chinese is “not found according to relevant laws and regulations,” tweets Swiss journalist Martin Aldrovandi.
Debate emerges over China’s pandemic policy
Tedros remarks come at a sensitive time as disagreements over Xi’s pandemic control policies may be emerging, reports Bloomberg News.
“Even as the Politburo Standing Committee warns citizens not to question Covid-control policies, it's not even clear if the two most powerful leaders in the country are in full agreement,” reports Bloomberg.
“When Premier Li Keqiang recently said the employment situation was "complicated and grave," he didn't mention Xi's Covid Zero strategy. The mixed messaging is raising questions about whether there’s a split at the top over the best way out of the pandemic.”
“It is probably a stretch to say that Xi and Li are personally at loggerheads, but their statements do represent divergent views within the system on Covid and its impact,” said Richard McGregor, author of The Party: The Secret World of China’s Communist Rulers. “China is reaching the point where the need for a genuine debate about whether the price being paid for further lockdowns is worth the economic damage.”
And here is a piece from the Wall Street Journal’s Lingling Wei that considers whether premier Li Keqiang may be pushing back against Xi’s heavy, anti-market hand.
‘Only in China’
“Only in China,” writes French television journalist Arnauld Miguet, tweeting a picture of an airport worker on the tarmac spraying disinfectant.
‘A highly politicized disease’
“More than 2 years after China ended its unprecedented lockdown in Wuhan as the first COVID-19 outbreak paralyzed the central Chinese city, the Chinese Government remains adamant on sticking with its zero-COVID strategy, raising serious questions of exactly how China is going to exit this pandemic,” writes Shawn Yuan in The Lancet.
“COVID-19 has become a highly politicized disease in China, and any voice advocating for the deviation from the current zero-COVID path will be punished”, one official said to the journal.
‘Strictly limit’ unnecessary travel overseas
China announced plans to “strictly limit” unnecessary travel outside China by Chinese citizens, then quickly denied it, reports Reuters.
In a statement on Thursday, China’s National Immigration Administration announced the new curbs, saying they were part of efforts to limit the spread of Covid. Just one day later, the administration seemingly reversed itself, denying reports that new passport issuances had been stopped and that foreign residency cards held by Chinese citizens were being cancelled.
“Officials have promptly processed certificates for people who need to travel abroad for necessary and urgent matters such as study, scientific research, trade and businesses and medical issues, the National Immigration Administration (NIA) said in a statement,” reported Reuters.
Still, the call to limit travel was not withdrawn. "There remain great uncertainties in the development of the pandemic and a big risk of getting infected during trips overseas," the NIA also warned on Friday. "People in the country should continue not to travel abroad for unnecessary, non urgent purposes."
Universities pull out of global rankings
Three prestigious Chinese universities have ended their participation in overseas university rankings, reports Yojana Sharma for University World News.
Beijing-based Renmin University of China, Nanjing University and Lanzhou University announced they have withdrawn from “all international university rankings” to instead focus on “educational autonomy” and “education with Chinese characteristics,” according to Chinese media reports.
The move follows a major speech on education by Chinese president Xi Jinping, given at Renmin University, one of China’s top ten institutions.
“We cannot blindly follow others or simply copy foreign standards and models when we build world-class universities of our own. Instead, we must proceed from our country’s realities and blaze a new path to developing world-class universities based on Chinese conditions and with Chinese characteristics,” and which served “the party and the people,” Xi said on April 25.
If China’s top three universities - in Beijing, Tsinghua University and Peking University, and in Shanghai Fudan University - were to pull out of rankings, “that would be an earthquake,” said Gerard Postiglione, emeritus professor at Hong Kong University.
‘1949 all over again’
Worn out by pandemic controls, some of China’s middle and upper classes are considering moving abroad, report the Wall Street Journal’s Shen Lu and Stella Yifan Xie.
“Immigration lawyers and agents say they have seen a surge in inquiries over the past month. Emigration-focused chat groups have sprung up on China’s ubiquitous WeChat messaging app as well as on encrypted platforms like Telegram,” reports the Journal.
In the last two months the number of inquiries about moving overseas is up ten times from a year ago, according to Ying Cao, a New York-based immigration lawyer.
“They feel like it’s 1949 all over again,” Cao said referring to when more than two million Chinese fled China for Hong Kong and Taiwan following the Chinese Communist Party’s victory. “There is a shared sense of fear and urgency to get out.”
BlackRock downgrades China stocks and bonds
“We are downgrading Chinese stocks and bonds to neutral on the deteriorating macro outlook. We see a growing geopolitical concern over Beijing’s ties to Russia. This means foreign investors could face more pressure to avoid Chinese assets for regulatory or other reasons,” says BlackRock in its weekly market commentary.
“We previously kept our modest overweight on Chinese assets because we saw improved valuations making up for the risks. The rapidly worsening outlook for China’s growth on widespread lockdowns to curtail a COVID spike has changed this.”
“Lockdowns are set to curtail economic activity. China’s policymakers have heralded easing to prevent a growth slowdown – but have yet to fully act. And yields on Chinese government bonds have fallen below those on US. Treasuries amid policy divergence, eroding their previous appeal.”
Notable/In Depth
“DiDi Global, the Chinese ride-share company, just said "if it does not delist from the NYSE, it will not be able to complete the cybersecurity review and rectification, which would have a material adverse impact on the Company’s ability to conduct normal operations,"“ tweets Bloomberg Opinion’s Tim Culpan.
“The escalating disruption of daily life from China’s “zero covid” policy, promoted at the highest level, risks alienating a population that has come to rely on what some scholars describe as the Communist Party’s implicit contract with the public: The leadership supports the economy, allows people to get rich and stays out of everyday affairs in exchange for political quiescence,” write the Washington Post’s Christian Shepherd, Lyric Li, and Vic Qiang.
Some younger Americans believe China has the "right to a more prominent place" in the world order, Dexter Roberts, a senior fellow at the Atlantic Council's Asia Security Initiative and author of The Myth of Chinese Capitalism, said to VOA News Ralph Jennings.
“Our findings have important implications for understanding political support and stability in China. Perhaps most importantly, the Chinese public appears to be of one mind about government: In addition to a high self-reported trust in government, the Chinese public possesses a widely held, implicit trust,” write University of California, Merced’s Haifeng Huang and Chanita Intawan, and University of Georgia, Athen’s Stephen P. Nicholson.
“Implicit trust also affects regime support, a finding that may help explain why China has maintained one of the world’s longest enduring modern authoritarian regimes.”
Perspectives on Politics @PoPpublicsphere
"Our results have important implications for understanding regime support in the world’s largest authoritarian country" IN GOVERNMENT WE TRUST: IMPLICIT POLITICAL TRUST & REGIME SUPPORT IN #CHINA By @haifeng_huang, Chanita Intawan & Stephen P. Nicholson https://t.co/BDTm56U5cx https://t.co/501DPAOh8A“Stimulus measures won’t restore confidence in a private sector that—having learned the hard way that Mr. Xi will always put political control before economic freedom—is very much once bitten, twice shy,” writes former Australian prime minister Kevin Rudd in the Wall Street Journal.
“Nor will stimulus spending do more than paper over the reality that China’s investment-driven economic model is reaching its limits. China’s population is peaking and aging rapidly. Its workforce is shrinking and productivity growth is stalling.”
Montana picture
Here is a recent shot of the Missoula valley looking north.
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