COVID-19 International Developments: Daily Scan, April 21, 2020
Prerna Gandhi, Associate Fellow, VIF
Strategic
US riles its rivals with missile moves and calls for Beijing to join New START

The U.S. Navy's video uploaded on March 19 had little drama to draw the world's attention away from the coronavirus pandemic. What looked like an ordinary missile was in fact a hypersonic glide vehicle, a new-fangled weapon that flies five times the speed of sound and changes direction mid-flight to evade defences. The successful American test came as all three powers rush to upgrade their nuclear and conventional arsenals, and as the post-Cold War arms control framework collapses. The last vestige, the 2010 U.S.-Russia treaty known as New START, expires in February 2021, removing limits on the number of strategic nuclear weapons the countries can possess and deploy. The Donald Trump administration insists any extension should include China, which wants no part of the deal. Now some experts are warning that the end of New START, coupled with U.S. plans to place conventional intermediate-range missiles in Asia, could mark the beginning of a true China-Russia military alliance.

France becomes fourth country with more than 20,000 coronavirus deaths

France on April 20 officially registered more than 20,000 deaths from the coronavirus, becoming the fourth country to pass that threshold after Italy, Spain and the United States, and the pace of increase in fatalities and infections sped up again after several days of slowing. “The epidemic is very deadly and is far from over,” France’s public health chief Jerome Salomon told a news briefing, adding that the death toll was now higher than that of the heat wave in the summer of 2003.

US has no authority to investigate China: Chinese Experts

Trump said at anApril 19 briefing that the US government wants to send a team to China to investigate the novel coronavirus pneumonia (COVID-19) outbreak. The US president said he is not happy with China, where the COVID-19 emerged in December 2019 in Wuhan, Central China's Hubei Province. China, like many other countries and regions in the world, was attacked by the virus, and it is not an accomplice, Geng Shuang, spokesperson of the Chinese Foreign Ministry, told a press briefing on April 20. "In 2009, the H1N1 started in the US and spread to 214 countries and regions, causing nearly 200,000 deaths. Who asked the US to pay for their losses?" Geng asked. "In the 1980s, AIDS was first discovered in the US and later spread to the world. Who held the US accountable? And did anyone ask the US to bear the consequences of the financial turmoil in the US in 2008 and the collapse of Lehman Brothers, which eventually turned into a global financial crisis?" Geng added. "I don't even remember when there was such a thing about holding others accountable or seeking compensation," he said.

China may be keeping coronavirus data for commercial gain: Trump adviser

White House adviser Peter Navarro charged on April 20 that China may be withholding data about early coronavirus infections because it wants to win the commercial race to create a vaccine. The United States, which has been the country worst affected by coronavirus pandemic according to official statistics, has repeatedly calling on Beijing to share early data on the outbreak, which began in China. “One of the reasons that they may not have let us in and given us the data on this virus early, is they’re racing to get a vaccine and they think this is just a competitive business race, it’s a business proposition so that they can sell the vaccines to the world,” Navarro told Fox Business Network. “But we’re going to beat them. We’re going to beat them because of President Trump’s leadership. We’re going to beat them because HHS has already got a five-company horse race,” said Navarro, referring to the U.S. Department of Health and Human Services.

Merkel urges 'transparency' from China on outbreak

German Chancellor Angela Merkel on April 20 urged China to be as transparent as possible about the coronavirus outbreak, as Beijing faces mounting pressure over its management of the crisis. Merkel urged for more information about the early days of the outbreak, which originated in the central Chinese city of Wuhan. "I believe the more transparent China is about the origin story of the virus, the better it is for everyone in the world in order to learn from it," Merkel told reporters in Berlin. Chinese scientists say the virus was likely first transmitted to humans at a wet market where wild animals were sold. Unproven theories that the virus came from a maximum-security virology lab in Wuhan have been raised by US officials, including Secretary of State Mike Pompeo who has said an investigation was under way into how the virus "got out into the world".

Iran opens up as economic woes trump virus infection fears

Iran on April 20 began opening intercity highways and major shopping centres to stimulate its sanctions-choked economy, gambling that it has brought under control its coronavirus outbreak -- one of the worst in the world -- even as some fear it could lead to a second wave of infections. Stores from high-end malls to the meandering alleyways of Tehran's historic Grand Bazaar opened their doors, though the government limited their working hours until 6 p.m. Restaurants, gyms and other locations remain closed, however. The state-owned polling centre ISPA found the virus has hurt the income of 50% of those surveyed, with 42% saying their businesses closed as a result. Of those polled this month, 13.5% said the outbreak left them jobless. The survey interviewed 1,563 people and offered no margin of error. Iran's economy suffered from over 20% unemployment among its youth and over 40% inflation even before the outbreak.

Israeli Prime Minister Netanyahu and Rival Benny Gantz Agree to Form Unity Government

Israeli Prime Minister Benjamin Netanyahu and his rival Benny Gantz have agreed to form a unity government, a move that would avert the prospect of another election as the country grapples with the coronavirus pandemic and keep the Israeli leader in power while he faces trial on corruption charges. On April 20, Mr. Netanyahu’s Likud party and Mr. Gantz’s Blue and White party issued a statement saying an agreement for a “national emergency government” has been signed after weeks of talks that had faltered in recent days. Under the deal, which the two leaders cast as an emergency government to fight the coronavirus, Mr. Gantz will be named deputy prime minister and is to get a turn as prime minister halfway through their three-year term, in October 2021, switching roles with Mr. Netanyahu.

Trump to sign order to temporarily suspend immigration into US

US President Donald Trump said on April 20, he will sign an executive order to temporarily suspend immigration into the United States."In light of the attack from the Invisible Enemy, as well as the need to protect the jobs of our GREAT American Citizens, I will be signing an Executive Order to temporarily suspend immigration into the United States", Trump said in a tweet late on April 20. The United States is the worst-hit country with 784,000 confirmed cases of COVID-19 and 42,094 fatalities.

Economic
South Korean currency tumbles as unconfirmed report indicates that North Korea’s Kim Jong Un is seriously ill

The Korean won weakened sharply on April 21 against the dollar on unconfirmed reports that North Korean leader Kim Jong Un is seriously ill. The South Korean markets also saw sizable declines, with the Kospi down 2.62% while the Kosdaq index fell 3.47%. Shares of defence firm Victek skyrocketed 29.66% while North Korea exposed stocks Hanil Hyundai Cement and Hyundai Elevator plummeted more than 6% each.

Japan Cabinet OKs reworked extra budget for $1.1 trillion virus package

Japan's Cabinet on April 20 approved a reworked fiscal 2020 supplementary budget to finance universal cash hand-outs, expanding the size of a record economic package plan to 117.1 trillion yen ($1.1 trillion) aimed at cushioning the fallout from the coronavirus pandemic. In a rare move, the extra budget was reworked and boosted to 25.69 trillion yen from the previously planned 16.8 trillion yen due to a sudden policy shift by the coalition government to provide a cash hand-out of 100,000 yen per person, including foreign residents. The record spending plan, now expanded from the initial 108.2 trillion yen, includes loan programs and deferred tax payments, and the sum of fiscal spending is 48.4 trillion yen. The extra budget is expected to be submitted to parliament around April 27, with its enactment likely on May 1, one week later than the government originally scheduled. The cash hand-outs should begin by the end of May, and people will need to apply for the money via mail or online, officials said.

US oil price back above zero after historic plunge

The price of US oil clawed back above zero on April 21 after plunging into negative territory for the first time as the coronavirus pandemic crushes demand in global energy markets. West Texas Intermediate, the US oil benchmark, was fetching $1.67 a barrel in early Asia trading after starting the session at -$14, meaning that producers were paying buyers to take oil off their hands given limited access to storage in the US. At one point on April 20, producers were paying more than $40 a barrel to get rid of their oil. A barrel of WTI crude cost $18.27 on April 17. The negative prices were the latest sign of the crisis in the oil sector as lockdowns implemented by authorities to smother the coronavirus outbreak cut demand for crude by as much as a third.

China expanding natural gas storage facilities as international prices dip

The construction of the first natural gas storage complex in western China recently began, with total investment set to reach 7 billion yuan ($990 million). The complex includes three storage tanks in Shanshan County in Northwest China's Xinjiang Uygur Autonomous Region, China National Petroleum Corp said on April 20. It said the designed natural gas storage capacity is 5.6 billion cubic meters, with load level reaching 2 billion cubic meters. China's oil and gas reserve capacity can cover about 90 days of use but that's far behind the US and Japan, which have capacity of half a year to 200 days. China has built 27 natural gas tanks but its load levelling capacity stood at a little more than 12 billion cubic meters, accounting for less than 4 percent of the country's annual natural gas consumption, media reports said. That's far below the international standard of 12-15 percent.

Trump's coronavirus stimulus package tests credibility of dollar

The costs of anti-coronavirus measures by countries worldwide now total about $8 trillion, 9% of the world’s GDP. Of the $8 trillion, $2.3 trillion comes from the U.S., sending the U.S. budget deficit and balance of government debt higher than during the 2008-2009 global financial crisis.If the government finances the $2 trillion economic package with 10-year bonds, annual interest payments will total $12 billion -- a mere 3% of the interest paid in fiscal 2019. However, the worsening U.S. budget will influence the theoretical value of the dollar. The Nikkei group found that the theoretical rate of the yen will become 93 yen per dollar in contrast to the current 107. The credibility of the dollar depends on whether the massive fiscal stimulus can lead to a V-shaped recovery. If the contraction continues, the dollar and U.S. bonds will depreciate markedly. Despite all that, on a trade-weighted basis dollar is at a three-year high. That poses a risk to governments and companies around the world that have borrowed in dollars and now face a tougher time repaying those debts. Goldman Sachs analysts said they continue to favour the dollar against the euro, for example, over the short term.

Coronavirus hits German services, job fears dent consumption: finance ministry

Measures to contain the coronavirus pandemic are hitting Germany’s services and the retail sector especially hard, the finance ministry said on April 21, adding that factory closures were also pushing down industrial production. “The consumer climate has also dropped noticeably,” the finance ministry said in its monthly report. “The growing uncertainty about future employment is clouding consumers’ propensity to buy and income expectations.”

China economy enters vicious circle as business cuts crush demand

Beijing's hopes of reviving the economy through domestic demand are at stake -- which had started to become more important as the government attempted to rebalance the economy. Consumption contributed to nearly 60% of China's growth last year as traditional engines such as investment and exports lost steam. The weeks of suspended economic activity, together with additional expenditures required to restart production, has already killed off many cash-strapped companies. The resulting job losses, income cuts and worries over a dim economic outlook are creating weak spots in China's demand for goods and services, leaving many fearing a longer-lasting downturn."China now relies more heavily on domestic demand and household consumption -- the new pillars of its economy that have been hit hard amid the COVID-19 pandemic," said Bruce Pang, head of macro and strategy research at China Renaissance Securities in Hong Kong.

IMF’s $1tn lending power is not all it is cracked up to be

The IMF faces a big dilemma in its efforts to support the global economy at its time of desperate need. Simply put, the fund’s problem is that most of the $1tn that it says it can lend is effectively unusable. The core problem is that the vast bulk of the fund’s firepower is effectively inert. This is because of the idea of “conditionality”. Under normal circumstances, when the IMF is the last-resort lender to a country, it insists that the borrowing government tighten its belt and exercise restraint in public spending. The problem, though, is that belt-tightening is a completely inappropriate approach to managing the current crisis. But that kind of solution would quickly run up against the IMF’s collateral problem. The more the IMF makes available as true emergency financing with few or no strings attached, the more it begins to undermine the quality of its loan portfolio. One way out of this might have been an emergency allocation of special drawing rights, a tool last used in 2009. That will not be happening, though, since the US is firmly opposed, for reasons bad and good.

Class of 2020: a lost generation in the post-coronavirus economy?

Research from around the globe shows that graduating in a recession can have significant and long-lasting impacts that can affect the entire career. In particular, it can lead to large initial earnings losses which only slowly recede over time. In the long term, the effects on the Covid-19 cohort could lead to wider social and political problems. The biggest problem is the lack of certainty about how long this will last – the longer the governments keep their countries on lockdown, the worse the economic impact. Millions of youths are now part of a job market in Southeast Asia that has been ravaged by the coronavirus pandemic. In Indonesia, for example, the virus has caused almost 2.8 million people to lose their jobs, according to the Manpower Ministry and the Workers Social Security Agency. Likewise, in Malaysia, an estimated 2.4 million people are expected to lose their jobs, going by data from the Malaysian Institute of Economic Research (MIER). Thailand is bracing itself for a 5.3 per cent contraction in GDP for the full year, the worst since the Asian financial crisis in 1997.

Medical
Coronavirus attacks lining of blood vessels all over the body, Swiss study finds

The coronavirus attacks the lining of blood vessels all over the body, which can ultimately lead to multiple organ failure, according to a new study published in The Lancet. “This virus does not only attack the lungs, it attacks the vessels everywhere,” said Frank Ruschitzka, an author of the paper from University Hospital Zurich. He said the researchers had found that the deadly virus caused more than pneumonia. “It enters the endothelium [layer of cells], which is the defence line of the blood vessels. So it brings your own defence down and causes problems in microcirculation,” said Ruschitzka, referring to circulation in the smallest of blood vessels. It then reduces the blood flow to different parts of the body and eventually stops blood circulation, according to Ruschitzka, chairman of the heart centre and cardiology department at the university hospital in Switzerland.

Mutations map holds the key to bringing coronavirus under control

Scientists studying mutations in coronavirus have decoded more than 10,000 different genomes of the deadly pathogen, creating a comprehensive map that will be crucial to controlling the pandemic and developing medicines to treat it. The map of mutations will be used to understand any subsequent waves of the virus if and when the current outbreak can be brought under control, as well as the development of the drugs and vaccines that will allow that to happen. When these are finally introduced, the genome technology will be employed to detect any signs of a developing resistance. About 80 vaccines and 150 drugs for Covid-19 are being worked on around the world. “People have talked about different strains evolving as the virus spreads and mutates but we think it is dangerous to use that term because it suggests that the mutations are making the virus more or less transmissible or virulent,” said Dr Hodcroft, whose collaboration has produced a series of spectacular graphics illustrating how the virus spread.

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