COVID-19 International Developments: Daily Scan, May 8, 2020
Prerna Gandhi, Associate Fellow, VIF
Economic
US-China trade negotiators vow to save phase one deal on first call during pandemic

Top trade negotiators from the United States and China spoke by phone on May 08 and vowed to continue to support the phase one trade deal, Chinese state media reported, in their first contact since the agreement was signed in January. On the call, China’s Vice-Premier Liu He, US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer “vowed to implement their trade deal and boost cooperation on public health”, the official Xinhua News Agency reported. The officials said they would “create favourable conditions to implement the phase one trade deal”, at a time when superpower tensions have been running high over the handling of the coronavirus pandemic. In a statement posted to its website, the Office of the US Trade Representative (USTR) added that “both sides agreed that good progress is being made on creating the governmental infrastructures necessary to make the agreement a success.” China has made multiple steps since January to open its markets to US products, including lifting bans on some pet food products, chipping potatoes, infant formula, poultry and beef products. It has rolled back some tariffs and opened up a tariff exclusion process, while it also resumed buying US pork, sorghum, corn and soybeans in February.

China starts campaign to help new graduates find jobs as economy slumps

Beijing has kicked off a campaign to help graduates entering the labour market as the country faces growing pressure to reboot the sagging economy and tackle unemployment. Ten initiatives were announced to find jobs for this year’s 8.74 million new graduates in an online launch on Wednesday by officials from the labour, education, human resources, and industry and information technology ministries. The “100-day” campaign – highlighting the urgency for young people to find work – includes more graduate degree programmes for universities, hiring extra 400,000 graduates as teachers, expanding army enlistment, increased hiring by state-owned enterprises, more subsidies for small businesses, and encouraging graduates to start their own businesses. It comes as China’s economy is facing daunting economic problems resulting from the coronavirus pandemic. The country’s economy shrank 6.8 per cent in the first quarter this year – an unprecedented GDP contraction.

Tech consultants join Gulf’s fight against Covid-19

Spending on consultancy in the Gulf has slumped because of Covid-19, but heightened demand for advanced technology consultancy services prompted by the pandemic is expected partly to offset the downturn. Revenue for all types of consultancy in the Gulf is forecast to fall 22 per cent this year to $2.6bn, according to Source Global Research, a UK-based adviser to professional services firms. In the past few months, however, authorities in the United Arab Emirates have used technologies including artificial intelligence (AI), big data and internet-connected devices in response to the Covid-19 crisis. The technologies, for example, are being used in testing for Covid-19, in tracking people infected with the virus and checking that residents are obeying lockdown rules. The market for technology consultancy in the Gulf has been strong for much of the past decade, buoyed by government spending on online public services and “smart city” technologies. Masdar City is a notable example of the latter. The Gulf consultancy market is heavily reliant on state-owned organisations.

BoE warns UK set to enter worst recession in 300 years

The Bank of England has forecast that the coronavirus crisis will push the UK economy into its deepest recession in 300 years, with output plunging almost 30 per cent in the first half of the year, but it decided not to launch a new stimulus. In its monetary policy report, the central bank presented rough and ready predictions for the economy, suggesting that output would slip 3 per cent in the first quarter followed by a further 25 per cent fall in the second. This would mean an almost 30 per cent drop overall in the first half of 2020, the fastest and deepest recession since the “great frost” in 1709.The economic projections came with a warning to Britain’s banks that if they tried to stem losses by restricting lending, they would make the situation worse. Andrew Bailey, the BoE governor, said a failure to lend would create a vicious circle of more bankruptcies and higher losses on loans that would come back to hit the banks themselves. Speaking to journalists, Mr Bailey said: “The better path for banks is to keep lending . . . we keep banging this message home. If the system [ensures a good supply of loans], we’ll get a better outcome.”

The Results Are In for the Sharing Economy. They Are Ugly.

The coronavirus pandemic has gutted the so-called sharing economy. In earnings reports this week, Uber and Lyft disclosed the depth of the financial damage. The companies said their ride-hailing businesses all but collapsed in March, the last month of the first quarter, as shelter-in-place orders spread through Europe and the United States. The red ink extends beyond ride hailing. The home-sharing company Airbnb, which investors valued at $31 billion, had planned to go public this year. Instead, the company has slashed costs and raised emergency funding, and on May 05 said it laid off 1,900 employees, about 25 percent of its staff. It also reduced its revenue forecast for this year to half of what it brought in last year. The companies, founded on the notion that they should become as big as possible as quickly as possible and worry about making a profit somewhere down the line, now face an uncertain future. Even when people return to the office and start travelling, the pandemic could change how they behave for years to come. Thirty per cent of gig-economy revenue could disappear over the next one to two years, with a portion of it unlikely to return, said Daniel Ives, managing director of equity research at Wedbush Securities.

The future of work is here: 5 ways to reset labour markets after coronavirus recovery

The coronavirus crisis has hurried the arrival of the “future of work”. Lockdown has seen wide scale remote working, increasing automation, a global revaluation of the care economy and a more visible lack of social protection within the gig economy. There is an opportunity to “build back better” in 5 areas: re-skilling and up-skilling; supporting the jobs of tomorrow; prioritizing redeployment and re-employment; re-evaluating essential work and improving the quality of jobs; and resetting education, skills and jobs systems for the post-pandemic recovery. For many white-collar workers, it has meant remote work. For many service workers and blue-collar workers, it has provided a window into a future where machines may displace people especially as firms consider increasing automation to enhance their future resilience. For those in the care economy, health sector and education sector, it has led to a long overdue global revaluation of the significance and essential nature of these professions. For those in the informal and gig economy, it has exposed the fundamental lack of social protection and the precarious nature of subsistence work.

'Businesses will need to adjust to govt intervention' says McKinsey global managing partner

Governments are assuming greater power over the private sector as a result of the coronavirus, according to Kevin Sneader, head of McKinsey & Company, one of the world's top consulting firms. "When the state steps up as the payer, lender and insurer of last resort, long-held expectations of the roles that individuals and institutions play in society are transformed in many countries," said Sneader, noting that governments around the world are rolling out stimulus plans to combat what will possibly be the worst recession since the Great Depression in the 1930s. "This is going to affect the way business is conducted and the role of the state in the economy." With governments expected to play a bigger role in the wake of the pandemic, the private sector is likely to face greater regulation. One will be an increased emphasis on sustainability as businesses increasingly adopt environment, social and governance (ESG) criteria into their operations. Another trend will be a focus on the resiliency of supply chains. "Efficiency is not enough. Manufacturers need to be both efficient and resilient in their operations," Sneader said.

Turkey bars 3 foreign banks from FX transactions

Turkey has blocked three foreign banks – BNP Paribas, Citibank, and UBS – from doing foreign exchange transactions with the Turkish lira, the nation’s banking watchdog announced on May 07. These banks failed to complete their Turkish lira commitments and so defaulted, said Turkey’s Banking Regulation and Supervision Agency (BRSA).The move followed reports saying some London-based financial institutions are engaged in manipulative attacks aimed at depreciating the Turkish lira, by buying large amounts of foreign currency with liras they do not own. The banking authority aims to protect the rights of both savings holders and banks in Turkey. The move will prevent “transactions and applications that might endanger the operation of banks” as well as ensure the credit system works effectively, said a BRSA statement. After the regulator’s ban, the Turkish lira, which hit a record low against the dollar on May 07, rebounded. It was trading 1.2% higher at 7.1065 per dollar.

Strategic
US marines revamp amid China’s growing threat

Details of the transformation, including the specific adjustments the Marine Corps will make to carry out the Indo-Pacific strategy, were outlined in its Force Design 2030 publication. The highlights include cutting several infantry battalions, eliminating all tanks not agile enough for coastal fighting, and replacing about three-fourths of regular artillery with long-range missile and rocket batteries. Fighter aircraft, helicopters and amphibious assault vehicles will be reduced. There will be more and improved long-range UAVs for both surveillance and attack. The idea is to conform to the geography. The Indo-Pacific has many islands and archipelagos with narrow confined seas. Small units of Marines occupying or seizing key terrain and using their own anti-ship missiles, long-range rockets and air defence weapons can easily turn nearby seas, and skies, into no-go zones – eventually stretching out hundreds of miles as improved weapons come on-line. The net effect is a deadly “web” that will make for a long afternoon for PLA Navy ships and aircraft trying to break out into the Pacific Ocean. The web will also provide cover for the US Navy as it manoeuvres. These kind of smaller, mobile Marine units armed with long-range precision weapons throughout the region are also more survivable than big battalions.

From China to Middle East, drones are increasingly used to attack, spy and kill

The use of drones, whether on Italian shores hunting for sunbathers escaping the lockdown or delivery of medicine in remote African areas, is growing more widespread, and is at the forefront of our search for an efficient and technologically-driven new normal. This is particularly true as the world grapples with the coronavirus pandemic: precision contact-tracing, contactless delivery, and support in enforcing lockdowns are just some of the roles that Unmanned Aerial Vehicles (UAV) are called on to perform. Despite the failed promise of remotely-operated ground vehicles delivering our daily groceries, their aerial counterparts are gaining popularity and government support by the day. But while civilian drones’ applications in the struggle against the pandemic are in their beta version, their military counterparts are well ahead of the curve, and have ushered in a new era of remote-controlled conflicts. From Yemen to Libya and Syria, warring parties continue to resist calls for a truce, and the role of armed UAVs is on the rise.

New Zealand says it backs Taiwan's role in WHO due to success with coronavirus

New Zealand on May 08 weighed in on the debate around whether Taiwan should be allowed to join the World Health Organisation (WHO) saying the country has a lot to offer given its success in limiting the spread of the coronavirus.“Taiwan has something to offer at the WHO right at the moment,” Finance Minister Grant Robertson said at a news conference when asked if New Zealand would support Taiwan’s inclusion in WHO as an observer. Taiwan’s exclusion from the U.N. body, due to objections from China which claims the island as one of its provinces, has infuriated the Taiwanese government which has reported fewer cases of coronavirus than many neighbours due to early detection and prevention work. Robertson said Taiwan has employed a number of successful methods of dealing with the virus and have a number of epidemiologists and public health experts who have provided a great deal of advice that many countries have benefited from. Taiwan attended the World Health Assembly as an observer from 2009-2016, when Taipei-Beijing relations were warmer. But China blocked further participation after the election of Taiwan President Tsai Ing-wen, whom China views as a separatist, a charge she rejects.

Indonesia deals with duelling outbreaks as dengue cases spike

Already struggling to cope with the spread of coronavirus, Indonesia's medical infrastructure is being pushed to the limit as the country sees a surge in potentially deadly dengue cases. With the Southeast Asian archipelago notorious for inadequate medical infrastructure, a continued rise in cases of dengue fever -- or "breakbone fever" as it is also known -- alongside COVID-19 cases may potentially push it to the brink of collapse. Some observers have said patients with symptoms not related to the coronavirus are struggling to get adequate care after the government ordered the country's 130-plus top-ranked hospitals to treat only COVID-19 patients. A total of 39,860 people have been diagnosed with dengue fever in the first three months of the year, according to the Health Ministry, a 15.7% rise compared with the same period last year. Particularly troubling is that the 137,761 cases in 2019 were double the number in 2018.

Beijing's full-court press on Pompeo tied to Communist Party's 2021 anniversary

China's state media has raised the volume on its criticism of U.S. Secretary of State Mike Pompeo, accusing him of spewing poison, spreading lies and turning his back on humanity for his comments about the coronavirus pandemic. State broadcaster China Central Television and the Communist Party flagship newspaper People's Daily have taken turns throwing punches at the top American diplomat. This kind of vicious attack on a single American official has not occurred since before U.S. President Richard Nixon made his historic visit to the communist state in 1972 to normalize relations. "This is not normal," one Chinese scholar said in astonishment. "A foreign ministers meeting between the U.S. and China will be impossible for the foreseeable future. "The question now is whether China also will launch direct attacks on his boss, U.S. President Donald Trump. Yet Beijing's offensive over the pandemic appears instead to be a defensive response, as Chinese President Xi Jinping looks to address political vulnerabilities as important historical dates near -- dates that now, oddly, seem to include the start of the Tokyo Summer Olympics.

US governors interpret their own way on White House guidelines on reopening

Many governors across the U.S. are disregarding or creatively interpreting White House guidelines for safely easing restrictions and letting businesses reopen amid the coronavirus pandemic, an Associated Press analysis found. The AP determined that 17 states did not meet a key benchmark set by the White House for loosening up -- a 14-day downward trajectory in new cases or positive test rates. And yet many of those have begun to reopen or are about to do so, including Alabama, Kentucky, Maine, Mississippi, Missouri, Nebraska, Ohio, Oklahoma, Tennessee and Utah. Because of the broad way in which the nonbinding guidelines are written, other states, including Georgia, have technically managed to meet the criteria and reopen despite not seeing a steady decline in cases and deaths. Asked on May 07, about states that are reopening without meeting the benchmarks, President Donald Trump said: "The governors have great power as to that, given by us. We want them to do that. We rely on them. We trust them. And hopefully they are making the right decisions."

Architect of Sweden’s no-lockdown strategy insists it will pay off

Anders Tegnell, Sweden’s state epidemiologist who devised the no-lockdown approach, estimated that 40 per cent of people in the capital, Stockholm, would be immune to Covid-19 by the end of May, giving the country an advantage against a virus that “we’re going to have to live with for a very long time”. “In the autumn there will be a second wave. Sweden will have a high level of immunity and the number of cases will probably be quite low,” Mr Tegnell said. Primary and secondary schools, restaurants, cafés and shops are mostly open as normal in Sweden, with health authorities relying on voluntary social distancing and people opting to work from home. Schools for over-16s and universities are closed and gatherings of more than 50 people are banned, but it is still the most relaxed approach of any EU country. Sweden’s virus-related death toll on May 07 reached 3,040. This is significantly higher than Nordic neighbours Denmark, Norway and Finland, which have registered fewer than 1,000 between them. Mr Tegnell said it would take about one to two years to know whose strategy had worked best and at what cost to society.

North Korean leader sends verbal message to Xi on China's success on COVID-19

North Korean leader Kim Jong-un has sent a "verbal message" to Chinese President Xi Jinpng, lauding Beijing's success in stemming the spread of the new coronavirus, state media reported on May 08.In the message, Kim "congratulated him, highly appreciating that he is seizing a chance of victory in the war against the unprecedented epidemic," according to the Korean Central News Agency. "Kim Jong Un wished Xi Jinping good health, expressing conviction that the Chinese party and people would cement the successes made so far and steadily expand them and thus win a final victory under the wise guidance of Xi Jinping," it added. It did not specify when and how the message has been delivered to the Chinese leader. This marked the second time that he has sent a message to Xi with regard to the coronavirus this year. In late January, Kim conveyed his support and unspecified aid for Beijing's fight against the virus that had been fast spreading in the neighbouring country.

Trump stresses desire for arms control with Russia, China in Putin call

U.S. President Donald Trump stressed his desire for arms control that includes both Russia and China in a telephone call with Russian President Vladimir Putin on May 07, the White House said in a statement. “President Trump reaffirmed that the United States is committed to effective arms control that includes not only Russia, but also China, and looks forward to future discussions to avoid a costly arms race,” the White House said. Trump has repeatedly argued - so far to no avail - for China to join the United States and Russia in talks on an arms control accord to replace the 2010 New START treaty between Washington and Moscow that expires in February. New START restricted the United States and Russia to deploying no more than 1,550 nuclear warheads, the lowest level in decades, and limited the land- and submarine-based missiles and bombers that deliver them. China, estimated to have about 300 nuclear weapons, has repeatedly rejected Trump’s proposal, arguing its nuclear force is defensive and poses no threat.

Medical
Scientists Consider Indoor Ultraviolet Light to Zap Coronavirus in the Air

As society tries to rebound from the coronavirus pandemic, some scientists hope a decades-old technology could zap pathogens out of the air in stores, restaurants and classrooms, potentially playing a key role in containing further spread of the infection. It has the ungainly name of upper-room ultraviolet germicidal irradiation, and it is something like bringing the power of sunlight indoors. “We have struggled in the past to see this highly effective, very safe technology fully implemented for airborne infections,” said Dr. Edward A. Nardell, a professor of global health and social medicine at Harvard Medical School. “We’ve done the studies. We know it works.”Sunlight disinfects, and the UV part of its spectrum is particularly effective at knocking out airborne pathogens. This is not what President Trump incomprehensibly described in April when he suggested irradiating the insides of Covid-19 patients with ultraviolet light. Portable ultraviolet units are already being used to sterilize surfaces in hospital rooms and subway cars, but these can be used only when those spaces are unoccupied.

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