COVID-19 International Developments: Daily Scan, April 7, 2020

Economic

“Sectors, People and Regions… and second lockdowns” Europe sets up taskforces to ease coronavirus lockdowns

France, Spain, Belgium and Finland are among many countries that have set up expert committees to examine a gradual easing of stay-at-home orders for some businesses and schools while avoiding a second wave of infections that could overwhelm health services. Pedro Sánchez, the Spanish prime minister said a ban imposed last month on all non-essential work including manufacturing and construction would be lifted after Easter. Angelo Borrelli, head of Italy’s Civil Protection Agency which is in charge of co-ordinating the national response to the outbreak, suggested a “phase two” of the country’s lockdown could begin next month. “I don’t want to give dates, but between now and May 16 we may have further positive data that suggests we can resume activities and then start phase two,” he said. A Munich-based Ifo economics institute report calledfor an “opening strategy, not an exit strategy”, since there is unlikely to be any return to normality before a reliable vaccine against Covid-19 becomes widely available, which appears several months away. The Ifo report argues for a “risk-adjusted” strategy whereby some age groups, regions and social and business functions can resume activity before others.

Eurozone closer to new funding as virus hits but no corona bonds now

Brussels Officials suggested European ministers are likely to approve a credit line through the region’s crisis fund — the European Stability Mechanism (ESM). The total credit line would be 2% of the euro area GDP (gross domestic product), roughly 240 billion euros ($258.82 billion) and be available to every nation in the 19-member euro area region.There would be in return “very, very light conditionality,” a Brussels official said, adding that there would be “no Troika,” referring to the three institutions that monitored how bailed-out nations were performing in the wake of the sovereign debt crisis of 2011.The idea of making loans available through the ESM has provoked some criticism in Italy, where the government does not want tough deficit and debt criteria attached to any loans. Rome believes the pandemic is hitting every EU nation and therefore no country should be punished with strict measures in exchange for financial support. “The funds must not come with any unnecessary conditions attached, as that would be tantamount to a rerun of the austerity policy that followed the financial crisis and would lead to unequal treatment between individual member states,” the German ministers of finance and European affairs said in an opinion article on April 6.

EU clears coronavirus state aid schemes ahead of Euro group meeting

The European Commission has approved a series of multi-billion-euro state support packages for Greece, Poland and Portugal to help soften the economic impact of the coronavirus through grants and loan guarantees.The Commission, which enforces EU anti-trust regulation, loosened its rules last month to allow EU governments to support businesses and banks after factories began to fall quiet and Europeans were ordered to stay home to stop the virus spreading. In a series of statements late on April 3 and April 4, the Commission approved a €13 billion state aid programme for the Portuguese economy, a €22 billion plan of state guarantees for Poland and a €2 billion scheme for Greece. The schemes were judged not to distort EU competition. Germany, France, Italy, the UK, the Netherlands and many others have also obtained clearance from EU competition authorities to support their economies during the crisis. By mid-march, Euro area countries had mobilised around 1% of their GDP (€120 billion) to fighting the economic fallout from the coronavirus. But the total amount could quickly exceed those sums as the crisis unfolds.

Italy activates satellite to monitor land

The Italian civil protection department on April 6 activated the EU's Copernicus observatory satellite to monitor its territory to check on gathering points and healthcare facilities. The aim is to monitor activities and public spaces during the COVID-19 emergency.The announcement was made by European Commissioner for Crisis Management, Janez Lenarcic. The civil protection will use Copernicus to make sure people are not gathering outside.

Coronavirus: nearly half a million Chinese companies close in first quarter as pandemic batters economy

More than 460,000 Chinese firms closed permanently in the first quarter as the coronavirus pandemic pummelled the world’s second largest economy, with more than half of them having operated for less than three years, corporate registration data shows.The closures comprised of businesses whose operating licenses had been revoked, as well as those who had terminated operations themselves, and included 26,000 in the export sector, according to Tianyancha, a commercial database that compiles public records. At the same time, the pace of new firms being established slowed significantly. From January to March, around 3.2 million businesses were set up, a 29 per cent drop from a year earlier.Most of these new companies were in traditional centres of economic power, such as Guangdong province in southern China, and close to half of them were in distribution or retail.

Coronavirus has lit the fuse on a time bomb in China’s economy: debt

Beijing has a tough choice to make: tolerate an unprecedented hit to the economy or go for massive stimulus and risk explosive consequences. The latest data from the Chinese Ministry of Finance shows fiscal revenue plunged by 9.9 per cent in the January-February period, the steepest drop since 2009. Overall tax revenue fell 11.2 per cent, driven by a 19 per cent slump in value-added tax (VAT) revenue, the main source of fiscal income. Beijing’s proposed stimulus spending will only exacerbate China’s already-massive debt pile, which had reached 310 per cent of gross domestic product by the end of last year, according to the Institute of International Finance. Many economies that have experienced such levels of debt have gone on to suffer a financial crash or economic crisis. China now accounts for about 60 per cent of the US$72.5 trillion emerging market debt.

China still needs to hold US Treasury debt- Global Times

There has been no short of calls for sell-off of US Treasuries in China over the past decade, but such a decision should by no means be a political one.The foremost reason why China cannot consider selling its massive US debt is that other markets - spot, reserve, futures, and gold - have no capacity to absorb such a large amount of assets. What kind of assets other than US Treasuries could be China's new option for foreign exchange reserve? Relevant decisions and choices must make business sense, not political sense. Indeed, certain individual US congressman recently said that China should relieve a great amount of US debt to pay for the costs incurred on Americans due to the coronavirus pandemic.

Signs of flattening in New York trigger massive stock rally across the globe

US stocks surged on April 6 after the governors of New York and New Jersey, two key East Coast states suffering from the coronavirus outbreak, both said they saw tentative signs of a "flattening" of the curve. The Dow Jones Industrial Average rose 1,627 points to close at 22,679. The Dow had already started the day strong, gaining over 800 points at the market open, as stocks in the U.K. and Germany had risen 3.1% and 5.8%, respectively. European stocks had ended positively as the pace of deaths in Italy and Spain slowed. But the ascent in New York took on new momentum minutes after Cuomo began speaking and gained further tailwinds as Murphy spoke later in the afternoon. "The biggest contributor was that both in Europe and the US we saw a rollover in the number of new cases per day," said Daniel Alpert, founding managing partner at Westwood Capital and co-creator of the U.S. Private Sector Job Quality Index. At the same time, the stabilization of the U.S. treasury market from a previous round of panic selling and the fact that the federal government's support program for small businesses has started to function, also likely played a big part, according to Alpert.

Donald Trump says China will proceed with agricultural purchases under phase one trade deal, bolstering US farmers

US President Donald Trump gave a qualified endorsement to Beijing’s efforts to fulfil the first phase of a trade deal that the two sides reached in January. Commenting on measures the US government has taken to protect various sectors of the domestic economy from the effects of the coronavirus, Trump said on Monday that American farmers could expect some support from agricultural purchases China will make as part of the trade agreement. “As of April 1 … it seems like [China is] buying,” Trump said at a press briefing. “So we’ll let you know how that’s going, but they’re buying anywhere from US $40 billion to US $50 billion worth of our agricultural products that would have a huge impact on our farmers.” Trump said he was confident that China would follow through “because I know President Xi [Jinping], who I like and respect, and I think he will honour the deal he made with us”.

Strategic

China is reporting no coronavirus deaths over last 24 hours

China on April 7 reported no new deaths from the coronavirus over the past 24 hours and just 32 new cases, all from people who returned from overseas. Another 12 suspected cases -- also all imported -- were being kept under observation, along with an additional 30 asymptomatic cases. China now has 1,242 confirmed cases in treatment and 1,033 asymptomatic cases under isolation and monitoring. The country that gave rise to the global pandemic has recorded 3,331 deaths and 81,740 total cases. Numbers of daily new deaths have been hovering in the single digits for weeks, hitting just one on several occasions.

Italy's daily COVID-19 cases fall sharply, some regions test for signs of immunity

Deaths from the COVID-19 epidemic in Italy rose by 636 on April 6, more than 100 higher than the previous daily tally of 525, the Civil Protection Agency said, but the number of new cases fell sharply.The total number of confirmed cases increased by 3,599 to 132,547, the lowest daily rise since March 17, underscoring hopes that the illness might be on the retreat thanks to a nationwide lockdown introduced on March 9. Authorities in northern Italy have begun testing health workers for antibodies that may help identify individuals with immunity to the coronavirus as they look for ways to ease the lockdown imposed a month ago to contain the epidemic. Following an initial phase of testing on 2,000-3,000 health workers, tests are to be extended to staff and residents in nursing homes and workers in contact with the public. Italy on April 6 also unveiled another €400 billion (US$430 billion) stimulus to help businesses hurt by the month-long national lockdown.

PM Abe to declare 1-month state of emergency on April 7 for Tokyo and 6 other prefectures

Prime Minister Shinzo Abe said on April 6 that he will declare a state of emergency to Tokyo and six other prefectures the next day to respond to the spread of the novel coronavirus. The announcement came during a board meeting of the ruling Liberal Democratic Party on April 6. The emergency declaration, which will last for roughly one month, will cover Tokyo and Kanagawa, Chiba and Saitama prefectures in the metropolitan area, as well as Osaka and Hyogo prefectures in western Japan and Fukuoka Prefecture in south western Japan. The emergency declaration would be based on a revised version of a law enacted in response to a previous influenza pandemic. It would mark the first time for such a declaration to be issued in Japan.

Washington warns Beijing not to ‘exploit’ coronavirus for S. China Sea disputes

The United States warned Beijing on Aril 6 not to take advantage of the coronavirus pandemic in the South China Sea after Vietnam said Beijing sank a trawler, AFP reported. The State Department said China had ramped up self-described research stations and landed special military aircraft in the dispute-rife sea. “We call on the PRC to remain focused on supporting international efforts to combat the global pandemic, and to stop exploiting the distraction or vulnerability of other states to expand its unlawful claims in the South China Sea,” State Department spokeswoman Morgan Ortagus said in a statement. Vietnam said last week that it lodged a protest with Beijing after the Chinese Coast Guard “hindered, rammed and sunk” a Vietnamese boat with eight fishermen on board near the Paracel Islands. Beijing last month accused the US of a “provocative” act, claiming that the USS McCampbell missile destroyer sailed near the Paracel Islands without China’s permission. Tensions have risen sharply in recent years between China and the US, which has also alleged that Beijing has not promptly controlled the coronavirus.

Islamic State Aims for Comeback amid Virus-Expedited US Withdrawal

The United States still has around 5,000 troops stationed in Iraq, divided among a number of Iraqi bases on the invitation of the Iraqi government to support and aid the fight against the Islamic State. But in recent weeks, the Americans have indeed drawn back, consolidating their soldiers onto fewer bases, with US Defense Department officials indicating that they hope to reduce the US troop presence in Iraq by half.Iraqis fear their country will become a new battleground between ISIS and Iran-backed militias.Iran, despite being preoccupied with its own terrible coronavirus outbreak, is not giving up its interests in Iraq. In the latest issue of its propaganda magazine, Al-Naba, the Islamic State urged its members to step up their attacks on “crusader nations” while they are distracted by the coronavirus. “Fear of this contagion has affected them more than the contagion itself,” the publication said, adding that Western nations will not want to deploy their troops abroad in the midst of the pandemic.

Downing St’s business-as-usual stance falls casualty to PM’s health

Throughout April 6, Downing Street insisted it was business as usual as Boris Johnson remained under observation in St Thomas’ Hospital on the south bank of the Thames facing the Houses of Parliament.The UK prime minister had “persistent” coronavirus symptoms, but Number 10 said he remained in good spirits.The government’s stance changed soon after 8 pm. Downing Street announced that Mr Johnson’s condition had worsened during the day and he had been moved to an intensive care unit an hour earlier. Although Mr Johnson remained conscious in the evening, he was moved in preparation for possible ventilation in the future.Before moving to intensive care, PM Johnson formally asked his de facto deputy Dominic Raab to deputise “where necessary” during his recovery. The UK government does not have a formal chain of command for such circumstances, but Raab is now effectively leading the UK government and heading its response to the coronavirus crisis.

Lebanon’s Hizbollah mobilises for ‘battle’ against coronavirus

For Hizbollah, an integral part of a corruption-riddled government that has been the target of anti-establishment protests over the past year, the drive to combat Covid-19 offers an opportunity to re-establish its legitimacy. In recent days, the group has organised quarantine and testing facilities and fitted out ambulances.While designated as a terrorist entity by Washington and London, Iran-funded Hizbollah is a sprawling conglomerate, combining a well-armed paramilitary force with a political party whose affiliates hold cabinet positions including the health ministry.At a local level, it runs several municipalities. It also oversees religious foundations and charities, supporting institutions from health to education. This has helped it mobilise 24,500 medics and volunteers, including 1,500 doctors, in recent weeks in the fight against coronavirus, the party claims.“Right now there’s no other party that has access to even a third of [Hizbollah’s] resources,” said Randa Slim, a senior fellow at the US’s Middle East Institute.

Medical

WHO warns masks are no 'silver bullet' for ending COVID-19 pandemic

World Health Organization chief Tedros Adhanom Ghebreyesus said masks alone were no "silver bullet" to defeating the COVID-19 pandemic, which has killed more than 70,000 people. "Countries could consider using masks in communities where other measures such as cleaning hands and physical distancing are harder to achieve because of lack of water or cramped living conditions," Tedros told a virtual briefing in Geneva on April 6. "Masks should only ever be used as part of a comprehensive package of interventions. There is no black or white answer, and no silver bullet. Masks alone cannot stop the COVID-19 pandemic." However, he stressed that the mass use of medical masks could exacerbate the shortage of protective equipment for healthcare workers.

World short of six million nurses: WHO

The WHO along with partners Nursing Now and the International Council of Nurses (ICN) underscored in a report the crucial role played by nurses, who make up more than half of all health workers worldwide. The report said that there are just fewer than 28 million nurses on the planet. In the five years leading up to 2018, the number grew by 4.7 million. "But this still leaves a global shortfall of 5.9 million," the WHO said, pointing out that the greatest gaps were in poorer countries in Africa, Southeast Asia, the Middle East and parts of South America. ICN chief executive Howard Catton told a virtual briefing that infection rates, medication errors and mortality rates "are all higher where there are too few nurses". Furthermore, "shortages exhaust our current nursing workforce", he added. Catton said that 23 nurses had died in Italy and cited figures suggesting that around 100 health workers had died around the world. Meanwhile he said there were reports of nine per cent of health workers being infected in Italy and "we're now hearing of rates of infections up to 14 per cent in Spain".

For Further Reading:

1. Financial Times: Europe prepares to ease coronavirus lockdowns, https://www.ft.com/content/1fa5ae87-b3b6-4708-b9c5-58d2077b8d95 [3]
2. CNBC: Europe moves closer to using crisis fund to help countries hit by the coronavirus pandemic, https://www.cnbc.com/2020/04/06/eurozone-closer-to-new-funding-as-virus-hits-but-no-corona-bonds-now.html [4]
3. Euractiv: EU clears coronavirus state aid schemes ahead of Eurogroup meeting, https://www.euractiv.com/section/economy-jobs/news/eu-clears-coronavirus-state-aid-schemes-ahead-of-eurogroup-meeting/ [5]
4. ANSA Italy: Italy activates satellite to monitor land, https://www.ansa.it/english/news/science_tecnology/2020/04/06/italy-activate-satellite-to-monitor-land-3_210f0c52-3cfd-4997-8ceb-2abfc7c4a7dc.html [6]
5. SCMP: Coronavirus: nearly half a million Chinese companies close in first quarter as pandemic batters economy, https://www.scmp.com/economy/china-economy/article/3078581/coronavirus-nearly-half-million-chinese-companies-close-first [7]
6. SCMP: Coronavirus has lit the fuse on a time bomb in China’s economy: debt, https://www.scmp.com/week-asia/opinion/article/3078018/coronavirus-has-lit-fuse-time-bomb-chinas-economy-debt [8]
7. Global Times: China still needs to hold US Treasury debt, https://www.globaltimes.cn/content/1184812.shtml [9]
8. Nikkei Asian Review: Signs of flattening in New York trigger massive stock rally, https://asia.nikkei.com/Spotlight/Coronavirus/Signs-of-flattening-in-New-York-trigger-massive-stock-rally [10]
9. SCMP: Donald Trump says China will proceed with agricultural purchases under phase one trade deal, bolstering US farmers, https://www.scmp.com/news/china/article/3078702/donald-trump-says-china-will-proceed-agricultural-purchases-under-phase [11]
10. Mainichi: China is reporting no coronavirus deaths over last 24 hours, https://mainichi.jp/english/articles/20200407/p2g/00m/0in/049000c [12]
11. Channel News Asia: Italy's daily COVID-19 cases fall sharply, some regions test for signs of immunity, https://www.channelnewsasia.com/news/world/italy-covid-19-cases-immunity-regions-12615600 [13]
12. Mainichi: PM Abe to declare 1-month state of emergency on April 7 for Tokyo and 6 other prefectures,https://mainichi.jp/english/articles/20200406/p2g/00m/0na/074000c
13. Foreign Policy: Islamic State Aims for Comeback amid Virus-Expedited U.S. Withdrawal, https://foreignpolicy.com/2020/04/06/iraq-islamic-state-comeback-coronavirus-us-withdrawal/ [14]
14. Financial Times: Downing St’s business-as-usual stance falls casualty to PM’s health, https://www.ft.com/content/80c4730e-17b1-4c9b-955e-847e7621958f [15]
15. Financial Times: Lebanon’s Hizbollah mobilises for ‘battle’ against coronavirus, https://www.ft.com/content/aef6f055-5469-4bba-b2a8-97bd59fd5654 [16]
16. Channel News Asia: WHO warns masks are no 'silver bullet' for ending COVID-19 pandemic, https://www.channelnewsasia.com/news/world/who-warns-masks-silver-bullet-ending-covid-19-coronavirus-12615826 [17]
17. Channel News Asia: World short of six million nurses: WHO, https://www.channelnewsasia.com/news/world/who-nurses-population-million-covid-19-12616272 [18]