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Japan, its Asian neighbours, European countries and the U.S. are all looking to carve their own unique paths toward the same destination -- an exit from the coronavirus crisis that has hammered their economies. Much of the world is now attempting this high-stakes balancing act -- avoiding a full-on economic collapse while also preventing a new rush of infections that could overwhelm medical services. Like Abe's, many governments have begun to lay out specific criteria for reopening their economies. Some are also setting conditions for restoring restrictions, in case the deadly virus appears to be making a comeback.
China is seeking to compartmentalize rising tensions with the US over a wide range of issues from trade to the COVID-19 pandemic by separating the phase one trade agreement from escalating diplomatic row, as it paved the way for increasing purchase of US agricultural products. China on May 14 cleared regulatory hurdles to allow imports of US agricultural products - barley and blueberries, according to a statement from the Chinese General Administration of Customs (GAC). While the GAC did not mention the phase one trade deal in the announcement, agricultural products make up a considerable part of China's pledge to increase purchases of various US products in the deal, which went into effect in mid-February. Allowing imports of more US farm products will help boost China's total purchases, trade analysts noted. The latest move from China followed the release on May 12 of a list of 79 items that will be exempted from tariffs imposed in response to the US' punitive tariffs during the trade war - all in line with China's commitment to carry out the phase one trade agreement, analysts said.
Donald Trump has warned that he could “cut off the whole relationship” with China, in the latest escalation of US tensions with Beijing as he increasingly blames China for the global spread of the coronavirus. “There are many things we could do. We could cut off the whole relationship. Now if you did, what would happen? You’d save $500bn”, Trump told Fox Business on May 14. It was unclear what that figure represented. Mr Trump was responding to a question about whether the US should refuse Chinese nationals student visas for sensitive science areas. The White House in 2018 considered blocking Chinese citizens from receiving student visas, but backed away from the idea pushed by Stephen Miller, a hardline White House aide who is close to Mr Trump. The president on May 14 also signed an executive order that authorises the US International Development Finance Corporation to provide loans to US industrial companies to shore domestic manufacturing related to the pandemic response.Pressed on how he could force US companies to move their supply chains, Mr Trump said Fox Business: “One incentive, frankly, is to charge tax for them when they make product outside.”
The US Senate on May 14 passed legislation that would pave the way for targeted sanctions against government officials in China over alleged human rights abuses against Muslim ethnic minority groups in the country’s northwest. The legislation directs the White House to submit a report to Congress within 180 days identifying those deemed responsible for torture, extrajudicial detention, forced disappearance and other “flagrant denial[s]” of human rights in China’s Xinjiang Uygur Autonomous Region (XUAR). These individuals would be subject to sanctions, including the freezing of assets in the US and denial of entry to the country. Introduced by Republican Florida Senator Marco Rubio and New Jersey Senator Bob Menendez, a Democrat, the Uygur Human Rights Policy Act was passed under the Senate’s unanimous consent rules, used to move non-controversial legislation without the need for a vote. Among its backers were former Democratic presidential hopefuls Elizabeth Warren, Bernie Sanders, Amy Klobuchar and Kirsten Gillibrand.
World Trade Organization head Roberto Azevedo will step down a year earlier than planned in August, he said on May 14, in a surprise move as the trade body struggles to rein in global tensions and coordinate responses to the COVID-19 pandemic. The 62-year-old Brazilian has been director-general since 2013 and is serving a second term that was due to conclude at the end of August 2021. "As members start to shape the WTO's agenda for the new post-COVID realities, they should do so with a new director-general," he told a virtual meeting of national members. Since the COVID-19 crisis hit, Azevedo has called for governments to refrain from imposing export restrictions on food and medical supplies. The WTO club of 164 members, which is designed to set global trading rules, has also not produced any major international accord since abandoning its "Doha Round" of negotiations in 2015. Some members, notably the United States, Japan and the European Union, are pushing for more fundamental reforms. They say global trading rules need to reflect new realities - notably a far stronger China - and address problems such as state-led subsidies and forced technology transfers.
After mounting criticism and thousands of deaths in New York nursing homes—including several individual facilities that have lost more than 50 residents—the state on May 10 reversed the mandate, which said nursing homes couldn’t refuse to accept patients from hospitals who had been diagnosed with Covid-19. New York now says hospitals can send patients to nursing homes only if they have tested negative for the virus. The policy before the U-turn is one of several decisions the state made that are now coming under fire, as New York’s death toll tied to nursing homes rises, to 5,398 presumed and confirmed fatalities as of May 12, more than any other state and a significant part of New York’s total deaths. The transfer of recovering coronavirus patients to nursing homes compounded broader vulnerabilities at the facilities, including low levels of staffing and limited access to protective gear and testing, which made them weak spots in New York’s fight against the pandemic. New York also said on May 10 that it would require nursing homes to test their employees twice a week.
The European Union’s foreign policy chief called on China on May 14 to contribute significantly to the fight against the coronavirus pandemic and said there should be an independent scientific investigation into the origins of the pandemic. In a guest column in May 15’s edition of the Frankfurter Allgemeine Zeitung newspaper, Josep Borrell said China should act to help protect the world from future pandemics. “An independent scientific investigation of the origin of this pandemic is also necessary,” he wrote. The virus emerged in Wuhan, China, in December and some countries, including the United States and some European states have criticised its handling of the outbreak. China says it has been open and transparent in its approach. Borrell also said China should take on its responsibilities “commensurate with its weight” in tackling the pandemic, vaccine research and boosting the global economy, including playing its part in a major debt relief effort for developing countries particularly hard hit.
The novel coronavirus has been detected in one of the southern Bangladesh camps that are home to more than a million Rohingya refugees, officials said on May 14, as humanitarian groups warned the infection could devastate the crowded settlement. An ethnic Rohingya refugee and another person have tested positive for COVID-19, a senior Bangladeshi official and a U.N. spokeswoman said. It was the first confirmed case in camps more densely populated than most crowded cities on Earth. “Today they have been taken to an isolation centre after they tested positive,” Mahbub Alam Talukder, the Refugee Relief and Repatriation Commissioner, told Reuters by phone. The other patient was from the “host population”, a term usually referring to local residents outside the camps, the U.N. spokeswoman said. Coronavirus infections have been gathering pace in recent days in Bangladesh, which has reported 18,863 cases of COVID-19 and 283 deaths. Aid workers have warned of a potential humanitarian disaster if there is a significant outbreak in the refugee camps outside Cox’s Bazar.
China is likely to come up with a fiscal stimulus package during the upcoming annual meeting of the country's top legislature, including raising fiscal deficit and expanding government debt, to contain the economic impact of COVID-19 epidemic and accelerate recovery, according to officials and experts. The government will moderately raise the fiscal deficit ratio, issue special Treasury bonds to counter the COVID-19 impact, increase local government special bonds and continually implement tax and fee cuts, to proactively offset the economic downturn, Finance Minister Liu Kun said on May 14. Liu stressed that the fiscal policy will be more proactive, to maintain economic fundamentals focusing on "six priorities": safeguarding employment, people's livelihoods, the development of market entities, food and energy security, the stable operation of industrial and supply chains, and the smooth functioning of society.
Investors have flocked to funds focused on logistics facilities there and elsewhere in Asia, anticipating that growth in e-commerce will drive strong demand even after the pandemic. The heavy focus on distribution facilities stands out, given that the market has yet to return to pre-outbreak levels. Though property in general looks likely to remain a popular investment as central banks keep global interest rates low, investors are being selective in order to position themselves for success when conditions recover. "Many investors are wary of investing in office buildings, which had seen a supply glut, and shopping centres, which are under threat from e-commerce," Cushman's Hideaki Suzuki said.Singapore-based GLP last month closed a $2.1 billion fund with a portfolio of 34 properties across 18 Chinese cities. Participants include seven Chinese institutional investors, six of which are new clients of the logistics expert, hinting at keen interest in the field as an investing theme. Prologis, a U.S.-based real estate investment trust, has reported raising an additional $1.4 billion for an existing China-focused logistics fund. Newease China, a logistics real estate platform, has partnered with J.P. Morgan Asset Management for a joint fund holding $600 million in initial assets.
On May 15, Taiwan Semiconductor Manufacturing Co.announced what may come to be one of its most important investments -- a $12 billion, 5-nm wafer plant in the U.S. state of Arizona, where construction will start in 2021 and production is targeted to begin in 2024. TSMC has vital interests in the U.S., which is home to customers including Apple, Qualcomm, Nvidia, Intel and Advanced Micro Devices. It produces chips for almost all the world's electronics, from iPhones to Google data centres. Its reach extends into the U.S. military -- TSMC produces programmable chips for Xilinx for use in U.S. F-35 fighter jets.But TSMC also has an important relationship with Huawei. TSMC is a lifeline for China's biggest tech company, especially now amid Washington's clampdown; few other foundries can produce the advanced chips Huawei needs. Huawei, in turn, has emerged as TSMC's fastest-growing and second-largest customer, behind Apple, accounting for more than 15% of revenue and eager to test cutting-edge technology. Founded in 1987 by Morris Chang, TSMC has grown into a semiconductor giant, with a market capitalization of more than $255 billion and most of the world's biggest tech groups as customers.
When South Korea’s Democratic Party, under the leadership of President Moon Jae-in, romped to a comprehensive victory in national elections last month, it also endorsed Moon’s newly launched climate change policy, which he has dubbed South Korea’s Green New Deal, echoing language used in Europe and the United States for a transformative agenda to shift away from damaging fossil fuels. It puts the country, which is currently the seventh biggest carbon polluter in the world, on a crash course with a painful, controversial but necessary overhaul of its energy systems. The action plan that the government announced in March - including a large-scale investment in renewable energy, the phasing out of coal operations and financing, a new carbon tax and a target of zero net emissions by 2050 - is at odds with much of the existing infrastructure and policies. South Korea relies on coal for about 44 per cent of its power needs presently. The non-nuclear renewable sector, including wind and solar is underdeveloped and accounted for less than 2 per cent of production in 2018.
The South Korean government said on May 15 that it plans to create over 1.56 million jobs in the public sector as part of emergency measures to fight the rapid increase in unemployment brought on by the COVID-19 pandemic. The government will resume its job creation program that was temporarily halted due to the virus pandemic, making some 445,000 jobs available mostly to the elderly and those in the low income bracket. In addition to the resumption of the existing project, at least 550,000 new jobs will be created for young jobseekers and those with low incomes. For young jobseekers, 100,000 jobs related to digitization will be made available in the public sector and 50,000 at private firms. About 50,000 openings will be available for jobseekers who want to participate in paid career building activities to bolster their resume, while 300,000 jobs will be offered to people in the low income bracket. Around 50,000 jobs will be at small- and medium-sized enterprises (SMEs) that apply for state subsidies which are granted only if they hire new workers. State-run examinations for 48,000 civil service positions will resume, months after the process, including tests and interviews, was delayed due to the pandemic.
Japan is poised to emerge as a winner from what the IMF calls the Great Lockdown recession. Japan’s listed companies went into this crisis with the biggest cash reserves ever recorded. Collectively, they had slightly more than $6.5tn of cash and short-term securities on their balance sheets at the end of December, according to data I tallied from the Tokyo Stock Exchange. This war chest amounts to more than 130 per cent of the country’s gross domestic product: more than three times the equivalent ratio in the US. And unlike Japan’s broad base of cash, which spreads across almost every sector of the economy, America’s cash reserves are highly concentrated, with about one-third of it in the hands of the tech oligopolies. There will possibly be a domestic boom in mergers and acquisitions. Japanese industry is extremely fragmented, with the top four companies controlling an average of less than 15 per cent of revenues in their respective industries, according to a government survey. (In America, a similar study shows the concentration of winners much higher, at around 38 per cent.) One can expect consolidation in financial services, machinery and machine components, as well as the food, pharma and energy sectors.
The coronavirus pandemic could have profound effects on the way people work in modern economies but is unlikely to reverse the globalisation of industrial supply chains, according to Geoffroy Roux de Bézieux, president of the French employers’ federation Medef. He said he expected teleworking — as practised by 5m French employees to avoid the spread of the Covid-19 virus — to continue on a large scale even after the crisis and to contribute to the “demetropolisation” of French life in favour of secondary towns.“What’s totally new is the voluntary slowdown of the economy,” Mr Roux de Bézieux said. “That’s something that has never happened in modern economic history.” He said the crisis was “accelerating trends that already existed” before the pandemic began, including the shift to teleworking and moves to “reshore” strategic industries in Europe or France from Asia. However, he said cost considerations were bound to limit the overall impact on supply chains that for many sectors are currently centred on China and its factories. “We’re not going to reverse the development of major supply chains or completely throw out the globalisation baby with the bathwater,” he said.
Consumers have been told for weeks it is safer not to leave the house — making them fearful about everyday activities, from shopping to drinking, that companies large and small depend upon. “The government has spent the last seven weeks educating the customer in a way that it is completely alien to them,” said Simon Emeny, chief executive of the UK pub group Fuller’s. “Now they need to re-educate them.” Even if people become less worried about catching Covid-19 and start to venture out, they will hardly be in the mood to splurge. The pandemic plus the economic downturn, is “an incredibly incendiary combination” and a double blow to consumer confidence, said Adam Galinsky, a business professor at Columbia University. The pandemic poses a particular problem for bricks-and-mortar retailers that have sought to defuse the existential threat of ecommerce by reinventing their stores as “destinations”. In hospitality, Keith Barr, chief executive of InterContinental Hotels, mentioned that guests will need a “visible sense” of what hygiene protocols were in place. “We’re just trying to make sure that people feel comfortable again.”
Amazon.com hurt many retailers. Coronavirus will finish some of them off. Roughly 100,000 stores are expected to close over the next five years—more than triple the number that shut during the previous recession—as e-commerce jumps to a quarter of U.S. retail sales from 15% last year, UBS estimates. The turbocharged shift to e-commerce is expected to further depress profit margins and accelerate a shakeout in a country that already had too much bricks-and-mortar space for an increasingly digital world. “If this isn’t the retail apocalypse I don’t know what would be,” said Sarah Wyeth, the lead analyst for retail and restaurants at S&P Global Ratings. Ms. Wyeth estimates that there is a 50% chance that 19 retailers tracked by S&P will default on their debt. Five retailers defaulted during the 2008 recession. JideZeitlin, chief executive of Coach parent Tapestry Inc., said the lines between physical and digital shopping are blurring, as customers often research items online before buying them in stores and vice versa. As such, he plans to require physical stores to log higher profits to justify their existence, which could result in fewer stores after the pandemic.
US health authorities issued an alert on May 14 over a rare but sometimes deadly autoimmune condition among children that is believed to be linked to COVID-19." Healthcare providers who have cared or are caring for patients younger than 21 years of age meeting MIS-C criteria should report suspected cases to their local, state, or territorial health department," said the CDC. The criteria include fever, multiple inflamed organs that cause severe illness requiring hospitalisation, a confirmed active or recent coronavirus infection and no other plausible causes. The condition had previously been referred to as Pediatric Multisystem Inflammatory Syndrome (PMIS) by the state of New York, where there have been more than a hundred reported cases, including at least three deaths. Sunil Sood, a paediatrician at Cohen Children's Medical Centre in New York, told AFP that the cases mainly seemed to emerge four to six weeks after a child had been infected and had already developed antibodies. "They had the virus; the body fought it off earlier. But now there's this delayed exaggerated immune response," he said. Adding to the mystery, the cases were first reported in Europe and then in North America, but not in Asian countries such as China, Taiwan and South Korea where the virus first emerged.
“The isolation, the fear, the uncertainty, the economic turmoil - they all cause or could cause psychological distress,” said Devora Kestel, director of the World Health Organization’s (WHO) mental health department. Presenting a U.N. report and policy guidance on COVID-19 and mental health, Kestel said an upsurge in the number and severity of mental illnesses is likely, and governments should put the issue “front and centre” of their responses. The report highlighted several regions and sections of societies as vulnerable to mental distress - including children and young people isolated from friends and school, healthcare workers who are seeing thousands of patients infected with and dying from the new coronavirus. Emerging studies and surveys are already showing COVID-19’s impact on mental health globally. Psychologists say children are anxious and increases in cases of depression and anxiety have been recorded in several countries. Domestic violence is also rising, and health workers are reporting an increased need for psychological support. Reuters last week reported from interviews with doctors and nurses in the United States who said either they or their colleagues had experienced a combination of panic, anxiety, grief, numbness, irritability, insomnia and nightmares.
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Links:
[1] https://www.vifindia.org/2020/may/15/covid-19-international-developments-daily-scan
[2] https://www.vifindia.org/author/prerna-gandhi
[3] https://asia.nikkei.com/Spotlight/Coronavirus/From-Japan-to-US-pandemic-exit-plans-take-shape
[4] https://www.globaltimes.cn/content/1188386.shtml
[5] https://www.ft.com/content/cfbba6bf-3de5-458d-92d1-a62fb958a354
[6] https://www.scmp.com/news/china/article/3084477/us-senate-passes-uygur-human-rights-policy-act
[7] https://asia.nikkei.com/Politics/International-relations/WTO-chief-Azevedo-to-step-down-a-year-early
[8] https://www.wsj.com/articles/new-york-sent-recovering-coronavirus-patients-to-nursing-homes-it-was-a-fatal-error-11589470773?mod=hp_lead_pos7
[9] https://in.reuters.com/article/health-coronavirus-eu-china/eu-top-diplomat-wants-independent-probe-into-coronavirus-origins-idINKBN22R0EV
[10] https://in.reuters.com/article/health-coronavirus-bangladesh-rohingya/bangladesh-says-coronavirus-detected-in-rohingya-refugee-camp-official-idINKBN22Q2OK
[11] http://www.chinadaily.com.cn/a/202005/15/WS5ebddf18a310a8b241155ce7.html
[12] https://asia.nikkei.com/Business/Markets/Property/Asia-logistics-attracts-billions-as-post-pandemic-winner
[13] https://asia.nikkei.com/Business/Company-in-focus/Chip-titan-TSMC-caught-in-crossfire-between-US-and-China
[14] https://www.channelnewsasia.com/news/asia/climate-change-south-korea-new-green-deal-ambitious-12691892
[15] https://www.koreatimes.co.kr/www/biz/2020/05/488_289548.html
[16] https://www.ft.com/content/7fdae7b1-9bc4-43d1-8e9f-72ae82cfc927
[17] https://www.ft.com/content/a8bd0fcc-4c6e-49eb-af3a-1f091c5ccda2
[18] https://www.ft.com/content/074bf736-a874-42a4-9e08-041bad7faf83
[19] https://www.wsj.com/articles/coronavirus-finishes-the-retail-reckoning-that-amazon-started-11589459920?mod=tech_lead_pos1
[20] https://www.channelnewsasia.com/news/world/us-issues-alert-over-childhood-illness-linked-to-covid-19-12734582
[21] https://www.weforum.org/agenda/2020/05/united-nations-global-mental-health-crisis-covid19-pandemic
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