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US chip giant GlobalFoundries confirms it has ceased operations at its only Chinese facility, with industry experts saying the poorly-planned project was doomed to fail
Closure deals blow to China’s plans to move up semiconductor value chain, amid increasingly hostile tech rivalry with the United States
Beijing boasted that the final total investment in the GlobalFoundries plant could be US$10 billion. The plant was intended to produce 300mm wafers, a key material in making chips, but production never started at the 65,000 square metre facility, which was completed mid-2018. Photo: Weibo
US chip giant GlobalFoundries has halted operations at a joint venture factory in China, the company has confirmed, dealing a potential blow to China’s bid to own a bigger slice of the global semiconductor market.
The closure of the firm’s only China facility comes just three years after it announced plans to make chips in the mainland, and comes amid an escalating tech war with the United States.
The winding down, however, has little to do with the fierce superpower rivalry. It comes after two years of speculation as to what was actually happening at the US$100 million facility, which was hailed as “a miracle” by local media when announced to fanfare in 2017, but which never got off the ground.
Nonetheless, the symbolism is rich.
China is struggling in its efforts to boost its domestic chip research and production in a bid to counter US efforts to block it from American technology.
Last week, the US Department of Commerce upped the ante by banning the sale
of Huawei-designed chips produced outside America if they are made using the US software and technology, adding further pressure to the Chinese telecom giant’s global supply chain.
The GlobalFoundries factory, in a hi-tech park in the southwestern city of Chengdu, was one of China’s major foreign-invested semiconductor projects, for which the local government rolled out the red carpet three years ago.
At the time, Chengdu boasted that the final total investment in the plant could be US$10 billion. The plant was intended to produce 300mm wafers, a key material in making chips, but production never started at the 65,000 square metre facility, which was completed mid-2018.
A spokesperson for California-based GlobalFoundries confirmed that the Chengdu plant had stopped operations and that it had offered staff an “employee optimisation plan”, a commonly-used euphemism for lay-offs.
“The plan is being carried out on the basis of open and transparent communications with the employees and they have been offered various options to choose from based on their personal situations,” a company statement read.
A 2018 annual report from the joint venture, in which GlobalFoundries had a stake of 51 per cent with the rest controlled by an investment vehicle of the Chengdu government, showed that the plant had 320 employees.
A company notice sent to employees dated May 14 and seen by the Post said that after mid-June, the company would only pay 70 per cent of Chengdu’s minimum monthly wage, about 1,246 yuan (US$175.38), while negotiating severance packages with staff.
For some industry analysts who have followed the Chengdu project from its inception, its demise has less to do with the trade war, more to do with poor planning.
There was little detailed research and planning before the project was launched. As far as the Chengdu government is concerned, it lacks a sufficient understanding of GlobalFoundriesGu Wenjun, analyst
“There was little detailed research and planning before the project was launched. As far as the Chengdu government is concerned, it lacks a sufficient understanding of GlobalFoundries, its decision-making mechanism and economic strengths, and it did not get strong support from the central government,” said Gu Wenjun, chief analyst at Shanghai-based semiconductor research firm ICwise.
The idea of establishing a joint venture was first pitched to Chongqing municipality, a neighbouring city of Chengdu, in 2016. Chongqing signed a memorandum of understanding with GlobalFoundries to set up a plant to manufacture 300mm silicon wafers – components for making integrated circuits – using technology from GlobalFoundries’ Singapore factory.
After the deal to open a Chongqing plant fell through for unclear reasons, Chengdu moved in to cut a deal with GlobalFoundries in late-2016. A 2017 blueprint stated that 3,500 employees could be working at the site, according to Wallace Pai, then GlobalFoundries’ general manager for China.
But production never started. Initially the project was supposed to have two phases: using mainstream technologies to manufacture 300mm wafers from 2018, then transferring to more advanced technologies in late-2019.
However, in October 2018, the two partners decided to “bypass” the phase one manufacturing stage, partly because of China’s increasing demand for more advanced products and GlobalFoundries’ own financial stress. The project has since stalled.
Comparing official announcements from the Chengdu government and GlobalFroundries back in 2017, Gu from ICwise said the two had different focuses, which might explain the plant’s derailment. The government clearly wanted to bring in mainstream, lower-risk technologies to boost the city’s brand, while the company aimed for Chinese capital and government support to invest in more advanced technology, Gu said.
The joint venture will continue after the factory’s demise, with GlobalFoundries still expecting to expand sales in the Chinese market, the company said in its statement. It now has five factories, three in the US and one each in Singapore and Germany.
When The Post contacted the office of the joint venture partner within the Chengdu government, the person answering the phone said they did not know anything about the closure nor future plans, before hanging up without giving their name.
“Our focus in China is on developing and growing our partner ecosystem including creating local technology infrastructure and bringing more intellectual property vendors and electronic design automation partners to better serve the local market,” the company said.
According to the China Semiconductor Industry Association, China’s integrated circuits sales rose 15.8 per cent in 2019 from a year earlier to 756.2 billion yuan (US$106.44 billion), while sales in the global semiconductor market dropped by 12 per cent to US$412 billion.
Last week, Dutch company ASML Holding, a key supplier of chip-making equipment, set up a plant in Wuxi, in Jiangsu province, in a boost to China’s efforts to attract foreign semiconductor investment.
— As the continued global spread of COVID-19 is weighing on the world economy, China’s foreign trade is under considerable downward pressure.
— Many export-oriented companies in China are turning to the domestic market for a lifeline while grappling with dropping overseas orders as major markets remain in the grip of the pandemic.
by Xinhua writers Zhang Yizhi, Li Huiying, Hu Guanghe, Xu Ruiqing
FUZHOU, May 9 (Xinhua) — Walking back and forth between shelves of neatly stacked shoes, some 20 live streamers dashed at the instructions of their followers on the phone, grabbing a shoe now and then from the shelves for a close-up in front of the camera.
At around eight o’clock every night, the supply chain platform 0594 in the city of Putian, east China’s Fujian Province, springs to life as live streamers flock to the exhibition area to sell shoes produced by the local manufacturers, many of which are troubled by the cancellations or delays of overseas orders amid the global coronavirus pandemic.
“To get rid of the excess inventory, many manufacturers in Putian are turning to live streaming to explore the domestic market,” said Chen Xing, general manager of 0594. “We are now cooperating with over 40 manufacturers and there will be more of them joining us in the future.”
The platform is also building an internet celebrity incubator and has so far organized seven rounds of influencer training courses enrolling more than 200 attendees.
Huang Huafang, 39, signed up for the two-day crash course in late March and soon after started her first live streaming session. She works from around 2 p.m. to 10 p.m., attracting over 500 followers and selling more than 20 pairs of shoes every day.
Though she is not a well-known live streamer, she is optimistic about the future. “There is a long way to go, but I believe live streaming is a trend. It is an essential skill for anyone who wants to market online,” said Huang.
A staff sells shoes through live streaming at an e-commerce warehouse in Putian, southeast China’s Fujian Province, May 7, 2020. (Xinhua/Lin Shanchuan)
According to Chen, the platform 0594 sold almost 130,000 pairs of shoes in April alone. As the domestic economic outlook continues to pick up, the sales target of May has been set at 200,000 pairs.
Like manufacturers in Putian, a city with a large number of export-oriented enterprises, many Chinese factories are turning to the domestic market for a lifeline, while grappling with dropping overseas orders as major markets remain in the grip of the pandemic.
ADAPT OR DIE
With decades of experience in manufacturing and developing products for overseas clients, some export-oriented companies in China are rolling out products catering to the domestic market.
After months of gloomy business, Wu Songlin, general manager of Putian-based Hsieh Shun Footwear Co., Ltd., heaved a sigh of relief as trucks loaded with therapeutic shoes tailored to the home market left his factory.
It was the first shipment for the domestic market since Wu and his partners started the company in 2010. In the past, his company only had two clients, one from Europe and the other from Japan. Business used to run smoothly and life was good.
But his factory was on the brink of a shutdown in March when the coronavirus pandemic started to ravage the global economy. No new orders came in and shipments of existing orders were requested to be delayed until June.
People work in a footwear workshop in Putian, southeast China’s Fujian Province, April 27, 2020. (Xinhua/Lin Shanchuan)
“Orders were canceled after completion of production, and our capital flow is stuck in our inventory. The pressure is mounting to keep the factory running,” Wu said. “By the end of June, workers would be left with no work to do as soon as we complete the existing orders.”
After losing almost all their orders from overseas clients, the desperate shoemaker turned to the domestic market. He called one of his old business partners and secured an order for massage footwear, which is selling like hot cakes in the domestic market as health tops the agenda in the time of the novel coronavirus.
The factory produced 10,000 pairs of massage shoes in April, and the number is expected to reach 30,000 in May, enough to keep the production lines running.
Thanks to the company’s quick adaptation, about 200 workers kept their jobs in the factory, while 20 percent were furloughed and the remaining workers were arranged to work in other companies as part of the city’s employee sharing program.
“If domestic orders keep coming in, our operation will hopefully get back to normal by September when the monthly output of massage shoes will reach 90,000,” Wu said. “By then the company will live and thrive without any orders from overseas customers.”
A woman works in a workshop of Hsieh Shun Footwear Co., Ltd. in Putian, southeast China’s Fujian Province, May 7, 2020. (Xinhua/Lin Shanchuan)
But switching to another market is not easy, explained Wu. In the past, export-oriented factories were only in charge of manufacturing, while brands would take care of sales, promotion as well as customer support.
“If you are selling to the domestic market, you need to have your own brand and marketing capacity,” he said. “Working with e-commerce platforms could be one way out, but it’s more important to understand domestic consumers and meet their needs.”
CUSTOMIZE THE FUTURE
For years, many export-focused manufactures have been trying to climb up the value chain and tap the uncharted waters of the domestic market. As the pandemic continues to spread, there is a strong push for them to embrace customized manufacturing.
In an experience store located in downtown Putian, customers line up waiting to have their feet measured on a smart device. After a few seconds, they get their readings on the phone, and a few swipes and clicks later, they place their orders with unique features, colors, and shapes.
Adjacent to the experience store, there is a flexible manufacturing workshop, which gives quick responses to orders and produces shoes following the customized demands of individual buyers.
SEMS, a longstanding sports footwear manufacturer that has established a partnership with several international brands, started to adopt flexible manufacturing years ago in an effort to adapt to the evolving domestic market.
A customer has her feet measured on a smart device in sports footwear manufacturer SEMS in Putian, southeast China’s Fujian Province, May 8, 2020. (Xinhua/Lin Shanchuan)
Customization gives consumers the benefit of products that fit their needs, and at the same time allows factories to utilize improved workflows and technology to maintain high output and omit the process of inventory and distribution, said Zhu Yizhen, the executive vice president of the company.
“Currently we only sell over 100 pairs of customized shoes a day, but we are at the dawn of a new era,” Zhu said. “We hope more companies awaken to the developing trend and join in the practice of mass customization.”
Customer to manufacturer, or C2M, which allows consumers to place orders directly to factories for customized products, has become a buzzword among export-oriented manufacturers hoping to reach domestic consumers amid the pandemic.
Li Junjie, who runs a ceramic flowerpot plant in Fujian’s Dehua County, one of the manufacturing centers of ceramics in China, did not sell a single pot to his overseas customers since the coronavirus outbreak in late January.
The factory used to export 30 percent of its flowerpots to the United States and Spain, but Li managed to make up for the lost deals by selling on domestic e-commerce platforms. Instead of bulk orders placed by foreign clients, domestic consumers tend to purchase customized products in small amounts.
Photo shows the automatic production line of a customized workshop in sports footwear manufacturer SEMS in Putian, southeast China’s Fujian Province, May 8, 2020. (Xinhua/Lin Shanchuan)
With the big data provided by e-commerce platforms, Li can tell which items will be a hit so as to increase their production and develop new products based on a thorough analysis of different consumer groups.
“Our online sales almost doubled over the past year, and we have sold over 100,000 customized pots this year, thanks to the C2M business model,” Li said.
Li’s company is one of many Chinese small and medium-sized enterprises (SMEs) that have benefited from the e-commerce giant Alibaba’s Spring Thunder Initiative, which is aimed at helping export-focused SMEs expand into new markets.
The initiative will also help some SMEs to transform and develop their business in the Chinese market through measures such as resource support, fee reductions, and fast-track processing.
In his “verbal message of thanks”, Mr Xi said he highly appreciated Mr Kim’s support during China’s outbreak and “showed his personal attention to the situation of the pandemic and people’s health” in North Korea, according to state media.
Mr Xi called for more efforts to strengthen co-operation in preventing the spread of the coronavirus, and said China was “willing to continue to provide assistance within its own capacity for [North Korea] in the fight against Covid-19”.
On Friday, North Korean state media reported that Mr Kim had sent a verbal message to the president that “congratulated him, highly appreciating that he is seizing a chance of victory in the war against the unprecedented epidemic”.
Image copyright REUTERSImage caption Kim Jong-un disappeared from public view for 20 days, before visiting a factory on 2 May
Mr Kim recently went 20 days without appearing in public, and missed the celebration of his grandfather’s birthday – one of the biggest events of the year.
Some media reports claimed he was “gravely ill”, or even dead.
But he then appeared at a fertiliser factory on 2 May – apparently in good health.
On Wednesday, South Korea’s National Intelligence Service told a parliamentary committee that there had been no signs the health rumours were true.
“He was performing his duties normally when he was out of the public eye,” a member of the committee, Kim Byung-kee, told reporters afterwards.
The lawmaker said the North Korean leader’s absence could have been down to a Covid-19 outbreak that the authorities in Pyongyang had not reported.
Analysis
By Celia Hatton, Asia Pacific Editor, BBC World Service
For months, North Korea-watchers have questioned Pyongyang’s claims that it has managed to isolate itself from Covid-19.
Admittedly, North Korea was the first country to suspend travel in response to the virus. There are unconfirmed reports that North Korean guards have been ordered to shoot at those who try to cross the lengthy border the North shares with China. However, it will be difficult to completely seal that dividing line for long. North Korea’s underground economy relies on illicit trade with Chinese entrepreneurs.
Beijing has a few good reasons for wanting to help North Korea. On a practical level, China needs to suppress a possible Covid-19 outbreak there if it wants to keep its own population healthy. Beijing also worries about what might happen inside North Korea if the virus takes hold. The North’s decrepit health system would quickly be overwhelmed by an outbreak of Covid-19, and that could threaten the fragile Kim Jong-un regime. Beijing has been Pyongyang’s biggest aid donor for decades, and it will continue to do what it can to keep Mr Kim in power. The alternatives to Kim Jong-un are much riskier for China, which does not want change on its doorstep.
China’s global political interests are also at play. Diplomatically, Mr Xi’s public exchange with Kim Jong-un underlines the seemingly close ties between China and North Korea. Pyongyang has been slow to accept public offers of help from the United States, and peace talks with Washington have stalled. If North Korea appeared to accept Beijing’s help, China would reassert itself as North Korea’s “true” ally in a time of need.
South Korea itself reported 18 new confirmed cases of Covid-19 on Saturday.
Seventeen of them are linked to a 29-year-old man who tested positive after spending time at five nightclubs and bars in Seoul’s Itaewon leisure district last weekend, the Yonhap news agency said.
Mayor Park Won-soon ordered nightclubs, bars and hostess venues across the capital to suspend business in response.
“Carelessness can lead to an explosion in infections – we clearly realised this through the group infections seen in the Itaewon club case,” Mr Park said.
Health officials have urged people who have visited the five venues in Itaewon to self-isolate and get tested to prevent additional transmissions. At least 1,500 people signed their entry logs, according to Yonhap.
The new infections brought the nationwide total to 10,840, while the death toll remained unchanged at 256.
CHENNAI (Reuters) – At least 11 people were killed in India in a gas leak at a South Korean-owned factory making polystyrene products that made hundreds of people sick and led to the evacuation of villagers living nearby, officials said.
The accident occurred some 14 km (9 miles) inland from the east coast city of Visakhapatnam, in Andhra Pradesh state, at a plant operated by LG Polymers, a unit of South Korea’s biggest petrochemical maker, LG Chem Ltd.
Srijana Gummalla, commissioner of the Greater Visakhapatnam Municipal Corporation, said gas from styrene, a principal raw materials at the plant, leaked during the early hours of the morning, when families in the surrounding villages were asleep.
RELATED COVERAGE
LG Chem share price falls nearly 2% after deadly gas leak in India
Yashwanth Saikumar Ambati, 23, who lives about 300 metres away from the plant, said he woke up around 4.30 a.m. because of a strong smell.
“I went back to sleep and I woke up around 6 because the smell got stronger. My eyes were itchy, and I was feeling drowsy, light-headed and slightly breathless,” he told Reuters, adding that neighbours also complained of eye irritation and stomach aches.
In a statement issued from Seoul, LG Chem said that the gas emitted in the leak can cause nausea and dizziness when inhaled, adding that it was seeking to ensure casualties received treatment quickly.
Video from Reuters partner ANI shot later on Thursday showed emergency workers in the area rushing to help victims, some of whom appeared to be listless and disoriented.
A number of victims lay unconscious on the streetside, as volunteers fanned them and others carried them to ambulances.
A spokesman for LG Chem in Seoul said the leak was discovered by a night shift maintenance worker and has been brought under control.
According to both the company spokesman and Gummalla, the plant was being reopened after India relaxed a nationwide lockdown that had been imposed on March 25 to contain the spread of the new coronavirus.
Thursday’s incident brought back bad memories of a gas leak at an factory of U.S. chemical firm Union Carbide that killed thousands in the central Indian city of Bhopal in 1984, but thankfully it was on a far smaller scale.
“I pray for everyone’s safety and well-being in Visakhapatnam,” Prime Minister Narendra Modi said in a tweet.
S.N. Pradhan, director general of the National Disaster Response Force, said that at least 11 had died after around 1,000 people living near the plant were exposed to the gas.
FALLING, RUNNING AWAY
B.V. Rani, a revenue official in the district, said she received a call at around 4 a.m. from a police officer near the facility, who sounded panicky. “He asked me to come to the spot immediately,” Rani told Reuters.
When Rani went there, she saw that people had collapsed unconscious in the village adjoining the 60-acre site of the plant.
“I personally helped more than 15 people get to an ambulance who had tried to run away from the village but dropped down within a few metres,” she said.
At least one child was among the dead, a policeman at the site told ANI, whose video showed at least two other children being lifted into an ambulance.
Between 300-400 people were hospitalised, Swarupa Rani, an Assistant Commissioner of Police in Visakhapatnam told Reuters. Another 1,500 people had been evacuated, mostly from a neighbouring village.
Areas within approximately 3-kilometre (nearly 2-mile) radius of the plant were evacuated, he said, with emergency services going from door-to-door to find anyone left behind.
TOP PETROCHEMICAL MAKER
Andhra Pradesh Chief Minister Jagan Mohan Reddy said in a televised address that the gas leak occurred because raw material was stored for a long period of time.
The state government will give 10 million rupees ($131,900) compensation to the families to those who died, and it will also form a panel to investigate the cause of the accident, said P.V. Ramesh, a senior aide to the chief minister.
“Obviously something has gone wrong,” Ramesh told Reuters. “Nobody will be spared.”
LG Chem’s share priced closed nearly 2% weaker on Thursday, in a Seoul market that was broadly flat.
South Korea’s top petrochemical maker by capacity, LG Chem acquired the plant in 1997 and established LG Polymers India Private Limited (LGPI), according to a company website.
The LG Polymers plant makes polystyrene products which are used in manufacturing electric fan blades, cups and cutlery and containers for cosmetic products such as make up.
“LG Polymers is a multi national, reputed company, and it is sad that the incident has happened in their plant,” Chief Minister Reddy said in a televised media address.
BEIJING (Reuters) – China’s factory activity likely rose for a second straight month in April as more businesses re-opened from strict lockdowns implemented to contain the coronavirus outbreak, which has now paralysed the global economy.
The official manufacturing Purchasing Manager’s Index (PMI), due for release on Thursday, is forecast to fall to 51 in April, from 52 in March, according to the median forecast of 32 economists polled by Reuters. A reading above the 50-point mark indicates an expansion in activity.
While the forecast PMI would show a slight moderation in China’s factory activity growth, it would be a stark contrast to recent PMIs in other economies, which plummeted to previously unimaginable lows.
That global slump, caused by heavy government-ordered lockdowns, as well as the cautious resumption of business in China, suggests any recovery in the world’s second-largest economy is likely to be some way off.
“The recovery so far has been led by a bounce-back in production, however, the growth bottleneck has decisively shifted to the demand side, as global growth has weakened and consumption recovery has lagged amid continued social distancing,” Morgan Stanley said in a note.
“The expected slump in external demand has likely capped further recovery in industrial production.”
The latest official data showed 84% of mid-sized and small business had reopened as of April 15, compared with 71.7% on March 24.
Hobbled by the coronavirus, China’s economy shrank 6.8% in the first quarter from a year earlier, the first contraction since current quarterly records began.
That has left Chinese manufacturers with reduced export orders and a logistics logjam, as many exporters grapple with rising inventory, high costs and falling profits. Some have let workers go as part of the cost-cutting efforts.
A China-based brokerage Zhongtai Securities estimated that the country’s real unemployment rate, measured using international standards, could exceed 20%, equal to more than 70 million job losses and much higher than March’s official reading of 5.9%.
Sheng Laiyun, deputy head at the statistics bureau, said on Sunday migrant workers and college graduates are facing increasing pressures to secure jobs, while official jobless surveys show nearly 20% of employed workers not working in March.
Chinese authorities have rolled out more support to revive the economy. The People’s Bank of China earlier in April cut the amount of cash banks must hold as reserves and reduced the interest rate on lenders’ excess reserves.
SHANGHAI (Reuters) – China’s smog-prone northern province of Hebei met its air quality targets by a big margin over the winter after concerted efforts to tackle emissions, a local official said on Sunday, without mentioning coronavirus-related factory shutdowns.
Average PM2.5 concentrations over the October-March period dropped 15% from a year earlier to 61 micrograms per cubic metre, while sulphur dioxide also fell by a third, said He Litao, vice-head of the provincial environmental bureau.
Most experts have attributed the significant decline in air pollution throughout China in the first quarter to the coronavirus outbreak and tough containment measures, which saw cities and entire provinces locked down and sharply reduced traffic and industrial activity throughout the country.
With millions staying at home, concentrations of lung-damaging PM2.5 particles fell by nearly 15% in more than 300 Chinese cities in the first three months of 2020.
Shanghai saw emissions fall by nearly 20% in the first quarter, while in Wuhan, where the pandemic originated, monthly averages dropped more than a third compared to last year.
However, He of the Hebei environmental bureau attributed the local decline in pollution to the “conscientious implementation” of government decisions even in the face of unfavourable weather conditions.
According to a winter action plan published last year, 10 cities in Hebei were expected to cut lung-damaging small particles known as PM2.5 by 1%-6% compared to the previous year.
Despite the decline, average PM2.5 was still much higher than China’s official standard of 35 micrograms, and the recommended World Health Organization level of 10 micrograms.
SEOUL/BEIJING (Reuters) – China has allowed 200 employees from South Korea’s Samsung Electronics Co Ltd (005930.KS) to enter the country to work on an expansion of the firm’s NAND memory chip factory, the company said on Wednesday.
The move came after China said on Tuesday that it was in talks with some countries to establish fast-track procedures to allow travel by business and technical personnel to ensure the smooth operation of global supply chains.
China said it has reached a consensus on such an arrangement with South Korea, without elaborating on the terms, including whether individuals entering China will be subject to quarantine.
China, where the virus first emerged late last year, blocked entry last month for nearly all foreigners in an effort to curb risks of coronavirus infections posed by travellers from overseas. After bringing the local spread under control with tough containment measures, it is trying to restart its economic engines after weeks of near paralysis.
A chartered China Air Ltd (601111.SS) plane flew in the Samsung Electronics employees on Wednesday, a company spokeswoman said.
Samsung said its employees will follow the local government’s policy upon arrival, without elaborating.
Shaanxi province, where Samsung’s NAND memory chip plant is located, requires people travelling from overseas to undergo a 14-day quarantine, according to South Korea’s foreign ministry.
“Samsung employees will not be exempted from the 14-day quarantine rule imposed by the Shaanxi province. They will get coronavirus tests at the airport upon arrival and will be transported to a local hotel designated by Chinese authorities,” an official at the Consulate General of South Korea in Xi’an told Reuters.
Samsung Electronics in December increased investment at its chip factory in China by $8 billion to boost production of NAND flash memory chips.
BEIJING (Reuters) – China will promote the sales of export products in domestic markets, as foreign trade faces unprecedented challenges due to the coronavirus pandemic, an assistant commerce minister said on Friday.
As the coronavirus spreads to almost all of China’s trading partners, the world’s second-largest economy is set to reach a grim milestone for full year growth, with the pace of expansion likely to be the slowest since the Cultural Revolution ended in 1976. And, the export sector is facing millions of job losses and factory shutdowns.
“Due to the rapid spread of the epidemic in the world, foreign demand has slumped and the biggest difficulty facing foreign trade companies is the plunge in orders,” said Ren Hongbin, the assistant minister at the Ministry of Commerce.
He said firms across the board have had their orders cancelled or delayed, and new orders are “very hard to sign”.
“The uncertainty about the pandemic has become the biggest uncertainty for foreign trade development.”
Forecasters expect China’s 2020 growth could be nearer the 2.0% mark – the slowest in over 40 years – due to the sweeping impact of the pandemic both at home and overseas. The economy grew 6.1% last year.
China’s overseas shipments fell 17.2% in January-February from the same period a year earlier, marking the steepest fall since February 2019. Imports sank 4% from a year earlier.
Among the government measures to support the sector, China is accelerating efforts to build online trade fairs and guiding exporters to work with e-commerce retailers for sales in domestic markets and coordinating with its trading partners to stabilise supply chains, said Ren.
The Canton Fair, China’s oldest and biggest trade fair due to take place online, will feature live-streaming services for participants, Li Xingqian, another commerce ministry official, told the same briefing. The fair was originally scheduled to begin on April 15, but was postponed due to the coronavirus outbreak.
China is willing to boost trade relations with other countries, including the United States, under the new circumstances, said Ren, adding that Beijing hopes to work together with Washington to promote bilateral trade.
Both countries have been engaged in a near two-year long trade war with tit-for-tat tariffs on each other’s goods, before negotiators called a truce with an interim trade deal in January.
People enjoy sunset on a plank road at the East Lake in Wuhan, capital of central China’s Hubei Province, March 18, 2020. (Xinhua/Shen Bohan)
Arduous efforts have been made since Wuhan was locked down and the efforts have paid off, with the outbreak of the COVID-19 gradually brought under control in this once hardest-hit Chinese city. With sacrifices and persistence, a bright dawn is finally around the corner.
WUHAN, March 24 (Xinhua) — Xia Yongli starts a workday at dawn by having his temperature taken, disinfecting his bus and going through safety checks before hitting the road at 7:00 a.m. sharp.
Over the past eight weeks, the bus driver in the central Chinese city of Wuhan had not driven his familiar route, which is 14 km long and usually takes 40 minutes. Instead, he has been shuttling medics and delivering supplies to shops and supermarkets.
The city, with a population of over 10 million, pressed a “pause” button on Jan. 23 to contain the spread of the rampaging coronavirus behind the COVID-19 epidemic, with all public transport and outbound channels shut down and all residents staying indoors.
The streets of Wuhan are no longer bustling. Shopping blocks, pedestrian streets and other popular places where local people would stroll around are largely left to still figure sculptures.
Arduous efforts have been made since Wuhan was locked down and the efforts have paid off, with the outbreak of the COVID-19 gradually brought under control. Once hardest-hit, Wuhan only had one newly confirmed COVID-19 case reported for six consecutive days between March 18 and 23.
Wuhan had reported a total of 50,006 confirmed cases by March 23, and 43,214 patients had been cured and discharged from hospitals.
With sacrifices and persistence, a bright dawn is finally around the corner. People will be allowed to leave the city and the province from April 8, local authorities said Tuesday.
A staff member conducts disinfection at a subway station in Wuhan, central China’s Hubei Province, March 23, 2020. (Xinhua/Shen Bohan)
To reduce the risk of imported cases, all personnel coming to Wuhan from overseas have to be brought under closed-loop management, with timely quarantine and epidemiological surveys conducted, said Ying Yong, secretary of Hubei Provincial Committee of the Communist Party of China.
“Wuhan had pressed the pause button and is currently in urgent need of restoring its urban functions with safe and ordered operations,” Ying said.
More than 110 bus routes citywide have conducted no-load test runs. Disinfection has been carried out at local metro and railway stations. Checkpoints for epidemic control, 27 on cross-river bridges and nearly 80 others in main urban areas, have been removed.
Infrared thermometers have been installed at subway entrances, with posters of QR codes for real-name registration inside the stations and carriages.
Staff members conduct disinfection on a subway train in Wuhan, central China’s Hubei Province, March 23, 2020. (Xinhua/Xiao Yijiu)
“The traffic on the road is coming back,” said Hu Lijun, general manager of the Wuhan Zhengyuan Gaoli Optical Co., Ltd., a photoelectric encoder manufacturer, whose production capacity has been restored by 80 percent.
Traffic flow at highway exits is also increasing by about 10 percent per day due to a growing number of people returned as Wuhan speeds up resumption of work and production.
There were health staff, community workers and police in each lane at toll-gate checkpoints, scanning health codes and taking body temperatures of the returning workers, disinfecting their vehicles and making registrations.
“Drivers had to queue up at the highway exits in the past to spend five minutes filling a registration form,” said Dong Hongxiang, a police officer, noting that registration time has been cut short now by using PDA scanners.
On March 21, a special train arrived in Wuhan with 1,013 passengers on board, all of whom were employees of Dongfeng Honda, a local joint venture. They were picked up at the train station and sent directly to the factory or their residences.
Workers are busy on the production lines at the workshop of Dongfeng Passenger Vehicle Company in Wuhan, central China’s Hubei Province, March 24, 2020. (Xinhua/Xiao Yijiu)
Wuhan-based enterprises that are important to the national and global industry chains and those closely related to people’s livelihood are allowed to continue operation or resume work, said Cao Guangjing, deputy governor of Hubei.
Hubei serves as one of China’s major auto producers and phosphate fertilizers. Cao said that relevant companies play significant role in the production chains. Their resumption of operation counts.
Preferential measures have been taken to support restart of engine in the city. The State Grid Wuhan electric power company has rolled out new policies to cut or exempt electricity bills for local enterprises, an estimated reduction of 389 million yuan (about 55 million U.S. dollars) by the end of June.
People have also started to venture out, although they cannot go as far or wherever they want.
Wang Tan, a Wuhan resident, stepped out of his home for the first time in two months to get some medicine for his father-in-law at a nearby pharmacy Monday morning.
With a health code on WeChat, Wang said he could visit convenience stores, green groceries and drug stores close to his home and have some free time outdoors inside his residential community, which has been clear of COVID-19 cases for 14 days in a row.
The Guoxinyuan community in Jiang’an District has been epidemic-free for 26 consecutive days. There were kids skipping ropes and the gray-haired doing exercises in open public areas. People observed social distancing while reclaiming a long-lost conversation.
“The public space in our community is quite small, thus no more than 80 people are allowed to have outdoor activities at one time,” said Wei Jilai, who heads the neighborhood committee.
A woman purchases daily necessities at a convenience store in Wuhan, central China’s Hubei Province, March 19, 2020. (Xinhua/Shen Bohan)
As the epidemic recedes, more than 21,000 medical staff from across the country who had fought on the frontline in Wuhan and other places in Hubei are returning home. Before departure, some visited East Lake, one of the well-known tourist attractions in Wuhan, having group photos before cherry trees in blossom to mark the unforgettable days in the city.
Some are leaving, while others stand their ground. Ma Xin, vice president of the Huashan Hospital affiliated to Fudan University in Shanghai, stayed at Wuhan’s Tongji Hospital with his team, treating severe and critically ill patients.
“Most of them have underlying diseases and have to be treated for their complications,” Ma said, stressing that vigilance is still needed at present, especially against imported cases and relapse.
Image caption The pack of cards cost £1.50 from Tesco
A factory in China has denied it used forced labour after a six-year-old girl found a message from workers inside a Tesco charity Christmas card.
The card supplier, Zhejiang Yunguang Printing, told China’s Global Times it had “never done such a thing”.
Tesco halted production at the factory on Sunday over the message, allegedly written by prisoners claiming they were “forced to work against our will”.
The Chinese foreign ministry said the allegation was “a farce”.
Speaking to the nationalist newspaper Global Times on Monday, a spokesman for the card supplier said: “We only became aware of this when some foreign media contacted us. We have never done such a thing.
The message – first reported by the Sunday Times – was found by Florence Widdicombe, who was writing cards to her school friends. She found that one of them – featuring a kitten with a Santa hat – had already been written in.
In block capitals, it said: “We are foreign prisoners in Shanghai Qingpu prison China. Forced to work against our will. Please help us and notify human rights organisation.”
The message in the card asked whoever found the message to contact Peter Humphrey, a British journalist who was himself imprisoned there four years ago.
Chinese foreign ministry spokesman Geng Shuang told reporters on Monday the allegation was “a farce” created by Mr Humphrey.
“Shanghai’s Qingpu prison has no such foreign prisoners undergoing forced labour,” Mr Shuang said.
Zhejiang Yunguang Printing’s factory manager, Shu Yunjia, told the BBC it had not outsourced any of its work to the Qingpu prison.
Media caption Florence Widdicombe was writing the cards last Sunday when she discovered the message
Florence, from Tooting in south London, said she was writing her “sixth or eighth card” when she saw “somebody had already written in it”.
“It made me feel shocked,” she said, adding that when it was explained to her what the message meant she felt “sad”.
Tesco added that it would de-list Zhejiang Yunguang if it was found to have used prison labour.
A Tesco spokeswoman said: “We were shocked by these allegations and immediately halted production at the factory where these cards are produced and launched an investigation.”
The supermarket said it has a “comprehensive auditing system” to ensure suppliers are not exploiting forced labour.
The factory in question was checked only last month and no evidence of it breaking the ban on prison labour was found, it said.
Sales of charity Christmas cards at the company’s supermarkets raise £300,000 a year for the British Heart Foundation, Cancer Research UK and Diabetes UK.
Tesco has not received any other complaints from customers about messages inside Christmas cards.
‘Very bleak life’
The message in the card urged the recipient to contact Peter Humphrey, who was formerly imprisoned at Qingpu on what he described as “bogus charges that were never heard in court”.
After the Widdicombe family sent him a message via Linkedin, Mr Humphrey said he then contacted ex-prisoners who confirmed inmates had been forced to work.
Media caption Peter Humphrey: “I think I know who it was but I will never disclose the name”
Mr Humphrey told the BBC that the cell block of foreign prisoners has about 250 people in it, who are living a “very bleak daily life” with 12 prisoners per cell.
He added that when he was in there, manufacturing labour work was voluntary – to earn money to buy soap or toothpaste – but that work has now become compulsory.
Mr Humphrey told the BBC: “I spent two years in captivity in Shanghai between 2013 and 2015 and my final nine months of captivity was in this very prison in this very cell block where this message has come from.
“So this was written by some of my cellmates from that period who are still there serving sentences.
“I’m pretty sure this was written as a collective message. Obviously one single hand produced this capital letters’ handwriting and I think I know who it was, but I will never disclose that name.”
It is not the first time that prisoners in China have reportedly smuggled out messages in products they have been forced to make for Western markets.
In 2012, Julie Keith from Portland, Oregon, discovered an account of torture and persecution by a prisoner who said he was forced to manufacture the Halloween decorations she had purchased.
And in 2014, Karen Wisinska from Co Fermanagh in Northern Ireland, found a note on a pair of Primark trousers reading: “Our job inside the prison is to produce fashion clothes for export. We work 15 hours per day and the food we eat wouldn’t even be given to dogs or pigs.”
Under the UN’s guidance for human rights and prisons, prisoners “should not be subordinated merely to making a profit either for the prison authorities or for a private contractor”.
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