Chindia Alert: You’ll be Living in their World Very Soon
aims to alert you to the threats and opportunities that China and India present. China and India require serious attention; case of ‘hidden dragon and crouching tiger’.
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But trade with partner countries might not be as badly affected as with countries elsewhere in the world, observers say
China’s trade with belt and road countries rose by 3.2 per cent in the January-March period, but second-quarter results will depend on how well they manage to contain the pathogen, academic says
China’s investment in foreign infrastructure as part of its Belt and Road Initiative has been curtailed because of the coronavirus pandemic. Photo: Xinhua
The coronavirus pandemic is set to cause a slump in Chinese investment in its signature
and a dip in trade with partner countries that could take a year to overcome, analysts say.
But the impact of the health crisis on China’s economic relations with nations involved in the ambitious infrastructure development programme might not be as great as on those that are not.
China’s total foreign trade in the first quarter of 2020 fell by 6.4 per cent year on year, according to official figures from Beijing.
Trade with the United States, Europe and Japan all dropped in the period, by 18.3, 10.4 and 8.1 per cent, respectively, the commerce ministry said.
By comparison, China’s trade with belt and road countries increased by 3.2 per cent in the first quarter, although the growth figure was lower than the 10.8 per cent reported for the whole of 2019.
China’s trade with 56 belt and road countries – located across Africa, Asia, Europe and South America – accounts for about 30 per cent of its total annual volume, according to the commerce ministry.
Despite the first-quarter growth, Tong Jiadong, a professor of international trade at Nankai University in Tianjin, said he expected China’s trade with belt and road countries to fall by between 2 and 5 per cent this year.
His predictions are less gloomy than the 13 to 32 per cent contraction in global trade forecast for this year by the World Trade Organisation.
“A drop in [China’s total] first-quarter trade was inevitable but it slowly started to recover as it resumed production, especially with Southeast Asian, Eastern European and Arab countries,” Tong said.
“The second quarter will really depend on how the epidemic is contained in belt and road countries.”
Nick Marro, Hong Kong-based head of global trade at the Economist Intelligence Unit, said he expected China’s total overseas direct investment to fall by about 30 per cent this year, which would be bad news for the belt and road plan.
“This will derive from a combination of growing domestic stress in China, enhanced regulatory scrutiny over Chinese investment in major international markets, and weakened global economic prospects that will naturally depress investment demand,” he said.
The development of the Chinese built and operated special economic zone in the Cambodian town of Sihanoukville is reported to have slowed, while infrastructure projects in Bangladesh, including the Payra coal-fired power plant, have been put on hold.
The development of the Chinese built and operated special economic zone in the Cambodian town of Sihanoukville is reported to have slowed. Photo: AFP
Marro said the reduction of capital and labour from China might complicate other projects for key belt and road partner, like Pakistan, which is home to infrastructure projects worth tens of billions of US dollars, and funded and built in large part by China.
“Pakistan looks concerning, particularly in terms of how we’ve assessed its sovereign and currency risk,” Marro said.
“Public debt is high compared to other emerging markets, while the coronavirus will push the budget deficit to expand to 10 per cent of GDP [gross domestic product] this year.”
Last week, Pakistan asked China for a 10-year extension to the repayment period on US$30 billion worth of loans used to fund the development of infrastructure projects, according to a report by local newspaper Dawn.
China’s overseas investment has been falling steadily from its peak in 2016, mostly as a result of Beijing’s curbs on capital outflows.
Last year, the direct investment by Chinese companies and organisations other than banks in belt and road countries fell 3.8 per cent from 2018 to US$15 billion, with most of the money going to South and Southeast Asian countries, including Singapore, Vietnam, Indonesia and Pakistan.
Tong said the pandemic had made Chinese investors nervous about putting their money in countries where disease control measures were becoming increasingly stringent, but added that the pause in activity would give all parties time to regroup.
“Investment in the second quarter will decline and allow time for the questions to be answered,” he said.
“Past experience along the belt and road has taught many lessons to both China and its partners, and forced them to think calmly about their own interests. The epidemic provides both parties with a good time for this.”
Dr Frans-Paul van der Putten, a senior research fellow at Clingendael Institute in the Netherlands, said China’s post-pandemic strategy for the belt and road in Europe
might include a shift away from investing in high-profile infrastructure projects like ports and airports.
Investors might instead cooperate with transport and logistics providers rather than invest directly, he said.
“Even though in the coming years the amount of money China loans and invests abroad may be lower than in the peak years around 2015-16, I expect it to maintain the belt and road plan as its overall strategic framework for its foreign economic relations,” he said.
Young people starting out in the jobs market face a hit to their prospects that could endure years after the Covid-19-induced downturn has run its course
A generation of angry youth raises the spectre of political instability
Freelance filmmaker Anita Reza Zein had grown used to jam-packed production schedules requiring her to put in long hours and run on little sleep. Until Covid-19 struck.
Today, the talented Indonesian is suddenly free. With five projects on hold and many more potentially cancelled, she now spends her time working on a personal project, doing research for her work and occasionally going for a ride on a bicycle.
“I feel calm and patient although I’m jobless. Maybe because it’s still the third week [of social distancing] and I still have enough savings from my previous work,” said the 26-year-old, who is from Yogyakarta. “But I imagine life will become tougher in the next few months if the situation gets worse.”
Like her, millions of youths are now part of a job market in Southeast Asia that has been ravaged by the coronavirus pandemic. They are the unlucky cohort of 2020 whose fortunes have changed so drastically, so quickly.
Freelance filmmaker Anita Reza Zein now spends most of her time at home as her projects have all been frozen due to the spread of Covid-19. Photo: Anita Reza Zein
Just three months ago, many eager graduates were about to partake in a strong economy and possibly land decent pay cheques.
Today, job offers are being withdrawn and hiring halted, leading to a spike in regional youth unemployment in the short term. In the long term, the effects on the Covid-19 cohort could lead to wider social and political problems.
JOB MARKETS SHUT
The virus’ impact on economies and the job market in the region has been swift and devastating. Borders have been slammed shut, workers ordered to stay at home, and thousands of companies closed every week.
The biggest problem is the lack of certainty about how long this will last – the longer the governments keep their countries on lockdown, the worse the economic impact.
In Indonesia, for example, the virus has caused almost 2.8 million people to lose their jobs, according to the Manpower Ministry and the Workers Social Security Agency. Likewise, in Malaysia, an estimated 2.4 million people are expected to lose their jobs, going by data from the Malaysian Institute of Economic Research (MIER).
is bracing itself for a 5.3 per cent contraction in GDP for the full year, the worst since the Asian financial crisis in 1997.
“We think about seven million jobs have been lost already, and the figure will hit 10 million if the outbreak drags on for two to three more months,” said Kalin Sarasin, council member and head of the Thai Chamber of Commerce.
Lockdown for 34 million people in capital Jakarta as Indonesia fights surge in coronavirus deaths
For young jobseekers, the outbreak of the Covid-19 pandemic could hurt even more, with companies unwilling to open up new jobs for them.
“My clients who were open to fresh graduates previously have realigned searches [for candidates] who have at least one year of experience, as it’s a lot faster for someone with experience to scale up quickly and contribute,” said Joanne Pek, a recruiter at Cornerstone Global Partners’ Singapore office.
For many small and medium-sized enterprises (SMEs) such as Singapore-based restaurant chain The Soup Spoon, saving jobs – rather than recruiting – is the priority.
“We don’t want to let anyone go during this period, so we’re focused on protecting jobs,” said co-founder and director Benedict Leow, who employs some 250 workers.
THE COVID-19 COHORT
The looming economic downturn could have distinct consequences for the Class of 2020 that will outlast the economic downturn itself.
For one thing, the paucity of jobs could result in the Covid-19 cohort becoming a “lost generation” of sorts, said Achim Schmillen, a senior economist at the World Bank Social Protection and Jobs Global Practice.
“Research from around the globe shows that graduating in a recession can have significant and long-lasting impacts that can affect the entire career. In particular, it can lead to large initial earnings losses which only slowly recede over time,” he said.
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Economics professor Jeff Borland of the University of Melbourne said that international studies showed that what happened to people when they first entered the labour market would affect them for the rest of their working lives.
“Many international studies have shown that trying to move into employment during a major economic downturn cuts the probability of employment and future earnings for a decade or more.
“Why this occurs is less well-established. Reasons suggested include being forced to take lower-quality jobs, losing skills and losing psychological well-being,” he said in a piece published on The Conversation website.
Malaysia sets up Covid-19 test zones in the capital to hunt for ‘hidden’ coronavirus cases
This could create “lasting scarring” on the graduates this year, said labour economist Walter Theseira.
“If their careers start badly, it would affect their earnings for a number of years because they would lack the same experience as peers who started in a more secure position,” the associate professor of economics at Singapore University of Social Sciences said.
Shrinking salaries and the downsizing of companies mean that graduates might have to seek out professions outside their areas of study to survive, said Grace Lee Hooi Yean, head of the Economics Department at Monash University, Malaysia.
She said youth unemployment in the country, which stands at 11.67 per cent, could rise sharply.
“This looming crisis could trap a generation of educated and capable youth in a limbo of unmet expectations and lasting vulnerability if the graduates are not ready to face reality and adapt to the new challenges,” she said.
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This is fast becoming the reality for final-year medical student Rebecca K. Somasundaram, who has been left without a job due to the pandemic.
After being offered a residency programme at a top specialist hospital in Kuala Lumpur, she was notified a month ago that her placement had been made void until further notice. This has thrown the 24-year-old’s plans into disarray as she was hoping to enter the workforce soon to pay off her student debts. Her plans to get married next year have also been put on hold temporarily.
“I am in constant talks with the hospital to see if there is any way I can join them soon but seeing how things are unfolding so quickly, I am slowly losing hope,” she said.
Over in Indonesia, the pandemic will trigger job losses on a national scale. To combat this, the government would need to introduce strong fiscal measures and beef up its social protection policies, said the country’s former minister of finance Muhamad Chatib Basri.
Many people on lower incomes tend to work in the extraction industry, such as mining and palm oil, and these are the first industries hit due to the global slowdown.
“The rich will be able to brave the storm, but the poor have no means to do so,” he said.
Singapore migrant workers under quarantine as coronavirus hits dormitories
SPECTRE OF 1997
With partial lockdowns imposed in the capital of Jakarta, more needs to be done to ensure that vulnerable citizens have access to food and financial support.
Without government intervention, economic woes could soon translate into political instability, a scenario last seen in the Asian financial crisis.
In 1997, waves of discontent sparked racial riots in Indonesia that toppled the country’s long-time strongman Suharto, while in Thailand a political crisis created the conditions for populist leader Thaksin Shinawatra to rise.
Rising discontent could have serious implications at the ballot boxes, warned Basri, who said young voters were a key voting bloc for President Joko “Jokowi” Widodo.
Coronavirus: food security, Asia’s next battle in a post-Covid world
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In last year’s general elections, Jokowi proved a hit among the lower-educated youth who had benefited from the creation of largely unskilled jobs during his tenure.
“With more young people expected to become unemployed in the coming months, things will only get worse from here,” said Basri, who added that the country’s youth unemployment stood at almost 20 per cent in 2018.
Indonesia, which has 268 million people and is Southeast Asia’s largest economy, had 133 million workers as of last August, according to official data.
Close to 10 per cent or about 12.27 million are university graduates but among this group, about 5.67 per cent or some 730,000 were unemployed. This was higher than the country’s overall unemployment rate at that time, which was 5.28 per cent.
‘Ghosts’ deployed to scare Indonesians into staying home to slow spread of the coronavirus
GETTING IT RIGHT
Economists say, however, that all is not lost. Much will depend on policy and how governments focus on battling the virus on the public health and economic fronts. They point to Singapore, which has launched a robust response to the crisis.
On April 6, the Singapore government announced its third budget in two months to help companies and households tide over the crisis. In all, Singapore’s total stimulus package, which aims to save jobs and keep funds flowing to companies, will cost the government a massive S$59.9 billion (US$42 billion).
The Singapore government was also preparing for a labour market that would be reluctant to hire fresh graduates on a full-time basis, said Theseira.
“There are plans to implement large-scale subsidised traineeships, which may be more palatable to companies which are worried about taking on permanent headcount this year,” he noted. “As the economic situation improves, they can be converted to permanent positions.”
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4 Mar 2020
While jobs were being created for fresh graduates, many would still have to temper their expectations, such as taking jobs with lower starting pay, said DBS Bank economist Irvin Seah.
“There are still some jobs to go around. There are still some companies that may need workers. But they will need to be realistic,” he said.
For instance, despite the downturn, Singapore telco Singtel expects to recruit over 300 fresh graduates for various permanent positions this year, according to Aileen Tan, the company’s Group Chief Human Resources Officer. Many of the new hires will be in new growth areas such as the Internet of Things, analytics and cloud.
The Singtel Comcentre building in Singapore. Photo: Roy Issa
Other companies that continue to hire include those in tech across the region, including e-commerce giant Shopee, food-delivery service Foodpanda and Amazon.
In Australia, Borland suggested helping young people to remain plugged into the labour market through government-funded paid internships, or even offering them loans to go for further studies and prevent a spell of unemployment.
For now, while some young jobseekers are taking a wait-and-see approach, the reality is hitting hard for others.
Final-year National University of Singapore student H.P. Tan had all but secured a job at a public relations firm last month, after three rounds of interviews.
The Faculty of Arts and Social Sciences undergraduate was rejected via an email from the agency, which said that they could no longer hire after Covid-19 started to drastically cut business.
“When I got that rejection, it was a turning point. I didn’t think I would be directly impacted,” said the 23-year-old.
“I also applied to a few other agencies but the response has been slow, so I am now freaking out at the possibility of not being able to find a job after graduation.”
GENEVA (Reuters) – World Health Organization officials on Wednesday denied that the body was “China-centric” and said that the acute phase of a pandemic was not the time to cut funding, after U.S. President Donald Trump said he may put contributions on hold.
The United States is the top donor to the Geneva-based body which Trump said had issued bad advice during the new coronavirus outbreak.
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U.S. contributions to WHO in 2019 exceeded $400 million, almost double the 2nd largest country donor, according to figures from the U.S. State Department. China contributed $44 million, it said.
“We are still in the acute phase of a pandemic so now is not the time to cut back on funding,” Dr Hans Kluge, WHO regional director for Europe, told a virtual briefing when asked about Trump’s remarks.
Trump told a news conference on Tuesday that the United States was “going to put a hold on money spent to the WHO,” however, he appeared to backtrack later when in response to questions he said: “We’re going to look at it.”
It was not immediately clear how Trump could “block” funding for the organization. Under U.S. law, Congress, not the president, decides how federal funds are spent.
Dr Bruce Aylward, senior advisor to the WHO Director-General, also defended the U.N. agency’s relationship with China, saying its work with Beijing authorities was important to understand the outbreak which began in Wuhan in December.
“It was absolutely critical in the early part of this outbreak to have full access to everything possible, to get on the ground and work with the Chinese to understand this,” he told reporters.
“This is what we did with every other hard-hit country like Spain and had nothing to do with China specifically.”
Aylward, who led a WHO expert mission to China in February, defended WHO recommendations to keep borders open, saying that China had worked “very hard” to identify and detect early cases and their contacts and ensure they did not travel.
“China worked very, hard very early on, once it understood what it was dealing with, to try and identify and detect all potential cases to make sure that they got tested to trace all the close contacts and make sure they were quarantined so they actually knew where the virus was, where the risk was,” he said.
“Then they made it very clear that these people would not and could not travel within the country, let alone internationally,” he added.
WHO Director-General Tedros Adhanom Ghebreyesus has been lavish in his praise of China from early in the outbreak, praising President Xi Jinping’s “rare leadership”.
David Heymann, a professor at the London School of Hygiene & Tropical Medicine who led WHO’s response to the 2003 SARS outbreak, said that any U.S. funding cut would be a huge blow.
“If the WHO loses its funding it cannot continue to do its work. It works on a shoe-string budget already,” Heymann said in London. “Of course it would be disastrous for the WHO to lose funding.”
Image captionGoogle’s plans for a Chinese search engine have reportedly halted
Google has reportedly “effectively ended” plans for a censored search engine in China.
The Intercept, which revealed the existence of Project Dragonfly in August, says Google has been “forced to shut down a data analysis system it was using” to feed the project.
And access to data “integral to Dragonfly… has been suspended for now, which has stopped progress”.
Google said it had no immediate plans to launch a Chinese search engine.
Image copyrightGETTY IMAGESImage captionGoogle has faced protests about the search engine it was working on for China
What is The Intercept reporting?
Citing internal Google documents and inside sources, the Intercept says Project Dragonfly began in the spring of 2017 and accelerated in December after Google’s chief executive, Sundar Pichai, met a Chinese government official,
An Android app with versions called Maotai and Longfei were developed and could be launched within nine months if Chinese government approved, it says.
Using a tool called BeaconTower to check if users’ search queries on Beijing-based website 265.com would fall foul of China’s censors, Google engineers came up with a list of thousands of banned websites, including the BBC and Wikipedia, which could then be purged from the Dragonfly search engine.
But members of Google’s privacy team confronted the Dragonfly project managers, saying the system had “been kept secret from them”.
And after several discussions, “Google engineers were told that they were no longer permitted to continue using the 265.com data to help develop Dragonfly, which has since had severe consequences for the project”.
Image copyrightREUTERSImage captionGoogle’s Project Dragonfly is reportedly on hold in China
What are the issues with launching a search engine in China?
The so-called great firewall of China is notorious for not allowing its citizens free access to all the content available on the internet.
China has in the past two years imposed increasingly strict rules on foreign companies, including new censorship restrictions.
Some Western sites are blocked outright, including Facebook, Twitter and Instagram.
Certain topics such as the Tiananmen Square protests in 1989 are also completely blocked.
References to political opposition, dissidents and anti-Communist activity are also banned as are those to free speech and sex.
Any search engine in China would have to comply with the Chinese government’s strict rules on censorship.
Analysis
by Dave Lee, BBC North America technology reporter
Even with this news today, I don’t think Google’s ambitions in China are over – just stalled.
Sundar Pichai has clearly decided that China is too important (and lucrative) a market to pass up and so, while Dragonfly has met a significant bump in the road – thanks to its own privacy team, the company will almost certainly find a new approach to serving the Chinese market.
But in doing so it might do serious harm to its brand.
Now more than ever, US technology companies are under pressure to act in the interests of both America and Americans.
Bowing to Beijing’s demands with whatever Project Dragonfly morphs into will be a stain on Google’s principles and its reputation.
How advanced were the plans?
We learned from Mr Pichai’s recent appearance on Capitol Hill that more than 100 engineers had been working on the project at one point in time.
When quizzed by lawmakers on the plans, he said: “Right now, we have no plans to launch in China.”
He said all efforts were “internal” and did not currently involve discussions with the Chinese government.
In response to further questions, Mr Pichai said the company would be “fully transparent” with politicians if it released a search service in China.
The BBC understands Project Dragonfly never reached the point of having a full and final privacy review by Google.
A letter from more than 300 Google employees in November, co-signed by Amnesty International, asked the company to halt the project entirely.
Image captionGoogle’s Project Dragonfly is reportedly on hold in China
Why does Google want to get back into China?
Quite simply, China is the biggest internet market in the world.
Google launched a search engine in the authoritarian state in 2006, google.cn.
Google was compliant with the Chinese government’s censorship requirements at the time but the search company pulled the plug in 2010, citing increasing concerns about cyber-attacks on activists.
Despite its main search engine and YouTube video platform being blocked, Google still has more than 700 employees and three offices in China and has been developing alternative projects.
Its Google Translate app for smartphones was approved in China last year.
It also invested in Chinese live-stream game platform Chushou in January and has launched an artificial intelligence game on the social media app WeChat.
CHINDIA ALERT: You'll be living in their world, very soon 