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’.
Without this attention, governments, businesses and, indeed, individuals may find themselves at a great disadvantage sooner rather than later.
The POSTs (front webpages) are mainly 'cuttings' from reliable sources, updated continuously.
The PAGEs (see Tabs, above) attempt to make the information more meaningful by putting some structure to the information we have researched and assembled since 2006.
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.
BEIJING/SHANGHAI (Reuters) – A northeastern Chinese city of 10 million people struggling with currently the country’s biggest coronavirus cluster shut dine-in services on Saturday, as the rest of China eases restrictions designed to hamper the spread of the disease.
Harbin, the provincial capital of Heilongjiang and its biggest city, said it temporarily suspended dine-in services for all eateries, reported the official CCTV citing an emergency epidemic prevention notice.
Catering services operating in the city, such as barbecue eateries and those selling skewers, shabu shabu, and stew, shall suspend dine-in meals until further notice and in accordance with changes in the epidemic situation, the notice said.
While mainland China reported only one case on Saturday and crowds returned to some of its most famous tourist attractions for the 5-day May holiday, the northern province of Heilongjiang is hunkering down to prevent further clusters from forming.
Of the 140 local transmissions in mainland China, over half have been reported as from Heilongjiang, according to a Reuters tally.
Heilongjiang province borders Russia and has become the frontline in the fight against a resurgence of the coronavirus epidemic, with many new infections from citizens entering from Russia.
The province has already banned entry to residential zones by non-locals and vehicles registered elsewhere. It had also ordered isolation for those arriving from outside China or key epidemic areas.
On the back of the outbreak, deputy secretary of the Provincial Party Committee Wang Wentao said at a Friday meeting “we deeply blame ourselves”, according to local media.
“We had an inadequate understanding of epidemic prevention and control,” said Wang, adding that the failure to carry out testing in a timely manner contributed to the clusters.
SHANGHAI (Reuters) – Apple Inc’s (AAPL.O) discounts on the iPhone 11 in China and the release of a new low-price SE model have put the company in a better position than rivals to weather a coronavirus-related plunge in global smartphone demand.
While China, which accounts for roughly 15% of Apple’s revenue, appears to be a rare bright spot, investors will be keen to get a picture of global demand when the Cupertino, California-headquartered company reports second-quarter results on Thursday.
The iPhone maker has shut retail stores in the United States and Europe following the COVID-19 outbreak, and China is the only major market where it has been able to reopen all shops.
Consumer spending is expected to be muted as the pandemic has crippled economies and Apple, the world’s second-most valuable tech company, is better armed with the launch of its new price-conscious iPhone model, analysts said.
“Apple is better positioned than most to experience a rapid recovery in a post COVID world,” Evercore analyst Amit Daryanani said in a research note. “We see demand as pushed out, not canceled.”
He added that the launch of the $399 iPhone SE suggested that Apple’s supply chain was getting back on its feet after weeks of shutdown earlier this year.
Analysts expect Apple to report a 6% drop in revenue and an 11% fall in net income in its fiscal second quarter, according to Refinitiv data.
On the other hand, Chinese brands such as Oppo and Vivo who have steadily moved to offer high-end models to challenge iPhones, stand to lose marketshare as bargain hunters choose Apple.
Earlier this month, several online retailers in China slashed prices of the iPhone 11 by as much as 18% – a tactic Apple has used in the past to boost demand. And while initial social media reaction to the new iPhone SE was muted, analysts said they were seeing a pick up in demand.
The cheaper iPhone SE could tempt iPhone owners to opt for a newer device, something they might have otherwise delayed in a weak economy, said Nicole Peng, who tracks the smartphone sector at research firm Canalys.
“People want to avoid uncertainty in a downturn,” she said. “Having a brand like Apple that can showcase quality and make people less worried about breakdowns or after-sales service can bring in buyers.”
CHEAP IS GOOD
Early data suggests that the Chinese smartphone market is recovering rapidly in the aftermath of the virus, and Apple has emerged relatively unscathed.
Sales of iPhones in China jumped 21% last month from a year earlier and more than three fold from February, government data showed, meaning March-quarter sales in the country were likely to have slipped just 1%.
To be sure, a recovery in Chinese demand won’t offset sales lost in the United States and Europe. And the company is yet to launch a smartphone enabled with 5G wireless technology like those offered by Asian rivals, a disadvantage for Apple so far.
But those same expensive 5G models may not sell well in the current climate of frugality, analysts said.
“If there are no massive subsidies (in China), I doubt there will be many smartphone users who will be eager to upgrade to 5G,” said Linda Sui, who tracks the smartphone sector at research firm Strategy Analytics.
Sui expects iPhone shipments in 2020 to be down 2 percentage points at the most, versus double digit declines at Chinese firms.
Apple also has revenue from its services business to fall back on. It has leveraged its large iPhone customer base to boost services revenue from music, apps, gaming and video.
“Apple’s Services segment should remain resilient in today’s work-from-home environment, thereby demonstrating the durability of Apple’s model,” Cowen analyst Krish Sankar said.
Image copyright GETTY IMAGESImage caption An empty stretch of the road and Delhi Police barricades to screen commuters during lockdown, at Delhi Gate on April 16, 2020 in New Delhi, India.
India has eased some restrictions imposed as part of a nationwide lockdown to curb the spread of the coronavirus.
Most of the new measures are targeted at easing pressure on farming, which employs more than half the nation’s workforce.
Allowing farms to operate again has been seen as essential to avoid food shortages.
But some other measures announced last week, will not be implemented.
This includes the delivery of non-essential items such as mobile phones, computers, and refrigerators by e-commerce firms – the government reversed its decision on that on Sunday.
And none of the restrictions will be lifted in areas that are still considered “hotspots” for the virus – this includes all major Indian cities.
Domestic and international flights and inter-state travel will also remain suspended.
So what restrictions are being eased?
Most of the new measures target agricultural businesses – farming, fisheries and plantations. This will allow crops to be harvested and daily-wagers and others working in these sectors to continue earning.
To restore the supply chain in these industries, cargo trucks will also be allowed to operate across state borders to transport produce from villages to the cities.
Essential public works programmes – such as building roads and water lines in rural areas – will also reopen, but under strict instructions to follow social distancing norms. These are a huge source of employment for hundreds of thousands of daily-wage earners, and farmers looking to supplement their income.
Banks, ATMs, hospitals, clinics, pharmacies and government offices will remain open. And the self-employed – such as plumbers, electricians and carpenters – will also be allowed to work.
Some public and even private workplaces have been permitted to open in areas that are not considered hotspots.
But all businesses and services that reopen are expected to follow social distancing norms.
Who decides what to reopen?
State governments will decide where restrictions can be eased. And several state chief ministers, including Delhi’s Arvind Kejriwal, have said that none of the restrictions will be lifted in their regions.
Mr Kejriwal said the situation in the national capital was still serious and the decision would be reviewed after one week.
India’s most populous state, Uttar Pradesh, will also see all restrictions in place, as will the southern states of Andhra Pradesh, Telangana and Karnataka.
The southern state of Kerala, which has been widely acknowledged for its success in dealing with the virus, has announced a significant easing of the lockdown in areas that it has demarcated as “green” zones.
This includes allowing private vehicular movement and dine-in services at restaurants, with social distancing norms in place. However, it’s implementing what is known as an “odd-even” scheme – private cars with even and odd number plates will be allowed only on alternate days, to limit the number of people on the road.
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.
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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.
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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.
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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.
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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.
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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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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.”
Image copyright GETTY IMAGESImage caption More than a billion people have been staying at home during the lockdown
Will India extend its rigorous 21-day lockdown to slow the spread of coronavirus beyond its end date next week? By all accounts, yes.
On 24 March, India shut its $2.9 trillion economy, closing its businesses and issuing strict stay-at-home orders to more than a billion people. Air, road and rail transport systems were suspended.
Now, more than two months after the first case of Covid-19 was detected in the country, more than 5,000 people have tested positive and some 150 people have died. As testing has ramped up, the true picture is emerging. The virus is beginning to spread through dense communities and new clusters of infection are being reported every day. Lifting the lockdown could easily risk triggering a fresh wave of infections.
A harsh lockdown is certain to slow down the disease. Virologists I spoke to believe India is still at an early stage of the infection. The country still doesn’t have enough data on the transmissibility of the virus or even how many people could have been infected and recovered to develop adequate herd immunity. (It is slowly beginning finger prick blood tests to look at the presence of protective antibodies.)
More than 250 of India’s 700-odd districts have reported the infection. Reports say at least seven states have a third of all infections, and want the lockdown extended. Six states have reported clusters of rapidly growing infections – from the capital Delhi in the north to Maharashtra in the west and Tamil Nadu in the south.
Economic fallout
Not surprisingly, the lockdown is already hurting the economy. Many of the early hotspots are economic growth engines and contribute heavily in revenues to the exchequer. Mumbai, India’s financial capital and Maharashtra’s main city, accounts for more than a third of overall tax collection. The densely populated city has reported more than 500 cases and 45 deaths, and numbers are steadily rising. Authorities say the infection is now spreading through the community. Mumbai has made wearing face masks mandatory.
Image copyright GETTY IMAGESImage caption India has ramped up testing during the lockdown
Many of these hotspot clusters are also thriving manufacturing bases. The spread of infection means that they will be under lockdown for a longer period of time.
The services industry, which generates almost half of India’s GDP, is also likely to remain shut for some more time. Construction, which employs a bulk of migrant workers, will remain similarly suspended. The unemployment rate may have already climbed to more than 20% after the lockdown, according to a report by the Center for Monitoring Indian Economy.
For the moment, economists say, the government will have to prioritise farming over everything else to ensure the livelihoods of millions and secure the country’s future food supplies.
Half of India’s labour force work on farms. The lockdown happened at a time when a bumper winter crop had to be harvested and sold, and the rain-fed summer crop had to be sowed. The immediate challenge is to harvest and market the first crop, and secure the second.
Moving trucks to pick up produce and take them to markets, with adequate social distancing and hand washing will be something the government will have to move on quickly.
“The immediate challenge is to ensure that rural India is not hit,” says Rathin Ray, an economist. “Realistically, a complete lockdown cannot be continuously maintained beyond early May. We don’t have a choice but to reopen gradually after that.”
Image copyright GETTY IMAGESImage caption India has been under a lockdown from 24 March
There is little doubt about that. For his part, SK Sarin, who heads a government advisory panel on combating the disease, says the lockdown can be only eased in a “graded manner in areas that are not hotspots” and that the hotspots remained cordoned off.
Like other affected countries, India will have to prepare itself for what Gabriel Leung, an infectious disease epidemiologist and dean of medicine at the University of Hong Kong, describes as several rounds of “suppress and lift” cycles.
During these periods “restrictions are applied and relaxed, applied again and relaxed again, in ways that can keep the pandemic under control but at an acceptable economic and social cost.”
Also, Dr Leung observes, “how best to do that will vary by country, depending on its means, tolerance for disruption and its people’s collective will. In all cases, however, the challenge essentially is a three-way tug of war between combating the disease, protecting the economy and keeping society at an even keel”.
It is now clear that shutdowns need to continue until transmission has slowed down markedly, and testing and health infrastructure has been scaled up to manage the outbreak.
Experts from the southern state of Kerala, a striking outlier that is containing the infection thanks to a transparent government and a robust public health system, say it isn’t time to lift the lockdown yet and have recommended a three-phase relaxation.
For most countries, easing the lockdown is a tricky policy choice. It sparks fears of triggering a fresh wave of infection and presents the inevitable trade-off between lives and livelihoods. French Prime Minister Edouard Phillipe, says relaxing the lockdown in his country is going to be “fearsomely complex”. In a crisis like this, according to his Dutch counterpart Mark Rutte, leaders have to “make 100% of the decisions with 50% of the knowledge, and bear the consequences.”
Image copyright GETTY IMAGESImage caption India’s financial capital, Mumbai, is emerging as a hotspot
It is going to be tougher for India with its vast size, densely packed population and enfeebled public health system. Also, no country in the world possibly has so much inter-state migration of casual workers, who are the backbone of the services and construction industries.
How will India manage to return these workers to their work places – factories, farms, building sites, shops – without a substantial easing of public transport at a time when crowded trains and buses can be a vector of transmission and easily neutralise the gains of the lockdown? Even allowing restricted mobility – allowing social distancing, temperature checks and passenger hygiene – would put considerable pressure on the public transport system.
The policy choices are fiendishly tough, and the answers are far from easy. India bungled the lockdown by not anticipating the exodus of millions of migrant workers from cities. The weeks ahead will tell whether the fleeing men, women and children carried the infection to their villages. The country simply cannot afford to make similar mistakes again while trying to relax the lockdown. Nitin Pai of The Takshashila Institution, a think tank, believes states should be left to decide on easing restrictions, and decisions “should be based on threat [of infection], which should be determined by extensive testing”.
This week Prime Minister Narendra Modi said that the “situation in the country is akin to a social emergency”. His government now needs make sure that the looming threat to the nation’s health and economic progress is tackled skilfully.
Some 460,000 Chinese firms shut in the first quarter amid fallout from the coronavirus
Registration of new firms between January and March fell 29 per cent from a year earlier
Many Chinese businesses are struggling from the economic fallout of the coronavirus. Photo: Reuters
More than 460,000 Chinese firms closed permanently in the first quarter as the coronavirus pandemic pummeled the world’s second largest economy, with more than half of them having operated for under three years, corporate registration data shows.
The closures comprised of businesses whose operating licenses had been revoked, as well as those who had terminated operations themselves, and included 26,000 in the export sector, according to Tianyancha, a commercial database that compiles public records.
At the same time, the pace of new firms being established slowed significantly. From January to March, around 3.2 million businesses were set up, a 29 per cent drop from a year earlier.
Most of these new companies were in traditional centres of economic power, such as Guangdong province in southern China, and close to half of them were in distribution or retail.
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The number of business closures underlines the challenges facing China as it tries to revive its economy, which is at risk of a contraction in the first quarter for the first time since 1976.
“China has managed to get the Covid-19 outbreak largely under control and domestic supply disruptions have now mostly dissipated,” Yao Wei and Michelle Lam, economists from French bank Societe Generale, said in a recent note.
“However, there are signs of lasting damage to domestic demand, and on top of that the external shock resulting from widespread lockdowns in other major economies is arriving fast and furious.”
In Dongguan, a once thriving industrial hub in the Pearl River Delta, rows of empty shops and closed factories are becoming a noticeable feature of the landscape as companies grapple with slumping international demand.
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In March, a local export-oriented manufacturer of tote bags and toys in the city, Dongguan Fantastic Toy Company, collapsed after overseas orders dried up, leaving some workers with unpaid salaries, the local labour authority said last month. The government has ordered the factory’s landlord to pay the outstanding wages.
Chinese business owners who can no longer afford to maintain operations face a number of hurdles before they can walk away from a company.
If an insolvent firm wants to cancel its company registration, it needs to go through bankruptcy procedures or show a liquidation report confirming it had no unpaid debt or other obligations.
Once shareholders or creditors file for bankruptcy, it can take months for courts to accept the case, followed by a long process of verification, creditors’ meetings and asset sales, said Li Haifeng, a partner at Baker McKenzie FenXun.
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“I expect a surge shortly after the situation settles down. We know many enterprises are already on the verge of bankruptcy. It’s just that they don’t have to declare or file for bankruptcy immediately,” Li said, adding he had received many queries on the matter in recent months.
Given the costly nature of bankruptcy proceedings, particularly for small businesses
struggling with cash flow or without sufficient assets, the number of bankruptcy filings this year would not be high, said Zhu Bao, a Beijing-based lawyer.
Fears over a growing number of companies going bust also appears to have played some part in Chinese courts rejecting and delaying bankruptcy filings, according to lawyers and official documents.
Creditors who filed on behalf of suppliers that helped contain the coronavirus or companies on the brink of bankruptcy as a direct result of the pandemic usually had their claims knocked back, dozens of court documents filed over the past two months showed.
We know many enterprises are already on the verge of bankruptcy. It’s just that they don’t have to declare or file for bankruptcy immediately – Li Haifeng
The courts in these cases encouraged the creditors to reconcile with the struggling firms and ride out the difficulties.
This – along with disruptions to court proceedings due to virus lockdowns – helped slow the review of bankruptcies in Chinese courts to 1,770 in February and March, from 2,160 filings in January, according to the national enterprise bankruptcy information disclosure platform.
“The delay and rejection of taking corporate bankruptcy cases is certainly intended to keep the economy going. Too many bankruptcies cases do not do much to help economic recovery,” Zhu said.
China’s central leadership has maintained it wants to hit economic targets for this year, even as the country braces for a possible second wave virus outbreak.
The delay and rejection of taking corporate bankruptcy cases is certainly intended to keep the economy going – Zhu Bao
The odds of a first quarter economic contraction for China are growing, however, and economists are debating whether it still makes sense for Beijing to set a specific gross domestic product (GDP) growth target for 2020.
Ma Jun, an academic member of the People’s Bank of China’s monetary policy committee, is one prominent voice that has suggested Beijing drop a set target amid the uncertainty caused by the virus outbreak.
However, others like Yu Yongding, an economist from Chinese Academy of Social Sciences, said it was necessary to anchor the country’s economic expansion, though the government should be realistic about the goal, reported the Beijing-based financial media group Caixin.
Image copyright GETTY IMAGESImage caption Millions are workers are defying a curfew and returning home
When I spoke to him on the phone, he had just returned home to his village in the northern state of Rajasthan from neighbouring Gujarat, where he worked as a mason.
In the rising heat, Goutam Lal Meena had walked on macadam in his sandals. He said he had survived on water and biscuits.
In Gujarat, Mr Meena earned up to 400 rupees ($5.34; £4.29) a day and sent most of his earnings home. Work and wages dried up after India declared a 21-day lockdown with four hours notice on the midnight of 24 March to prevent the spread of coronavirus. (India has reported more than 1,000 Covid-19 cases and 27 deaths so far.) The shutting down of all transport meant that he was forced to travel on foot.
“I walked through the day and I walked through the night. What option did I have? I had little money and almost no food,” Mr Meena told me, his voice raspy and strained.
He was not alone. All over India, millions of migrant workers are fleeing its shuttered cities and trekking home to their villages.
These informal workers are the backbone of the big city economy, constructing houses, cooking food, serving in eateries, delivering takeaways, cutting hair in salons, making automobiles, plumbing toilets and delivering newspapers, among other things. Escaping poverty in their villages, most of the estimated 100 million of them live in squalid housing in congested urban ghettos and aspire for upward mobility.
Image copyright GETTY IMAGESImage caption Informal workers are the backbone of India’s big city economies
Last week’s lockdown turned them into refugees overnight. Their workplaces were shut, and most employees and contractors who paid them vanished.
Sprawled together, men, women and children began their journeys at all hours of the day last week. They carried their paltry belongings – usually food, water and clothes – in cheap rexine and cloth bags. The young men carried tatty backpacks. When the children were too tired to walk, their parents carried them on their shoulders.
They walked under the sun and they walked under the stars. Most said they had run out of money and were afraid they would starve. “India is walking home,” headlined The Indian Express newspaper.
The staggering exodus was reminiscent of the flight of refugees during the bloody partition in 1947. Millions of bedraggled refugees had then trekked to east and west Pakistan, in a migration that displaced 15 million people.
Image copyright GETTY IMAGESImage caption Migrant labourers feel they have more social security in their villages
This time, hundreds of thousands of migrant workers are desperately trying to return home in their own country. Battling hunger and fatigue, they are bound by a collective will to somehow get back to where they belong. Home in the village ensures food and the comfort of the family, they say.
Clearly, a lockdown to stave off a pandemic is turning into a humanitarian crisis.
Among the teeming refugees of the lockdown was a 90-year-old woman, whose family sold cheap toys at traffic lights in a suburb outside Delhi.
Kajodi was walking with her family to their native Rajasthan, some 100km (62 miles) away. They were eating biscuits and smoking beedis, – traditional hand-rolled cigarettes – to kill hunger. Leaning on a stick, she had been walking for three hours when journalist Salik Ahmed met her. The humiliating flight from the city had not robbed her off her pride. “She said she would have bought a ticket to go home if transport was available,” Mr Ahmed told me.
Others on the road included a five-year-old boy who was on a 700km (434 miles) journey by foot with his father, a construction worker, from Delhi to their home in Madhya Pradesh state in central India. “When the sun sets we will stop and sleep,” the father told journalist Barkha Dutt. Another woman walked with her husband and two-and-a-half year old daughter, her bag stuffed with food, clothes and water. “We had a place to stay but no money to buy food,” she said.
Then there was Rajneesh, a 26-year-old automobile worker who walking 250km (155 miles) to his village in neighbouring Uttar Pradesh. It would take him four days, he reckoned. “We will die walking before coronavirus hits us,” the man told Ms Dutt.
He was not exaggerating. Last week, a 39-year-old man on a 300km (186 miles) trek from Delhi to Madhya Pradesh complained of chest pain and exhaustion and died; and a 62-year-old man, returning from a hospital by foot in Gujarat, collapsed outside his house and died. Four other migrants, turned away at the borders on their way to Rajasthan from Gujarat, were mowed down by a truck on a dark highway.
As the crisis worsened, state governments scrambled to arrange transport, shelter and food.
Image copyright SALIK AHMED/OUTLOOKImage caption Ninety-year-old Kajodi Devi is walking from Delhi to her village
But trying to transport them to their villages quickly turned into another nightmare. Hundreds of thousands of workers were pressed against each other at a major bus terminal in Delhi as buses rolled in to pick them up.
Delhi chief minister Arvind Kejriwal implored the workers not to leave the capital. He asked them to “stay wherever you are, because in large gatherings, you are also at risk of being infected with the coronavirus.” He said his government would pay their rent, and announced the opening of 568 food distribution centres in the capital. Prime Minister Narendra Modi apologised for the lockdown “which has caused difficulties in your lives, especially the poor people”, adding these “tough measures were needed to win this battle.”
Whatever the reason, Mr Modi and state governments appeared to have bungled in not anticipating this exodus.
Mr Modi has been extremely responsive to the plight of Indian migrant workers stranded abroad: hundreds of them have been brought back home in special flights. But the plight of workers at home struck a jarring note.
“Wanting to go home in a crisis is natural. If Indian students, tourists, pilgrims stranded overseas want to return, so do labourers in big cities. They want to go home to their villages. We can’t be sending planes to bring home one lot, but leave the other to walk back home,” tweeted Shekhar Gupta, founder and editor of The Print.
Image copyright GETTY IMAGESImage caption There is a precedent for this kind of exodus during crisis
The city, says Chinmay Tumbe, author of India Moving: A History of Migration, offers economic security to the poor migrant, but their social security lies in their villages, where they have assured food and accommodation. “With work coming to a halt and jobs gone, they are now looking for social security and trying to return home,” he told me.
Also there’s plenty of precedent for the flight of migrant workers during a crisis – the 2005 floods in Mumbai witnessed many workers fleeing the city. Half of the city’s population, mostly migrants, had also fled the city – then Bombay – in the wake of the 1918 Spanish flu.
When plague broke out in western India in 1994 there was an “almost biblical exodus of hundreds of thousands of people from the industrial city of Surat [in Gujarat]”, recounts historian Frank Snowden in his book Epidemics and Society.
Half of Bombay’s population deserted the city, during a previous plague epidemic in 1896. The draconian anti-plague measures imposed by the British rulers, writes Dr Snowden, turned out to be a “blunt sledgehammer rather than a surgical instrument of precision”. They had helped Bombay to survive the epidemic, but “the fleeing residents carried the disease with them, thereby spreading it.”
More than a century later, that same fear haunts India today. Hundreds of thousands of the migrants will eventually reach home, either by foot, or in packed buses. There they will move into their joint family homes, often with ageing parents. Some 56 districts in nine Indian states account for half of inter-state migration of male workers, according to a government report. These could turn out to be potential hotspots as thousands of migrants return home.
Image copyright GETTY IMAGESImage caption The fleeing migrants could spread the disease all over the country
Partha Mukhopadhyay, a senior fellow at Delhi’s Centre for Policy Research, suggests that 35,000 village councils in these 56 potentially sensitive districts should be involved to test returning workers for the virus, and isolate infected people in local facilities.
In the end, India is facing daunting and predictable challenges in enforcing the lockdown and also making sure the poor and homeless are not fatally hurt. Much of it, Dr Snowden told me, will depend on whether the economic and living consequences of the lockdown strategy are carefully managed, and the consent of the people is won. “If not, there is a potential for very serious hardship, social tension and resistance.” India has already announced a $22bn relief package for those affected by the lockdown.
The next few days will determine whether the states are able to transport the workers home or keep them in the cities and provide them with food and money. “People are forgetting the big stakes amid the drama of the consequences of the lockdown: the risk of millions of people dying,” says Nitin Pai of Takshashila Institution, a prominent think tank.
“There too, likely the worst affected will be the poor.”
But in Delhi and the financial capital, Mumbai, people fearing shortages quickly thronged shops and pharmacies.
“I have never witnessed such a chaos in my life,” the owner of one store in the Shakarpur district of Delhi said, quoted by the Press Trust of India.
“All our stocks, including rice, flour, bread, biscuits, edible oils, have been sold out.”
Police in the busy city of Ghaziabad, in Uttar Pradesh state, patrolled the streets with megaphones to tell residents to stay indoors.
Image copyright AFPImage caption People in Mumbai rushed to stock up on essentials following Mr Modi’s address
Under the new measures, all non-essential businesses will be closed but hospitals and other medical facilities will continue to function as normal. Schools and universities will remain shut and almost all public gatherings will be banned.
Anyone flouting the new rules faces up to two years in prison and heavy fines.
In his address, Prime Minister Modi also:
Stressed that the 21-day lockdown was “very necessary to break the chain of coronavirus”
Emphasised the seriousness of the situation and said that even developed countries had faced problems in combating it
Said that “social distancing was the only way to stop” the virus spreading
Announced that nearly $2bn (£1.8bn) would be made available to boost the country’s health infrastructure
Called on people not to “spread rumours” and to follow instructions
His announcement came after several Indian states introduced measures of their own, such as travel restrictions and the closure of non-essential services.
India has already issued a ban on international arrivals and grounded domestic flights. The country’s rail network has also suspended most passenger services.
Many parts of India, including cities such as Delhi and Mumbai, are already under tight restrictions. But this move extends those provisions to every corner of the country.
An earlier one-day curfew, which was seen as a trial, was flouted by many.
Mr Modi called on Indians to clap and cheer the emergency services from their balconies on Sunday. But many misunderstood the call and congregated in the streets as they danced and chanted.
“It’s impossible to fathom the cost that India may have to pay if such irresponsible behaviour continues,” Mr Modi warned at the time. “Social distancing is the only option to combat coronavirus.”
The implications of a total lockdown in India are huge, not just economically, but socially.
This is a nation where community is everything. Going to worship at a temple, mosque or church is an essential part of daily life for so many.
This is a seismic cultural shift but – like the rest of the world facing similar restrictions – a necessary one.
What’s the latest from around Asia?
Neighbouring Pakistan has almost twice as many confirmed cases – 878 as of Monday evening. Sweeping restrictions are in place although the government has stopped short of imposing a nationwide lockdown. However, several provinces have announced them independently. The army is being brought in to help enforce the restrictions
Bangladesh, which has reported 33 cases and three deaths, is also deploying its armed forces to help maintain social distancing and boost Covid-19 preventive measures. The soldiers will also monitor thousands of quarantined expatriate returnees. Across South Asia, there are concerns that the actual number of cases could be much higher than is being reported.
Indonesia, which has 49 confirmed Covid-19 deaths – the highest in South East Asia – has converted an athlete’s village built for the 2018 Asian Games into a makeshift hospital for coronavirus patients. A state of emergency was declared in Jakarta on Monday
In Thailand, a month-long state of emergency which will include curfews and checkpoints will begin on Thursday. The government has been criticised for failing to take strong action so far. Four people have died and nearly 900 tested positive
The most populous country that was without a case until now – Myanmar – has announced two cases
And what about the rest of the world?
Elsewhere, governments are continuing to work to stem the spread of the virus which has now affected more than 190 countries worldwide
More than 2.6 billion people are in lockdown now India has introduced its new measures, according to a tally by the AFP news agency
Media caption Reality Check tackles misleading health advice being shared online
Europe remains at the epicentre of the pandemic. On Tuesday, the death toll jumped by 514 in a single day in Spain and other European countries also reported sharp increases
Italy is the worst affected country in the world in terms of deaths. The virus has killed almost 7,000 people there over the past month
The World Health Organization (WHO) has warned that the US has the potential to become the new epicentre of the pandemic
In other developments, Japanese Prime Minister Shinzo Abe said the International Olympic Committee has agreed that the 2020 Tokyo Olympics should be postponed by a year
BEIJING (Reuters) – China on Sunday reported 46 new cases of coronavirus, the fourth straight day with an increase, with all but one of those imported from overseas, and further stepped up measures to intercept cases from abroad as the outbreak worsens globally.
While China says it has drastically reduced the number of domestically transmitted cases – the one reported on Sunday was the first in four days – it is seeing a steady rise in imported cases, mostly from Chinese people returning from overseas.
In a sign of how seriously China is taking the threat of imported cases, all international flights due to arrive in Beijing starting Monday will first land at another airport, where passengers will undergo virus screening, government agencies said on Sunday, in an expansion of existing measures.
International flights that were scheduled to arrive in the capital will land instead at one of 12 airports. Passengers who clear screening will then be permitted to reboard the plane, which will then fly to Beijing, the regulator said.
Separately, Shanghai and Guangzhou both announced that all arriving international passengers will undergo an RNA test to screen for coronavirus, expanding a program that previously only applied to those coming from heavily-hit countries.
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Among the new cases from abroad reported on Sunday, a record 14 were in the financial hub of Shanghai and 13 were in Beijing, a decline from 21 the previous day.
The new locally transmitted case was in the southern metropolis of Guangzhou and was also the first known case where the infection of a local person was linked to the arrival of someone from overseas, according to Guangdong province.
Hu Xijin, the editor-in-chief of the Global Times newspaper, called for all cities in China to implement 14-day quarantines for people arriving from abroad.
He also called for quarantine policies to apply to people from Hong Kong and Macau as well, he said on his Weibo account on Sunday.
“I am worried that there are similar cases to the Guangzhou one existing in other parts of the country. There were reports previously that people coming back from abroad returned to their homes in Shanghai without any obstacles,” Hu said.
“It matters to the overall situation of China’s next prevention and control efforts if we can plug the leaks.”
The Global Times is a tabloid published by the Ruling Communist Party’s People’s Daily.
The latest figures from China’s National Health Commission bring total reported coronavirus cases in the country to 81,054, with 3,261 deaths, including six on Saturday. On Saturday, China reported 41 new coronavirus cases for the previous day, all of them imported.
Of all 97 imported cases as of end-Saturday, 92 of them are Chinese nationals and 51 are Chinese students returning from studying abroad, said Gao Xiaojun, spokesman for the Beijing Municipal Health Commission during a press conference on Sunday.
The Beijing health commission announced separately on its website it had two more imported cases on Sunday, bringing the city’s total number of imported cases to 99 as of Sunday noon.
BACK TO A KIND OF NORMAL
China is trying to revive an economy that is widely expected to contract deeply in the current quarter, with life slowly returning to normal in cities such as Beijing and Shanghai, albeit with everyone wearing masks in public.
Still, numerous shops and restaurants remain shut – many have gone out of business – and factories and other workplaces are still not operating at full capacity.
On Sunday, a central bank official called for stepped-up global policy coordination to manage the economic impact of the pandemic. He said China’s recent policy measures were gaining traction, and it has capacity for further action.
Chen Yulu, a deputy governor at the People’s Bank of China (PBOC), also said he expects significant improvement in the Chinese economy in the second quarter.
And while the virus will continue putting upward pressure on near-term consumer prices, there is no basis for long-term inflation or deflation, he told a news briefing.
Globally, roughly 275,000 people have been infected with the virus, and more than 11,000 have died, according to a Reuters tally, with the number of deaths in Italy recently surpassing those in China.
“Now I think the epidemic has been controlled. But this definitely doesn’t mean that it’s over,” said a 25-year-old woman surnamed He who works in the internet sector and was visiting the vast Summer Palace complex in Beijing on Saturday.
“I’m willing to come out today but of course I am still afraid,” she told Reuters.
The central province of Hubei, where the outbreak first emerged late last year in its capital Wuhan, reported its fourth straight day of no new cases.
China has used draconian measures to contain the spread of the virus, including locking down Hubei province.
Image copyright REUTERS
Image copyright REUTERS
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