Chindia Alert: You’ll be Living in their World Very Soon
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Test in Xiong’an, the new city being built south of Beijing, will focus on everyday goods and services for the first time
American food outlets to be included in the digital currency tests, conducting small transactions with local firms
American chains Starbucks, McDonald’s and Subway were named on the People’s Bank of China’s list of firms that will test the digital currency in small transactions with 19 local businesses. Photo: Bloomberg
China’s central bank has accelerated the testing of its new sovereign digital currency and, for the first time, will include some foreign consumer brands in the programme.
American chains Starbucks, McDonald’s and Subway were named on the People’s Bank of China (PBOC)’s list of firms that will test the digital currency in small transactions with 19 local businesses.
The global names will be joined by local hotels, convenience stores, a stuffed bun shop, a bakery, a bookstore and a gym, according to details revealed at a promotional event in the Xiong’an New Area, a city being built south of Beijing, news portal Sina.com reported.
The inclusion of businesses providing everyday goods and services marks an expansion of the PBOC’s testing. It follows a previous disclosure that last week in Suzhou the digital currency was used to pay half public sector workers’ travel subsidies for May.
Is China a currency manipulator?
Wednesday’s promotional event was organised by the local branch of the National Development and Reform Commission, the powerful planning agency, and attended by representatives of the Big Four state-owned banks and two of the country’s internet giants – Alibaba and Tencent.
China has not released a timetable for launching the digital yuan, but last week’s reports on new testing have fanned speculation that it could be imminent.
The tests were reportedly accelerated after Facebook launched its Libra project in June last year, an attempt to create a global digital currency pegged to a basket of currencies and backed by global commercial giants.
The Libra Association, the consortium managing the project, announced changes last week in an attempt to win regulatory approval and pave the way for an official launch sometime later this year. The consortium said it would create multiple digital units tied to existing currencies such as the US dollar or the euro, rather than a single token based on a basket of currencies.
China’s official digital currency, known as Digital Currency Electronic Payment (DCEP), came into the public spotlight last week when a screenshot of a test version of an app developed by the Agricultural Bank of China circulated online.
The digital currency app has several basic functions, similarly to other Chinese online payment platforms such as Alipay and WeChat Pay – the country’s two most popular online payment tools – allowing users to make and receive payments, and transfer money.
“It’s certain that the DCEP is now in its final testing stage and should be officially launched,” BlockVC, an investment firm, said in a research note.
The PBOC’s digital currency research institute confirmed last Friday that testing was being conducted in four cities: Shenzhen, Suzhou, Xiong’an and Chengdu. In addition, venues for the 2022 Winter Olympics in Beijing and Zhangjiakou will join the testing programme in the future.
What is the Hong Kong Dollar Peg?
The institute, which was inaugurated in 2017, said that the test versions and applications of the currency had not been finalised.
The project testing is based on two principles: the central bank issues the virtual money to commercial banks who then pass it on to consumers, and that is aimed at replacing cash in all transactions.
China is the first major economy to publicly announce plans for a sovereign digital currency, aiming to better control the rapid rise of digital payments worldwide.
The PBOC has, however, cracked down on the trading of other digital currencies and banned banks from accepting cryptocurrencies, which it views as a risk to financial stability.
Around two thirds of the total number of flights scheduled every day in February were cancelled, placing huge financial pressure on airlines and airports
China’s aviation industry has also been affected by a series of restrictions by other countries and airlines, with British Airways extending its suspension until mid-April
The cancellation of around 10,000 flights a day, or around two thirds of the total number of flights scheduled every day in February, has placed huge financial pressure on airlines and airports. Photo: Kyodo
A one-way air ticket from the coastal economic hub of Shanghai to the inland municipality of Chongqing, a journey of over 1,400km (870 miles), now costs less than a cup of coffee, with Chinese airlines slashing prices in a bid to boost weak domestic demand amid the coronavirus outbreak.
The cancellation of around 10,000 flights a day, or around two thirds of the total number of flights scheduled every day in February, has placed huge financial pressure on airlines and airports.
The Civil Aviation Administration of China said in a notice on Tuesday that flights should resume gradually as part of the country’s efforts to return economic and social life back to normal, but passengers are still reluctant to fly with the deadly outbreak still not fully under control.
The one-way flight from Shanghai to Chongqing is being offered for just 29 yuan (US$4.10) by China’s biggest low-cost carrier, Spring Airlines, as a special offer for its frequent flyer club members, while a tall caffe latte at Starbucks in China costs 32 yuan (US$4.5).
Many Chinese carriers do receive subsidies for operating key domestic routes, so this also skews the economics as well Luya You
A one-way ticket from Shanghai to Harbin, the capital of the northern Heilongjiang province, a distance of over 1,600km (994 miles), costs just 69 yuan (US$9.80).
Shenzhen Airlines, a division of state-owned carrier Air China, is also running special offers to Chongqing, with a one-way ticket for the 1000km (621 miles) journey from Shenzhen costing just 100 yuan (US$14), around 5 per cent of the standard price of 1,940 yuan (US$276).
Chengdu Airlines, a unit of Sichuan Airlines, which counts China Southern Airlines as a shareholder, is also offering cheap one-way flights from Shenzhen to Chengdu, a distance of over 1,300km (808 miles), for just 100 yuan.
“Considering lower average costs of operating in mainland China, carriers could potentially offer deeper discounts while making slim profits or just breaking even,” said Luya You, an aviation analyst with Bank of Communication International. “As outbreak numbers stabilise or even decline, carriers will likely adjust their fares as well, so these low fares will not last if the situation quickly turns for the better.
“Many Chinese carriers do receive subsidies for operating key domestic routes, so this also skews the economics as well. If it is a key route, for example, the carrier may choose to continue operating regardless of fares or loads as the route constitutes a major link in the domestic network infrastructure.”
China’s aviation authority confirmed earlier this month that between January 25 and February 14, which included the Lunar New Year holiday, the average daily passenger traffic in China was just 470,000, representing a 75 per cent drop from the same period last year.
China’s aviation industry has also been affected by a series of restrictions by other countries and airlines, with British Airways last week extending its suspension of flights to China until after the Easter holiday in mid-April following travel advice from the British government.
The novel coronavirus, which causes the disease officially named Covid-19, has infected more than 78,000 people and killed 2,700 in China. In recent days, South Korea, Italy and Iran have all reported a surge in new cases, raising fears over the spread of the coronavirus.
“The flight suspensions will track the outbreaks, but not likely lead them. If there are more outbreaks, expect more flight suspensions,” said Andrew Charlton, managing director of Aviation Advocacy.
The new coronavirus has been declared a global emergency by the World Health Organization, as the outbreak continues to spread outside China.
“The main reason for this declaration is not what is happening in China but what is happening in other countries,” said WHO chief Tedros Adhanom Ghebreyesus.
The concern is that it could spread to countries with weaker health systems.
Meanwhile, the US has told its citizens not to travel to China.
The state department issued a level four warning – having previously urged Americans to “reconsider” travel to China – and said any citizens in China “should consider departing using commercial means”.
China has said it will send charter plans to bring back Hubei province residents who are overseas “as soon as possible”.
A foreign ministry spokesman said this was because of the “practical difficulties” Chinese citizens have faced abroad. Hubei is where the virus emerged.
At least 213 people in the China have died from the virus, mostly in Hubei, with almost 10,000 cases nationally.
The WHO said there had been 98 cases in 18 other countries, but no deaths.
Most international cases are in people who had been to Wuhan in Hubei.
However in eight cases – in Germany, Japan, Vietnam and the United States – patients were infected by people who had travelled to China.
Getty Coronavirus outbreak outside China
18 The number of countries with cases
14 Cases in Thailand and Japan
13 Singapore
11 South Korea
8 Australia and Malaysia
5 France and USA
Source: WHO and local authorities
Speaking at a news conference in Geneva, Dr Tedros described the virus as an “unprecedented outbreak” that has been met with an “unprecedented response”.
He praised the “extraordinary measures” Chinese authorities had taken, and said there was no reason to limit trade or travel to China.
The US Commerce Secretary, Wilbur Ross, has said the outbreak could “accelerate the return of jobs to North America”.
Preparing other countries
What happens if this virus finds its way into a country that cannot cope?
Many low- and middle-income countries simply lack the tools to spot or contain it. The fear is it could spread uncontrollably and that it may go unnoticed for some time.
Remember this is a disease which emerged only last month – and yet there are already almost 10,000 confirmed cases in China.
The 2014 Ebola outbreak in West Africa – the largest in human history – showed how easily poorer countries can be overwhelmed by such outbreaks.
And if novel coronavirus gets a significant foothold in such places, then it would be incredibly difficult to contain.
We are not at that stage yet – 99% of cases are in China and the WHO is convinced the country can control the outbreak there.
But declaring a global emergency allows the WHO to support lower- and middle-income countries to strengthen their disease surveillance – and prepare them for cases.
How unusual is this declaration?
The WHO declares a Public Health Emergency of International Concern when there is “an extraordinary event which is determined… to constitute a public health risk to other states through the international spread of disease”.
It has previously declared five global public health emergencies:
Swine flu, 2009 – The H1N1 virus spread across the world in 2009, with death toll estimates ranging from 123,000 to 575,400
Polio, 2014 – Although closer than ever to eradication in 2012, polio numbers rose in 2013
Zika, 2016 – The WHO declared Zika a public health emergency in 2016 after the disease spread rapidly through the Americas
Ebola, 2014 and 2019 – The first emergency over the virus lasted from August 2014 to March 2016 as almost 30,000 people were infected and more than 11,000 died in West Africa. A second emergency was declared last year as an outbreak spread in DR Congo
Media caption Inside the US laboratory developing a coronavirus vaccine
How is China handling the outbreak?
A confirmed case in Tibet means the virus has reached every region in mainland China. According to the country’s National Health Commission, 9,692 cases have tested positive.
The central province of Hubei, where nearly all deaths have occurred, is in a state of lockdown. The province of 60 million people is home to Wuhan, the heart of the outbreak.
The city has effectively been sealed off and China has put numerous transport restrictions in place to curb the spread of the virus.
People who have been in Hubei are also being told to work from home until it is considered safe for them to return.
The virus is affecting China’s economy, the world’s second-largest, with a growing number of countries advising their citizens to avoid all non-essential travel to the country.
How is the world responding?
Voluntary evacuations of hundreds of foreign nationals from Wuhan are under way.
The UK, Australia, South Korea, Singapore and New Zealand are expected to quarantine all evacuees for two weeks to monitor them for symptoms and avoid contagion.
Australia plans to quarantine its evacuees on Christmas Island, 2,000km (1,200 miles) from the mainland in a detention centre that has been used to house asylum seekers.
In other recent developments:
Italy suspended flights to China after two Chinese tourists in Rome were diagnosed with the virus; earlier 6,000 people on board a cruise ship were temporarily barred from disembarking
In the US, Chicago health officials have reported the first US case of human-to-human transmission. Around 200 US citizens have been flown out of Wuhan and are being isolated at a Californian military base for at least 72 hours
Russia has decided to close its 4,300km (2,670-mile) far-eastern border with China
Two flights to Japan have already landed in Tokyo. Japan has now raised its infectious disease advisory level for China
Some 250 French nationals have been evacuated from Wuhan
India has confirmed its first case of the virus – a student in the southern state of Kerala who was studying in Wuhan
Israel has barred all flight connections with China
Papua New Guinea has banned all visitors from “Asian ports”
SHANGHAI (Reuters) – Food giant Nestle (NESN.S) on Thursday started selling Starbucks-branded (SBUX.O) coffee in mainland China, seeking to tap growth in a market where it says coffee consumption per capita remains low compared to global standards.
Nestle last year paid $7.15 billion for exclusive rights to sell the U.S. chain’s coffees and teas globally, and began selling Starbucks-labelled products in Europe, Asia and Latin America in February.
The world’s largest food company will start selling 21 Starbucks-branded capsule and instant coffee products on Chinese e-commerce platforms like Alibaba’s (BABA.N) Tmall and JD.com (JD.O), as well as to offices and hotels in tier-1 cities, both companies said.
“We believe China is the most exciting market in general but especially for coffee because… per capita cup consumption is quite low as compared to Asia,” said Rashid Aleem Qureshi, Nestle’s chief executive officer for the Greater China region.
“Right now the overall soluble coffee in China is growing between 3-5% (a year) and we believe that by bringing this exciting new business opportunity we should be able to grow faster than that,” he said, referring to a category that includes capsule and instant coffee.
Nestle’s move comes as the Swiss company experienced a slower first-half growth in China, its second-largest market, where other categories like mainstream baby foods have struggled compared to pricier options.
China’s per capita coffee consumption is about 6 cups a year, compared to 400 in Japan and 300 in South Korea, Nestle said.
The partnership with Starbucks would help Nestle add a premium coffee option to the range of products it already sells in China, such as Nescafe instant coffee range and Nespresso capsule coffees, Qureshi said.
Starbucks China CEO Belinda Wong said the Nestle deal would open two new avenues to sell its products in China, where it has been investing heavily in its store network and delivery amid tougher competition from local startups.
CHINDIA ALERT: You'll be living in their world, very soon 