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.
China’s leadership has made it clear to its people that the world will become more dangerous and they must be prepared for hard times
Beijing’s relatively small stimulus response to Covid-19 suggests it wants to save its economic policy ammunition for a bigger battle
China opted not to set a GDP target for 2020. Photo: Xinhua
Beijing’s decision not to set an annual GDP target for 2020 – for the first time since 2002 – is a sign it is putting stability ahead of growth as part of its preparations for an escalating conflict with the United States.
Economic development has always been the central theme for Beijing since it established diplomatic relations with the US in 1979. But this year it has given priority to job creation and tackling poverty. The coronavirus outbreak might appear to have been the reason for the shift, but the underlying factor is the tension with the US.
Covid-19 offered a preview of what a decoupling of China and US might look like: aircraft grounded, cargo flows disrupted, value chains broken, goodwill and cooperation lost, blame games started.
Both countries have suffered heavy human and economic losses from the coronavirus, yet that did not inspire them to work together. Instead, hostility and rivalry has thrived, and neither wants to blink first.
The Chinese leadership has made it clear to its people that the world will become more dangerous and they must be prepared for hard times. As such, the government is saving its economic policy ammunition.
While the stimulus plans introduced in the US, Germany, Japan and France exceed 10 per cent of their national GDP and interest rates have been cut to the bone, Beijing stopped at just 1 trillion yuan (US$140 billion) worth of special treasury bonds and 1.6 trillion yuan of additional local government bonds. In total, about 2.6 per cent of GDP.
Interest rates in China – 2.7 per cent on 10-year bonds – are some of the highest among major economies.
China’s 6.6 per cent defence spending boost lowest in three decades
23 May 2020
China’s budget fiscal deficit has increased to 3.6 per cent of GDP for 2020, but the larger deficit is mainly from tax and fee cuts instead of increased fiscal expenses, except for an increased military spending.
Beijing is calling on provincial and local authorities to tighten their belts, which is unusual for a government that has huge assets and can increase spending at any time through quantitative easing.
So why is the government, which is known for intervening in the economy, being so restrained?
It is bracing itself for a perceived period of turbulence and hardship as its relationship with the US turns sour. It is putting jobs and social stability on top of its agenda, instead of growth.
Beijing is refraining from excessive spending, eliminating sources of potential instability, making appeals to the most vulnerable social groups, and saving its power for a bigger test.
Against that backdrop, the National People’s Congress passed the national security legislation on Hong Kong. Beijing knew the bill would anger the US, but did it anyway.
Hong Kong is known as China’s gateway to the international capital market and the largest offshore yuan market, but Beijing is ready to trade losses on the financial and economic front for potential gain on a fortified national security fence.
All this points to the suggestion that Beijing is preparing for the possibility of decoupling from the US, even if it doesn’t necessarily want to.
The threat of a new Cold War is clouding the world. The theme of life for one or two generations of people on both sides of the Pacific may shift from growth and prosperity to struggle and confrontation.
China and the US have yet to collide totally, but that moment is drawing near.
The measures China has taken to stop the spread of the coronavirus are starting to have an impact, Mi Feng, a spokesman at the National Health Commission, said on Sunday.
In other developments:
The number of people who have tested positive on the Diamond Princess cruise ship, which is being held in quarantine in Japan, has risen to 355. The US and Canada are sending planes to evacuate their citizens
A Chinese tourist has died in France – the first fatality outside Asia
An 83-year-old American woman has tested positive after disembarking another cruise ship that was turned away by a number of countries before being allowed to dock in Cambodia
In the UK, all but one of nine people being treated have been discharged from hospital
On Saturday, World Health Organization (WHO) head Tedros Adhanom Ghebreyesus praised Beijing’s response to the outbreak.
“China has bought the world time. We don’t know how much time,” he said. “We’re encouraged that outside China, we have not yet seen widespread community transmission.”
How is China coping?
Tens of millions of Chinese still face heavy restrictions on their day-to-day life as part of the government’s efforts to halt the spread of the disease, which causes a disease named Covid-19.
Much of the response has focused on the hard-hit province of Hubei and its capital Wuhan, where the outbreak began. The city is all but sealed off from the rest of the country.
Foreign Minister Wang Yi said that along with a drop in infections within Hubei there had also been a rapid increase in the number of people who had recovered.
China’s central bank will also disinfect and store used banknotes before recirculating them in a bid to stop the virus spreading.
Media caption Medics in Wuhan resort to shaving their heads in a bid to prevent cross-infection of the coronavirus
In another development Chinese state media published a speech from earlier this month in which Chinese President Xi Jinping said he said he had given instructions on 7 January on containing the outbreak.
At the time, local officials in the city of Wuhan were downplaying the severity of the epidemic.
This would suggest senior leaders were aware of the potential dangers of the virus before the information was made public.
With the government facing criticism for its handling of the outbreak, analysts suggest the disclosure is an attempt to show the party leadership acted decisively from the start.
CHINDIA ALERT: You'll be living in their world, very soon 