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.
Concerns are rising that China is repeating its mistake of a decade ago by pursuing short-term debt-fuelled economic growth at the cost of long-term sustainability
Local governments are stepping up spending on infrastructure projects in a bid to offset the slowdown caused by the coronavirus outbreak and subsequent lockdowns
Construction of high-speed railways, motorways and airports is an old tactic that Beijing dusted off after the pandemic led to a 6.8 per cent economic contraction in the first quarter. Photo: Xinhua
China’s huge stockpile of local government debt, one of the biggest “grey rhino” risks threatening the Chinese economy’s future, is set to rise steeply as local authorities rush to increase capital spending to help offset the damage caused by the coronavirus outbreak.
As Beijing discusses increasing the central government budget deficit and monetary policy easing to spur economic growth, many local governments see the situation as a golden opportunity to realise their investment ambitions, fanning concerns that China is repeating its mistake of a decade ago by pursuing short-term debt-fuelled economic growth at the cost of long-term sustainability.
In one of the latest investment drives, the southeastern province of Fujian announced on Sunday that it had signed contracts for 391 new projects with a combined investment value of 783.6 billion yuan (US$110.6 billion). Projects undertaken by central government-owned companies, which received significant lending support in the first quarter, accounted for more than half of the promised investment in Fujian, some 92 projects worth 424.5 billion yuan.
The landlocked eastern province of Anhui is also planning 2,583 new projects this year at a cost of 450 billion yuan, a third of which have been created in the last two weeks.
Construction begins for major sea crossing to link Shenzhen and Zhongshan in Greater Bay Area
In addition to work on existing construction projects, costing around 850 billion yuan, the province has also prepared a list of 3,300 reserve projects with a total investment value of 5.4 trillion yuan (US$762 billion) which could theoretically be started at any point in the future, pending government approval and funding support.
“The most powerful and effective way to offset the economic slowdown is to increase the size of investments,” Wang Qikang, an official with the Anhui economic planning office said on Friday. “[We] must quicken the pace of construction, working day and night to win back the lost time [from the coronavirus lockdowns].”
Construction of high-speed railways, motorways and airports is an old tactic that Beijing dusted off after the pandemic led to a 6.8 per cent economic contraction in the first quarter.
Infrastructure construction has already been hit hard amid the lockdowns, plunging 19.7 per cent in the first three months of the year compared to a year earlier.
Many [local governments] are still striving to achieve a high growth rate without the guidance of a national [gross domestic product] target – Liu Xuezhi
“The investment stimulus mindset has hardly been eradicated at the local level,” said Liu Xuezhi, a senior researcher with the Bank of Communications in Shanghai. “In particular, many [local governments] are still striving to achieve a high growth rate without the guidance of a national [gross domestic product] target.”
Before the start of the coronavirus outbreak, Beijing was thought to be targeting a
of around 6 per cent this year after achieving 6.1 per cent in 2019, although many local governments appear to be setting their own annual targets still using the original expected goal as a guide.
However, that target was never made public because the meeting of the
scheduled for early March, where the growth target would normally have been released, was postponed due to the virus.
The government announced on Wednesday that the NPC will be held from May 22, when a new, likely lower, growth target could be announced.
China’s first-quarter GDP shrinks for the first time since 1976 as coronavirus cripples economy
International rating agency Moody’s warned that greater infrastructure spending would result in higher debt for regional and local governments, increasing their financial risks amid a sharp slowdown in tax revenues.
“Such investments are less likely to be a main support measure [chosen by Beijing] now given the government’s focus on avoiding a rapid increase in leverage and asset price inflation,” Moody’s analysts Michael Taylor and Lilian Li said on Tuesday.
At the end of March, local government debt stood at 22.8 trillion yuan (US$3.2 trillion), according to the Ministry of Finance. But implicit liabilities, which are hidden in local financing vehicles, state firms and public-private partnership projects, are believed to be much larger, with some estimates pointing towards an additional debt of over 30 trillion yuan.
Chinese central bank governor Yi Gang, along with other officials, have already warned against excessive economic stimulus, saying it would add risks to China’s financial system.
A key risk is that local governments are front-loading China’s long-term investment plan, especially in the railway sector, with more than 357 railway projects proposed by local governments.
Shandong province, for example, is preparing to build four new railway lines, including the Shandong portion of a second high-speed railway between Beijing to Shanghai.
“There is still a chance for infrastructure investment growth to hit 10 per cent if the government releases 2 trillion yuan (US$282 billion) in funding through local special purpose bonds and special treasury bonds,” said Haitong Securities’ chief economist Jiang Chao on Monday.
However, a local government debt monitoring report issued on Tuesday by the National Institution of Finance and Development warned that China’s local government fiscal situation is worsening rapidly as expenses surge and revenues drop.
“All levels of local governments in China will face huge debt repayment pressure in five years,” warned Yin Jianfeng, deputy director of the Beijing-based think-tank.
Elderly resident says he can’t recall this happening in his city before, not even during the Cultural Revolution
Outbreak is expected to deal a heavy blow to businesses, especially smaller eateries, with some already forced to close
Like many elderly Chinese in Guangzhou, He Zhijian was shocked when he heard there was a ban on eating in restaurants, as authorities try to curb the spread of the coronavirus.
The 73-year-old has spent his entire life in the southern city, where gathering for dim sum is an important weekly family ritual.
“My wife and I … are used to having dim sum, tea and Cantonese dishes at the local restaurants every week. From memory, this [type of ban] has never happened in Guangzhou before – not even during the Cultural Revolution,” He said, referring to the decade of social and political upheaval from 1966, when food was in short supply.
The ban took effect at 9pm on Wednesday and is part of measures to contain the outbreak of the virus, which causes a disease officially known as Covid-19, and is believed to have started in Wuhan in December. The pneumonia-like illness has so far
Residents can still get takeaway meals in Guangzhou, but they have been encouraged to order online and have them delivered. Photo: He Huifeng
Guangzhou is home to more than 15 million people and a busy trading port, and has been known as China’s most open city since the 1600s. For locals, going to restaurants for yum cha, or “drinking tea”, and dining on dim sum is an important part of the city’s history and culture – a tradition that has been carried through many generations.
“Even in the ‘three years of natural disasters’ [from 1959 to 1961, when China was in the grip of a famine] I remember there were still restaurants open,” He said. “I was really shocked [by the ban]. I guess the epidemic situation must be severe, otherwise Guangzhou definitely wouldn’t introduce this measure.”
China’s Hubei province reports huge spike in coronavirus cases, rising 10-fold from previous day
Many people in Guangzhou and across the country went back to work on Monday after an extended Lunar New Year break – another measure to try to stop the virus from spreading – with the government keen for businesses to return to normal operations.
The ban on dining in applies to restaurants, but employees can continue to have meals at their company canteens. And while residents can still get takeaways from restaurants, they have been encouraged to do this online, and have their meals delivered, rather than collecting their orders.
Group gatherings have also been banned in the city, and according to Nanfang Daily, some 126 banquets that would have involved more than 90,000 people have been cancelled by authorities already. The authorities did not say how long the measures would be in place.
Guangzhou is not the only city in Guangdong province to bring in a ban on dining in restaurants – Futian district in Shenzhen, Xiangzhou in Zhuhai, Foshan and Zhongshan have all taken the same step.
Beijingers gradually return to work as China’s fight against deadly coronavirus continues
In Guangzhou, while residents try to adapt, businesses are expecting to take a hit. One of the city’s top hotels said the virus outbreak could have a severe impact on the industry.
“Now we will focus on promoting takeaways for local customers. They can order our meals through apps providing online takeaway ordering services,” said Fion Liang, director of sales and marketing at The Garden Hotel. “As for guests staying in the hotel we will deliver meals to their rooms.”
To work or not to work: the difficult coronavirus question facing China
13 Feb 2020
She said the outbreak did not have a big impact on the hotel’s business in January, because the situation only became severe at the end of the month.
“The impact was definitely much bigger in February. If the epidemic continues to be severe throughout February, the occupancy rate of our rooms will be in the single digits this month,” Liang said. “[Most] hotels in Guangzhou are in the same situation.”
The outbreak is expected to deal a heavy blow to restaurants in the city, especially smaller eateries, and some have already been forced to close. June Zhao, the owner of dumpling restaurant Xi Xi, decided to shut down on Wednesday – the day the eat-in ban was announced.
Prospects had been good for the restaurant – it also sold books and alcohol in the evenings, and its trendy decor drew a young crowd.
“We had just started making money last winter and we were looking forward to earning more over the Lunar New Year holiday. But then the coronavirus came, our turnover fell to several hundred yuan a day, and we lost hope,” she said. “The new ban makes this situation worse – takeaway is not a good choice for dumplings, especially in winter. The losses will continue if we stay open.”
Coronavirus: major cities given power to seize private property
13 Feb 2020
The ban has also interrupted daily routines. Freelance cameraman Cony Yu, 28, usually spends some of his working day at cafes, but that is no longer possible. “[Now] I don’t have a comfortable place to sit aside from my home – even the parks have all been closed,” Yu said.
China disinfects entire cities to fight coronavirus outbreak, some twice a day
In the southern tech hub of Shenzhen, dining in has also been banned in central Futian district. Zhu Hao, a financial analyst based in the district, has been working from home for a week and ordering takeaway food every day. But he has to collect it from the gate at his residential compound, where security staff check the temperature of anyone entering or leaving.
He is losing patience with the restrictions. “I want to eat out. I want beef hotpot, coconut chicken, Korean barbecue and seafood,” he said.
In other Shenzhen districts, many restaurants and shopping centres have been temporarily closed or can only provide takeaway meals – including fast food chains such as McDonald’s and Starbucks.
Other places have strict rules for customers. At a bread shop, customers must register their ID and phone numbers and have their temperatures checked before they can enter. And for now, all hotpot restaurants have been closed.
CHINDIA ALERT: You'll be living in their world, very soon 