Covid Policy Shift, Economic Woes, and China-Russia Relations
Covid Policy Shift
VERMILION: The good news for Chinese citizens is that it looks like Covid policies are beginning to soften and they’ll no longer be tested 3 times a day. The CCP is sticking to its Zero-Covid language, but throughout the country they are removing testing requirements from certain public spaces, loosening travel restrictions between cities, and getting rid of some health code barriers. With vaccination rates being relatively low amongst the elderly, the CCP is gambling on Omicron being “less pathogenic” and overall less lethal than previous strains of the virus. Some say that this shift is the result of the protests, but China’s struggling economy is the more compelling reason.
Chinese President Xi Jinping believes ‘frustrated students’ are behind Covid protests, EU officials say - SCMP
Thanks for reading Vermilion! Subscribe for free to receive new posts and support my work.
Xi told Michel that the dominant strain of Covid-19 in China is “now mainly Omicron, and Delta before that was much more lethal”, according to the senior official. Xi’s remarks were taken to suggest that the government would loosen some controls.
A second senior source said that the Chinese leadership had intimated that it would try to push vaccinations in response to the unrest, with Michel sharing with Xi and his most senior underlings the European experience of rolling out mass vaccinations.
Xi told Michel that China had “high rates of vaccination, except for elderly people, which is a challenge”, they said.
“My sense was that this [exchange] was something that was informative. I had a feeling that China would on its side be increasingly looking to incentivize its citizens to be vaccinated, to follow a tiny bit the European experience,” the second official said.
VERMILION: It will be interesting to see how the CCP “incentivizes” elderly people to get the vaccine. Will they use the original stick of increased health code restrictions or provide a carrot in the form of some sort of financial reward? It is safe to say that the CCP is absolutely not following the European experience regardless of how much the European delegation would like to believe that.
China’s Covid tsar says fight against virus entering ‘new stage’ - FT $$
China’s top zero-Covid enforcer says the fight against the virus has entered a “new stage” while state media have downplayed its risks, bolstering expectations that Beijing is easing its anti-pandemic approach just days after a wave of unrest.
Vice-premier Sun Chunlan said on Wednesday that the Omicron variant was becoming “less pathogenic” and pointed to higher vaccination rates, even as China recorded tens of thousands of new cases from its biggest outbreak.
Sun did not mention the term “dynamic zero-Covid”, a policy that has for nearly three years sought to eliminate all infections through mass testing, quarantine and lockdowns.
While the government has stopped short of any explicit policy change, Sun’s comments — which were followed by softer language about the virus in state media on Thursday — build on a decision to ease lockdown restrictions in parts of the southern city of Guangzhou despite high case numbers.
VERMILION: No change in policy language makes the CCP look strong, but functional changes in the policy will help ease social unrest and open up the economy.
Relief and worry as major Chinese cities ease COVID curbs - Reuters
China is set to announce a nationwide reduction in how frequent mass testing and regular nucleic acid tests will be conducted as well as allowing positive cases and close contacts to isolate at home under certain conditions, sources familiar with the matter told Reuters earlier this week.
Chengdu and Tianjin, among China's biggest cities, announced they would not require subway users to show negative COVID tests from Friday, another relaxation of a curb imposed to stop transmission of the virus in crowded public spaces. Beijing will drop this requirement from Monday.
Some supermarkets in Beijing on Friday also stopped demanding negative test results as a condition for entry.
One residential community in east Beijing on Friday sent a notice to say those who have "no social activities," such as homebound elderly and infants, no longer needed to get tested regularly.
Several testing booths in the area have stopped operating and the number of people getting tested has dropped by up to 30%, a staff member said. Still, the park nearby remained closed, while restaurants and cafes only sold takeaway.
5个超大城市同日优化出行政策，超1亿人通行变得更方便 - Yicai - CN
From 0:00 to 24:00 on December 1, 31 provinces (autonomous regions, municipalities directly under the Central Government) and Xinjiang Production and Construction Corps reported a total of 34,772 new cases of local COVID-19 infection. Among them, the total number of new infections in the above five megacities was 17,549, accounting for more than half (50.3%) of total new infections. According 2021 census, the permanent population of these five cities reached 107.74 million at the end of last year, accounting for 7.6% of the total population; At the end of last year, the total regional GDP reached 13.2 trillion, accounting for 11.54% of the national total.
VERMILION: An excellent overview of Covid policy changes. This excerpt highlights that while this specific strain of Omicron might be less lethal, it is still spreading like wildfire.
China Is Finally Trying to Fix Its Housing Crisis - NYT $$
Real estate development plays an outsize role in China’s economy, representing about a quarter of economic output and a quarter of its bank loans. Housing represents at least three-fifths of household assets in China, and many Chinese regard apartments as the only reliable way to build wealth.
China’s cabinet called late Wednesday for banks, most of which are state-owned, to lend more money for the completion of unfinished apartments, following a similar directive by regulators put out hours earlier. China’s central bank, the People’s Bank of China, and the main bank regulator codified 16 measures on the same day to make sure that developers can borrow enough money from banks and bond investors, and can defer repayment when necessary. And on Friday evening, the central bank reduced by $70 billion the money that the country’s commercial banks are together required to hold for emergencies, freeing them to lend that money instead.
An affiliate of the central bank agreed earlier this month to guarantee the repayment of new bonds issued by some of the less distressed real estate developers, in effect assuring investors it was safe to lend to the companies.
The finance ministry has enacted a tax break for people who buy a new home within a year of selling the previous one.
Acting on instructions from the cabinet and bank regulators, China’s biggest banks gave lines of credit this week to large developers. The Industrial and Commercial Bank of China announced on Thursday that it had issued lines of credit totaling $91 billion to 12 developers. Bank of Communications gave a $14 billion line of credit to Vanke, China’s biggest developer.
VERMILION: This article is from last week, but there are major bailouts happening in the real estate development market that are akin to what the US saw with bank bailouts in 2008. Simply put, real estate development firms in China are too integral to the economy for the CCP to allow them to fail. The first sentence in this section highlights a huge cultural difference between China and the West. The vast majority of Chinese individual net worth is tied up in real estate and allowing this to effectively disappear is not an option for the CCP.
Asia-Pacific markets fall as investors seek clarity on China's Covid rule changes - CNBC
Markets in the Asia-Pacific mostly fell while investors looked for clarity after China signaled slight easing of its stringent Covid restrictions.
Hong Kong's Hang Seng index struggled for direction and fell 0.15% in its final hour of trade. In mainland China, the Shanghai Composite also fell 0.29% and the Shenzhen Component lost 0.4%.
IMF head warns of ‘exceptional’ uncertainty as zero-Covid hits China’s economy - FT $$
The head of the IMF has warned Asia’s leaders and central bankers to brace for “exceptional” uncertainty as China’s zero-Covid policy hurts its economy and inflationary pressures from Russia’s invasion of Ukraine hit the region.
China, the world’s second-biggest economy, is forecast to grow at its slowest pace in about three decades as Beijing tries to navigate an exit from President Xi Jinping’s policy of eliminating all coronavirus cases.
Consumer sentiment among the country’s 1.4bn people has been battered by relentless lockdowns and travel restrictions, exacerbating a severe property sector slowdown and the fallout from rising global inflation.
Speaking to an Association of Southeast Asian Nations summit in Singapore, Kristalina Georgieva, the managing director of the IMF, said the outlook was “exceptionally uncertain” and “dominated by risks”, including global financial tightening.
VERMILION: Recovery can only happen if there is concrete policy guidance.
China’s Xi eyes ‘closer energy partnership’ with Russia as Putin praises their ‘evolving’ economic cooperation - SCMP
China is willing to build a closer partnership with Russia in energy cooperation, President Xi Jinping said on Tuesday.
The remarks came as energy trade between the two countries reached a historic high this year amid an escalating Western boycott of commodities from Russia following its invasion of Ukraine.
Energy cooperation is an important cornerstone of practical cooperation between China and Russia, and it’s also a positive force in maintaining global energy security, Xi said in a congratulatory letter sent to this week’s 4th China-Russia Energy Business Forum.
“China is willing to work with Russia to forge a closer energy partnership, promote clean and green energy development, and jointly maintain international energy security and the stability of industry supply chains,” Xi said, according to Xinhua.
He said the neighboring countries have strengthened communication and cooperation and pushed forward major projects in the face of external challenges, and this reflects the strong resilience of their energy cooperation and the broad prospects of a comprehensive strategic partnership between the two countries.
VERMILION: When it comes to strategic goals, China is one of the biggest winners in the Ukraine-Russia war. US and European sanctions on Russian oil and gas have provided China with an incredibly cheap, accessible, and reliable source of energy. The question here is whether or not China will continue to aggressively pursue the China Pakistan Economic Corridor that allows China to bypass strategic choke points such as Diego Garcia and the Straits of Malacca.
Russian, Chinese bombers fly joint patrols over Pacific - AP
MOSCOW (AP) — Russian and Chinese strategic bombers on Wednesday flew a joint patrol over the western Pacific in a show of increasingly close defense ties between the two countries.
The Russian Defense Ministry said that the Tu-95 bombers of the Russian air force and the Chinese H-6K bombers flew over the Sea of Japan and the East China Sea during an eight-hour mission.
As part of the drills, the Russian bombers for the first time landed in China and the Chinese bombers flew to an air base in Russia, the ministry said in a statement. It noted that the joint patrols weren’t directed against any other country.
Japanese, Korean Fighters Scrambled in Response to Joint Russia-China Bomber Patrol - USNI
On Wednesday morning, two Chinese H-6 bombers were confirmed to have flown from the East China Sea through the Tsushima Strait into the Sea of Japan before heading north, according to the Japanese MoD. Around the same time, two Russian aircraft flew south before turning back and heading north. Japan Air Self-Defense Force (JASDF) fighter aircraft scrambled in response, according to a statement from the MoD.
According to Korea’s Yonhap News Agency, the Republic of Korea’s (ROK) Joint Chiefs of Staff (JCS) said Wednesday a total of two Chinese H-6 bombers, four Russian Tu-95 bombers and two Russian Su-35 fighters entered the Korea Air Defence Identification Zone that day with the Chinese bombers entering twice on their own and once with the Russian aircraft. The JCS stated that Republic of Korea Air Force fighters scrambled in response, but the Russian and Chinese planes did not violate ROK airspace.
VERMILION: Will this increase urgency around the Joint Japan-UK-Italy next-gen fighter program?
China, Russia committed to safeguarding international justice - China Daily - CN
Morgulov said the Russia-China relationship is unbreakable and the friendship between the two countries can prevail over any challenge.
Noting that Russia supports China's development and strength, he said Moscow would work with Beijing to reject unipolar hegemony and promote the comprehensive strategic partnership of coordination to a new height.
Over the past month, the Russian ambassador has paid visits to senior Chinese officials, including Liu Jianchao, minister of the International Department of the CPC Central Committee, and Vice-Foreign Minister Ma Zhaoxu, to strengthen communication and coordination.
Scholars observed that China-Russia relations, under the strategic guidance of the heads of each state, have maintained positive growth momentum and seen high-quality development, setting a good example of relations between major countries.
Data from China's General Administration of Customs showed that trade volume between China and Russia in the first 10 months of the year set a record, exceeding $150 billion and surpassing the total for the whole of last year.
VERMILION: Between military exercises and economic cooperation, it is clear that this “strategic partnership” is nothing short of an alliance. Western analysts and political figures should not dismiss the language that the Chinese and Russians are using when they say that they have an “unbreakable” relationship.
China, Russia Creeping Further Into West as Major Latin American Nations Reject U.S. Where’s Biden’s Strategy? - Heritage Foundation
Most importantly, Lula has a history of keeping relations with Washington afloat while readily embracing the influence of communist China and allies Russia and Iran. Since his first presidency, Lula’s foreign policy has opted for a “multi-polar” world, even one (in practice) where Beijing and Moscow might be powerful poles in the Western Hemisphere. He already met with China’s special climate envoy, Xie Zhenhua, at the COP27 conference in Egypt.
In his first two terms, Lula was instrumental to positioning Beijing’s influence in Brazil. China increased its trade with Brazil sixteenfold under his tenure, evolving from initial investments in rare earth minerals, oil and gas, and agriculture to sensitive telecommunications and infrastructure projects, and later to capital goods, manufacturing, and the service sector.
VERMILION: China and Russia have a history of undermining US interests in Latin and South America, but the US can expect coordinated activity in the future.
Thanks for reading Vermilion! Subscribe for free to receive new posts and support my work.