Xi Jinping Archives - Page 2 of 2

• Hubei provincial health commission said the province had confirmed a total of 31,728 cases with 974 deaths by the end of Monday, a fatality rate of 3.07%. More than three-quarters of the deaths have been in the provincial capital Wuhan. The commission said there were still a total of 16,687 suspected but unconfirmed cases

Bizarre news item: In January, several individuals on a Paris takeoff flight bound for Shanghai were diagnosed with the #Coronavirus— in the opposite travel direction of the outbreak epicenter.

An update of a familiar BBC graph:

And this from the Yokohama cruise ship. 439 tested, 135 positive. 32.5%.

The Holland America cruise ship Westerdam, which had gotten permission to dock in Thailand after 9 days at sea and 3 countries refusing entry, has been denied entry by Thailand at the last minute as well. There are no known carriers aboard.

And this guy, bless his soul, has been disappeared.:

Lawyer and citizen journalist Chen Qiushi: “I’m not even afraid of death. You think I’m afraid of the Communist Party?”

Lawyer and citizen journalist Chen Qiushi vanished while documenting the coronavirus lockdown in Wuhan. He spent weeks filming patients and overrun hospitals pic.twitter.com/pdf7YE8ell

— SCMP News (@SCMPNews) February 11, 2020

Time flies when you’re having fun with viruses. It’s already been 9 days since I explained in The Party and the Virus: “Never a bad word should be uttered about the Party, and nothing said that could embarrass it.”

The Party blames individuals, so it can escape the blame. Problem with that is that is the Party is wrong, it won’t be corrected.

• 3 Wuhan Officials Summoned To Explain Failings (SCMP)

A special task force reviewing prevention efforts in Wuhan, Hubei’s capital, has summoned three local officials for emergency meetings and detailed their failings in containing the outbreak. Wuhan deputy mayor Chen Xiexing and two district chiefs in the city, Lin Wenshu and Yu Song, were called in for meetings, state news agency Xinhua reported on Tuesday. Officials found to have been negligent would be held accountable, the report said. Headed by Vice-Premier Sun Chunlan, the task force was set up by the Communist Party’s Central Committee. Mainland media reported on Friday that Chen Yixin, a protégé of President Xi Jinping, had been added to the team.

China has had nearly 1,000 cluster outbreaks of the coronavirus and found that 83 per cent occurred in families, with the rest arising in hospitals, schools and shopping malls, said Wu Zunyou, chief scientist of China’s Centre for Disease Control and Prevention, at a media briefing on Tuesday. Among the cluster cases, 86 per cent were first or second-generation transmissions – people who lived or travelled in Hubei, contracted the virus and passed it to people who were in close contact with them, such as family members or people who shared meals with them. “Occurrences of these cluster cases showed our control and treatment measures have been effective and it did not spread from small units to bigger areas of society,” Wu said.

Let’s see your priorities. For now, “gets back to work” looks a bit much.

Do note: when Xi comes out of hiding to announce it will be a hard fight, expect trouble.

• China Gets Back To Work As Death Toll Reaches 1,018 (SCMP)

Health authorities in China reported on Tuesday 108 new fatalities attributable to the novel coronavirus, bringing the national death toll to 1,018. This is the first time more than 100 people have died from the disease in a single day on the mainland. The National Health Commission also reported 2,478 new confirmed cases of the illness, bringing that total to 42,638 as of Monday. Of the new deaths, 103 were in Hubei province – the epicentre of the novel coronavirus epidemic – and five in other provinces. As millions of people in China prepare to return to work, Beijing has made clear that the reopening of businesses must not be hampered by “crude and oversimplified” restrictions.

As many as 160 million people are expected to be returning to their cities of employment over the following week, according to Xu Yahua, director of the transport services department at the Chinese ministry of transport. The coronavirus outbreak coincided with the Lunar New Year travel season, when millions of migrant workers traditionally travel to their homes to spend the holiday with their families. As part of China’s response to the outbreak, the holiday season was extended to February 18. Many local authorities – from megacities like Beijing and Shanghai to remote villages – have curbed public transport provision and restricted people from moving outside their communities during the outbreak.

Many local governments have also adopted a registration system and prior approval requirements for companies planning to resume production. Some business owners have been detained for resuming work in advance. But Beijing has now made clear these practices were not in line with the requirements and policies of the central authorities. “Such a tendency must be stopped,” said Ou Xiaoli, director of social development at the National Development and Reform Commission, the country’s top economic planning agency. “We will strictly stop restricting the production resumption in an oversimplified and crude way,” he said, at the same press conference on Tuesday.

Anything public has lost most of their income. Whaddaya mean no lay-offs?

• China Firms Cut Staff On Virus Outbreak As Xi Vows No Large-Scale Layoffs (R.)

A Chinese media company said it will lay off 500 employees due to the coronavirus outbreak, the latest among a string of firms to do so in the past two weeks as the epidemic takes a toll on small-to-medium sized businesses. Xinchao Media, which places advertisements in elevators, will cut 10% of its workforce to “ensure survival”, the company said in a post on its official WeChat account on Monday, which carried the transcript of an internal speech by CEO Zhang Jixue. “To overcome the epidemic, you have to step on the brakes, jam the cash flow, reduce costs,” Zhang said, as he noted the company’s cash reserve of 1 billion yuan ($143 million) would likely be enough for only 6-7 months in the absence of income.

The job cuts come even as President Xi Jinping said the government would prevent large-scale layoffs caused by the virus outbreak – which has killed more than a 1,000 people in mainland China and infected over 40,000. Authorities said on Tuesday they will roll out measures to stabilize jobs. But many companies are hurting from disruptions felt since late-January after local governments extended Lunar New Year holidays and urged people to stay home. Beijing’s “Karaoke King” has said it wants to terminate contracts with all its 200 employees as it shut its outlets due to the outbreak, local media reports said. The karaoke chain did not immediately return calls made by Reuters on Tuesday.

Chinese restaurant chain Xibei, which has over 360 outlets, said it was worried about wages for its roughly 20,000 workers given how the epidemic had impacted its income. “We need 156 million yuan a month to pay our workers, and if the epidemic continues, and cash flow continues to be inadequate, we will not be able to hold up for much longer,” it said on its official Weibo account. In Beijing, only 11,500 restaurants were operational mid last week, or 13% of the total, the Beijing Municipal Market Supervision Bureau said.

Cited this last week. Individuals get the blame, so the Party does not.

• Senior Chinese Officials ‘Removed’ As Death Toll Hits 1,000 (BBC)

China has “removed” several senior officials over their handling of the coronavirus outbreak – as the death toll passed 1,000. The party secretary for the Hubei Health Commission, and the head of the commission, were among those who lost their jobs. They are the most senior officials to be demoted so far. The deputy director of the local Red Cross was also removed for “dereliction of duty” over “handling of donations”. The two Hubei party officials will be replaced by a national figure – the deputy director of China’s National Health Commission, Wang Hesheng. On Monday, some 103 died in Hubei province alone, a daily record, and the national death toll is now 1,016. But the number of new infections nationally was down almost 20% from the day before, from 3,062 to 2,478.

Hubei’s health commission confirmed 2,097 new cases in the province on Monday, down from 2,618 the previous day. According to state media, there have been hundreds of sackings, investigations and warnings across Hubei and other provinces during the outbreak. But removal from a certain role – while regarded as a censure – does not always mean the person will be sacked entirely, as it can also mean demotion. As well as being removed from their posts, officials can also be punished by the ruling Communist Party. For example, the deputy head of the Red Cross, Zhang Qin, was given “a serious intra-Party warning as well as a serious administrative demerit”, state media said. Earlier this month, the deputy head of the Wuhan bureau of statistics was removed, also with a “serious intra-party warning a well as a serious administrative demerit for violating relevant regulations to distribute face masks”.

The Hubei health commission said the province had a total of 31,728 cases with 974 deaths by the end of Monday – a fatality rate of 3%.

“..a culture of suppression and “systemic impotence”..”

• Outspoken Academic Blames Xi Jinping For ‘Catastrophe’ Sweeping China (G.)

A prominent Chinese intellectual has become the first high-profile public figure to lay the blame for the coronavirus crisis at the feet of the country’s leader, Xi Jinping, saying the spread of the deadly virus has “revealed the rotten core of Chinese governance”. As the crisis expands across the country, Xu Zhangrun, a law professor from one of the country’s top universities, lambasted the government under Xi in an essay titled: Viral Alarm, When Fury Overcomes Fear. In it, Xu laid the blame for the current national crisis at the feet of Xi and a culture of suppression and “systemic impotence” that he has created. The virus has now killed more than 1,000 people inside China.

“The cause of all of this lies with The Axelrod and the cabal that surrounds him,” Xu writes, referring to Xi, according to a translation of the article by historian Geremie Barmé published on Monday by the website ChinaFile. “It is a system that turns every natural disaster into an even greater man-made catastrophe. The coronavirus epidemic has revealed the rotten core of Chinese governance; the fragile and vacuous heart of the jittering edifice of state has thereby shown up as never before.” Xu describes the outbreak as a “national calamity” that involves politics, the economy and “nation’s ethical fabric” making it “more perilous than total war itself”.

After weeks of disappearing from public view, Xi on Monday visited a neighbourhood and hospital in Beijing where he held a video call with health workers in Wuhan. Coverage of his appearance filled the front page of the official People’s Daily on Tuesday. Xu’s essay captures growing public anger at the government, which has reached a new peak after the death of a doctor and whistleblower last week. Officials have tried to blame lower-level bureaucrats, but top bosses have not escaped. On Tuesday, the party secretary of health commission of Hubei province and the director of the Hubei provincial health commission were both fired.

Professor Gabriel Leung, around whose January 31 report I based my Feb 5 article The Big Lockdown:

• Expert Warns Infection Could Reach 60% Of World’s Population (G.)

The novel coronavirus epidemic could spread to around two-thirds of the world’s population if it cannot be controlled, according to Hong Kong’s leading public health epidemiologist. His warning came after the head of the World Health Organisation (WHO) said recent cases of coronavirus patients who have never visited China could be the “tip of the iceberg”. Professor Gabriel Leung, chair of Public Health Medicine at Hong Kong University, said the overriding question was to figure out the size and shape of the iceberg. Most experts thought that each person infected would go on to transmit the virus to around 2.5 other people. That gave an “attack rate” of 60-80%.

“Sixty per cent of the world’s population is an awfully big number,” Leung told the Guardian in London, en route to an expert meeting at the WHO in Geneva. Even if the general fatality rate is as low as 1%, which Leung thinks is possible once milder cases are taken into account, the death toll would be massive. He will tell the WHO expert meeting that the main issue is the scale of the growing worldwide epidemic and the second priority is to find out whether the drastic measures taken by China to prevent the spread have worked – because if so, other countries should think about adopting them. Leung – one of the world’s experts on coronavirus epidemics, who played a major role in the Sars outbreak in 2002-2003 – works closely with other leading scientists such as counterparts at Imperial College London and Oxford University.

At the end of January he warned in a paper in the Lancet that outbreaks were likely to be “growing exponentially” in cities in China, lagging just one to two weeks behind Wuhan. Elsewhere, “independent self-sustaining outbreaks in major cities globally could become inevitable” because of the substantial movement of people who were infected but had not yet developed symptoms, and the absence of public health measures to stop the spread. Epidemiologists and modellers were all trying to figure out what was likely to happen, said Leung. “Is 60 to 80% of the world’s population going to get infected? Maybe not. Maybe this will come in waves. Maybe the virus is going to attenuate its lethality because it certainly doesn’t help it if it kills everybody in its path, because it will get killed as well,” he said.

[..] In January Leung published two papers in the Lancet. The first examined the damage done by social unrest to the mental health of the Hong Kong population. The second was on the spread of coronavirus. “So the two have now come together. The first has made the second impossible to deal with – impossible. I mean, how do you bring your population along when there’s been this huge chasm in society?” he said.

Western governments and media are as guilty here as China. No use singling out China. Everyone just wishes it would all go away. Everyone’s more afraid for the economy than of the virus. Until they can’t. Dumb piece. Find your own faults first, not those of the other. You really want people to believe western governments would react differently?

• China Delayed Reporting The Outbreak And The WHO Is Staying Mum (Vox)

Nearly six weeks after China announced the coronavirus outbreak, there’s still a surprising amount we don’t know about this newly discovered disease. But one thing is becoming clear: China’s silence in the earliest days of the crisis may have made it worse. Chinese authorities delayed informing the world about the severity of a deadly disease spreading within the country’s borders — even trying to muzzle whistleblowers, like the late Dr. Li Wenliang. Now hailed as a national hero, Li was forced on January 3 by police to sign a letter saying he spread “untrue speech” for warning colleagues about the virus that eventually took his life. With more than 40,500 people infected and 910 deaths, China’s missteps early on seem increasingly fateful.

The fact that the international community has not acknowledged those missteps is also consequential. On Friday, President Trump applauded China. “They’re working really hard and I think they’re doing a very professional job,” Trump told ABC News. Meanwhile, the leading global health body, the World Health Organization, has stayed mum about China’s blunders — and is drawing criticism for failing to publicly criticize the country and creating “a false sense of security” about an emerging health crisis. But the reality is this: China’s mishandling and the ensuing silence from the international community is emblematic of how the global system governing the international response to pandemics fails to work, half a dozen global health experts told Vox.

Though we have global health laws — in particular, the International Health Regulations, or IHR — meant to guide countries dealing with outbreaks, they’re not actually enforceable. “You can’t penalize [countries that] don’t follow it,” said Devi Sridhar, the chair in global public health at the University of Edinburgh. Instead, the international community has to rely on “soft law and norms” — or “disease diplomacy.” This means that when a pandemic threat looms, the world has little recourse to punish those that fail to live up to the IHR for not detecting a public health problem, or hiding a crisis, even when that mishandling imperils the lives of billions. And with just about every outbreak, history repeats. “Our global outbreak response system depends on the full participation of all actors at all levels of government,” Steven Hoffman, director of the Global Strategy Lab and a professor of global health at York University, summed up. “But our system is only as strong as its weakest link.” Understanding the IHR, and how disease diplomacy is done today, helps explain why.

Not just economic growth. Flaws in the Party system, which is incapable of adapting to being found out.

• Coronavirus Exposes Fundamental Flaws In China’s Economic Growth Model (SCMP)

The outbreak of the novel coronavirus, which has killed over 1,000 people and infected over 40,000, has exposed fundamental flaws in China’s governance system and its growth model – the excessive concentration of power, information and resources in the hands of a powerful state. But given the path of China’s political and economic evolution, it is difficult for China to loosen its grip on power as a response to so-called black swan events such as the coronavirus. The most likely outcome is that Beijing will continue to strengthen centralised control, which in turn is a greater threat to China’s prospects than the virus itself.

When it is done right, a centralised political system means the government can deliver positives such as rapid economic growth, but it also make it possible for the government to place emphasis on the wrong things, which has the potential to lead to uncertainty and even disaster for society. There is precedent that China tends to enhance centralisation as the solution to a problem that has stemmed from over control. The “new normal” concept, which was adopted by the state in 2014, dissociated the political legitimacy of the Chinese government from economic growth, therefore reducing the pressure on local Chinese authorities to deliver. And while the concept had the good intention of seeking high quality growth, it has, in reality, made the local authorities less friendly to the private sector.

To achieve high economic growth, local governments have had to free up market forces and allow the private sector to thrive, but without the pressure, they do not have the incentive to conduct the necessary political and economic liberalisations to entertain private investors. As a result, the central government is increasingly reliant on state-owned enterprises and state money to maintain social stability and to deliver environmental improvement, while the private economy is gradually marginalised and local autonomy is weakened.

Co-author Dr Zhong Nanshan was very very wrong when he said late January that the epidemic would be over in 7-10 days. Talked about that. Just saying.

• Coronavirus Could Have Incubation Period Of 24 Days (Ind.)

Medical researchers in China have found the incubation period for coronavirus ranges up to 24 days — 10 days longer than experts previously thought. The research was co-authored by Dr Zhong Nanshan, who discovered the SARS coronavirus in 2003 and has been appointed as a leading advisor in managing the current coronavirus crisis. Current advice from health organisations and ministries say the virus’ incubation period is as long as 14 days, based on the incubation period of previous MERS viruses. Public Health England and the Department of Health and Social Care has urged anyone travelling from specific countries, including China, to quarantine themselves at home for 14 days.

The findings, which have not yet been peer reviewed, were published on Sunday and titled ‘Clinical characteristics of 2019 novel coronavirus infection in China’. They found only 1.18 per cent of patients “had a direct contact with wildlife”. The majority of the patients had contracted the virus from being in contact with people from Wuhan, where the centre of the outbreak is. More than 80 percent of patients developed lymphopenia, which is a state where a specific white blood cell that is part of the body’s first-line defence against diseases is reduced.

Wait till we see car sales in China.

• Look How Low Oil Prices Have Fallen (F.)

West Texas Intermediate oil is trading just below $50 midday Monday. This is a very low price for the US benchmark, otherwise known as WTI. The lesson: don’t underestimate the impact of the Coronavirus on the oil market and the greater American economy. The price of WTI last fell below this level for a couple of weeks at the end of 2018 and start of 2019. Other than that moment, the price has not been this low since September of 2017. The concern is that the current low price is not a blip like last year but rather a sustained drop or maybe only the beginning of a situation that could get significantly worse. If the Coronavirus continues to interfere with the Chinese economy and international trade, oil prices are likely to fall further. After all, China is the world’s largest importer of oil by a wide margin, accepting 10.78 million barrels per day in December, 2019.

Here’s who really needs to keep an eye on these low oil prices.

First is, of course, oil producers—from international oil companies like Exxon and Chevron to wildcatters in shale fields—need to beware.

Next, we have the oil industry employees and supplemental industries like truck drivers, welders and restaurant workers near oil fields who could all be affected.

Financiers and investors—hedge funds, private equity and retail investors alike—who fund oil operations are worried about failed projects if revenue drops.

Airlines need to watch oil volatility, because they have an opportunity to buy jet fuel at low prices if it drops, which allows them to hedge for when higher prices eventually return.

Certain state governments, such as Alaska, Wyoming, Texas, New Mexico, Oklahoma, North Dakota and others that fund their budgets in part with taxes on oil production and sales have to beware, as they may be facing unexpected lean times.

Last, businesses that contract for products to be trucked around the country should be looking for discounted pricing.

Despite all the talk about electric vehicles and alternative energy, oil is still the vital liquid that keeps much of our economy moving. We are reminded of that at times like these, when the oil market is anticipating volatility and change.

Well, if the virus gives up later this very day, he might be right. But not a minute later.

• Coronavirus Could Trim 1 Percentage Point From China GDP Growth – Gov’t. (R.)

Zeng Gang, vice chair of the National Institute for Finance and Development, compared the current crisis with the SARS epidemic of 2003, when China’s growth declined by about 2 percentage points in a single quarter. “The impact of this epidemic on the economy in the first quarter is expected to be comparable,” Zeng said in a commentary published in the 21st Century Business Herald newspaper. “At present, according to different scenario assumptions, researchers expect the negative impact of the epidemic on full-year GDP growth to be in the range of 0.2% to 1%.” If the official response to the epidemic is timely and effective at limiting its spread, long-term growth trends would not be significantly affected, Zeng said.

“But in the short term, the epidemic’s impact on economic activity cannot be ignored, especially with tertiary industries and small enterprises with tight cash flows facing greater pressures,” Zeng said. Zeng said difficulties for small companies could prompt a rise in bankruptcies and put upward pressure on the unemployment rate in the first quarter. “The employment situation is not optimistic. This will also pose a serious challenge to the macro policy goal of ‘employment first’,” he said. Chinese President Xi Jinping said on Monday that the government would prevent large-scale layoffs, Chinese state television reported.

China’s central bank has taken steps to support the economy, including reducing interest rates and flushing the market with liquidity. It has also said it will provide special funds for banks to lend to businesses. Analysts at Citi said they expect growth to slow significantly despite expectations of more proactive fiscal policy and more accommodative monetary policy. “Assuming the virus is contained by the end of March, we revise down our 20Q1 GDP growth forecast considerably to 3.6% and the annual growth modestly to 5.3%”, Citi analysts said in a note. Citi previously forecast first-quarter growth of 4.8% and full-year growth of 5.5%.

But GDP growth only 0.2% lower?

• China Q1 Smartphone Shipments To Fall More Than 30% (CNBC)

China’s smartphone shipments for the three months ending in March could decline by more than 30% from the same period a year ago, International Data Corporation said on Tuesday. The world’s largest smartphone market could experience a so-called “Black Swan effect” in the first half of the calendar year due to the new coronavirus outbreak that has killed more than 1,000 people on the mainland, according to the research firm. [..] “The coronavirus outbreak impacted the Lunar New Year’s shopping season in late January and is also expected to have adverse effects in the following months,” IDC said in a statement, adding that it expects “China’s smartphone shipments to drop more than 30% year-on-year in 2020Q1.”

The virus outbreak will also “create uncertainty in product launch plans, the supply chain, and distribution channels, in the mid and long term,” IDC said. Research firm Canalys earlier this month predicted China’s smartphone shipments could drop by as much as 50% between the last three months of 2019 and the first three months of 2020. “Technology vendors are likely to stall marketing activities as they are unlikely to divert attention to new product launches, such as 5G devices,” Canalys said in a Feb. 3 report. “It will take time for vendors to change their product launch roadmaps in China, which is likely to dampen 5G shipments in 2020.”

Curious where this will go.

• US Charges Four Chinese Military Officers Over Equifax Hack (BBC)

The US has charged four Chinese military officers over the huge cyber-attack on credit rating giant Equifax. More than 147 million Americans were affected in 2017 when hackers stole sensitive personal data including names and addresses. Some UK and Canadian customers were also affected. Announcing the indictments, Attorney General William Barr called the hack “one of the largest data breaches in history”. According to court documents, the four are allegedly members of the People’s Liberation Army’s 54th Research Institute, a component of the Chinese military.

They spent weeks in the company’s system, breaking into security networks and stealing personal data, the documents said. The nine-count indictment also accuses the group of stealing trade secrets including data compilation and database designs. The whereabouts of the suspects is unknown and it is highly unlikely that they will stand trial in the US. FBI Deputy Director David Bowdich said: “We can’t take them into custody, try them in a court of law, and lock them up – not today, anyway.”

The country that never tires of embarrassing itself.

• Aboriginal Australians Are Not ‘Aliens’, Cannot Be Deported – High Court (G.)

The Australian government has released an Aboriginal man from immigration detention after a landmark high court case decided Aboriginal Australians are not aliens for the purpose of the constitution and cannot be deported. On Tuesday afternoon the acting immigration minister, Alan Tudge, said the government is still reviewing the decision but “in the light of the court’s ruling, Mr [Brendan] Thoms was this morning released from immigration detention”. The case was a major defeat for the deportation powers of Peter Dutton’s home affairs department and a significant development in the rights of Indigenous Australians. In a four-to-three split decision the high court ruled that Aboriginal people with sufficient connection to traditional societies cannot be aliens, giving them a special status in Australian constitutional law likely to have ramifications far beyond existing native title law.

The majority of the high court ruled that New Zealand-born Brendan Thoms was not an alien and the commonwealth therefore did not have power to order his deportation. The court was not able to decide if the second plaintiff, Daniel Love, was an Aboriginal Australian, requiring a further hearing to establish whether he is accepted as a member of the Kamilaroi tribe. Speaking outside the court earlier, the men’s lawyer, Claire Gibbs, called on the government to immediately release Thoms, who had been in immigration detention for 500 days. Love had previously been released in September 2018. Gibbs said she was “confident” Love will also be found not to be an alien and told reporters the pair will seek “significant” damages.

Nobody’s looking at New Hampshire. It’s an illusion. Trump is only watching out of Schadenfreude. The only people who care about Democrats today are Democrats. And they have themselves to blame for that. The only thing is that Biden and Warren, on the brink of annihilation, might come with heavy and utterly ridiculous allegations vs ButtGeek and Bernie.

• ‘The World Is Looking At New Hampshire’ – Bernie Sanders (R.)

In Plymouth, Buttigieg tried to reach out to undecided voters, referring to “future former Republicans” who he said were more than welcome to back his campaign. “It’s decision time,” Buttigieg said. He took a shot at Sanders, saying that the self-described democratic socialist would have a hard time pulling in moderate voters. “Knowing how much depends on bringing Americans together, we cannot risk alienating Americans at this critical moment,” he said. “And that’s where I part ways with my friend Senator Sanders.” In a separate event, Sanders aimed his attacks at Trump. “I know not everybody agrees with everything I say, but I think what we can agree about is that we cannot continue having a president who is a pathological liar,” Sanders told a crowd at a sports club in Manchester.

‘The world is looking at New Hampshire:’ Vermont Senator and Democratic presidential candidate Bernie Sanders makes closing pitch to voters https://t.co/VJB1Aw6lNv pic.twitter.com/EQDOfv1SqG

— Reuters (@Reuters) February 11, 2020

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The Party and the Virus

Feb 022020

February 2, 2020 Posted by Raúl Ilargi Meijer at 3:30 pm Finance Tagged with: 2019nCOV, CCP, China, coronavirus, epidemic, fatalities, pandemic, Party, WHO, Xi Jinping 11 Responses »

Samuel Colman The Edge of Doom 1836-38

What the future will bring for the 2019nCoV novel Wuhan coronavirus is still unclear. An epidemic it already is, but is it also a pandemic? Some 20 countries have reported infections, but it still could all fizzle out; 305 deaths can be forgotten by next week. Nobody can tell you how this will play out, not even the most experienced and/or smartest virologists and other experts.

Because there’s no telling what viruses will do, not even for them, and because while they have some idea about the infinitesimal size and lifespan of viruses, “ordinary” people have no grasp of either, and that includes managers, planners and politicians. Whether in the rich west or in “up and coming” China.

The timeline is quite literally terribly obvious. In early December -and it could have been even earlier-, it was obvious to doctors and Communist Party (CCP) politicians in Wuhan that something was wrong. But their painfully predictable reaction was to hope this would pass. Never a bad word should be uttered about the Party, and nothing said that could embarrass it.

December passed, as news was getting worse and more obvious due to a large number of “pneumonia” patients. Chinese doctors published an article in the Lancet this week (this week, 6 weeks after the fact!) saying human-to-human transmission had been established by mid-December.

But the code of silence was not broken, even when a man died from the virus on January 9. It took until mid-January before word got out, a full week later. By then millions of people had left and/or entered Wuhan, a city of 11 million, potentially infecting millions of other Chinese and perhaps people abroad. 5 million later left the city for Lunar New Year.

On January 10, the virus was defined and the sequence was shared, but testing didn’t start for another week; patients were registered as pneumonia sufferers, including those that died (we have no idea how many there were).

Then, mid January, doctors starting testing for the virus. The first “exported” case was noted in Thailand on January 13, but it still took more time for the potential threat to be realized and reported. The Party boys were still hoping it would all pass. Can you blame them? They are civil servants, they don’t know anything about viruses, or their threat.

Ironically, over 300 civil servants (Party officials) and health care workers were sanctioned very recently for not doing enough. The Party makes sure the blame is put on individuals, not on itself. Even if all they’ve done is follow the party line. It’s very simply how the system works. And not just in China. If the virus might come to a town near you, check where the blame is placed. It won’t be the president or prime minister, health workers will be first in line, civil servants second.

It’s good to note how fast the novel virus has spread. If only to show what those who are determined to keep such a thing silent are up against. Can’t be easy. 291 cases on Jan 20, 14,562 cases 13 days later. Those are exponential numbers, even if the number of fatalities “only” rose by 46 overnight.

It’s also good to keep in mind that the main threat in viruses is their ability to mutate and become deadlier. This virus now has at least those 14,562 hosts which they can use to mutate in. Hong Kong University doctor and epidemiologist Gabriel Leung and his team said in a Jan 31 report: “In our baseline scenario, we estimated 75,185 infections as of Jan 25.” . And they were reporting on Wuhan alone. In other words, well over 5 times as many hosts and chances for the virus to mutate in just one city. In a city of 11 million people, numbers like that are perhaps not that extreme.

Back to politics. We have had two phases so far. 1 is first discovery followed by total silence. 2 is damage control, and deflecting all blame from the Party.

We are now in phase 3. The WHO, which was caught napping as much as the Party in phase 2, lavishes great praise on that same Party now for its “extraordinary safety measures”. Locking down entire cities (increasingly people are not even allowed to leave their homes), speed-building hospitals, you name it. And the WHO is not the only entity praising the Party.

The reason why there is so much emphasis on this is that the CCP is desperate to show everyone, at home and abroad, that it is in control. That there is no reason to worry, at least not due to actions by the Party. If other countries have problems, that is not the Party’s fault.

And also, the Party will take it from here, no need for foreign assistance. They’ll allow in some doctors, preferably WHO related, and they have asked both the US and EU for medical equipment and doctors’ uniforms, hazmat suits, that sort of thing, just so nobody asks any further questions: see, we do accept help! We’ll let you know if we need anything.

Other than that, the Party is in full control, thank you very much. And if Chinese people start protesting the failures of the Party so far, as they are, that is none of anyone else’s business. “We” have it under control”. Ask the WHO, they said so too.

If the Party is allowed to get away with this behavior aimed at self-preservation above anything else, including human lives of both Chinese and foreigners, something bad is sure to happen. Maybe not this time, maybe this one will fizzle out. But the next one, or the one after that, will not.

It is obvious how dangerous this is, putting the interests of the Party, or the economy, above the risk of spreading global pandemic. But is is also obvious why it happens. And it wouldn’t or couldn’t happen only in China. Though the country in its present state is a ideal breeding ground.

Flights are halted. Hundreds of millions will soon be in lockdown. Exports will plunge, because production will. Which will hit the west as much as China. Just so the Party can say it did what had to be done, and so it will stay in power. Xi Jinping knows his power depends on the economy, but he thinks he has what it takes to hold on to power even when the economy tanks.

He can simply declare force majeure, he can tell his people how much worse things would have been had he not decided to lock down everything.

We’ve been following the numbers of infections and fatalities now for 2 weeks or so, even as we know they don’t mean much, they’re just Party propaganda. The Party will release what it thinks it must, but no more. Perhaps we need other sources; these will come if and when things get out of hand. Not that we know they will.

Xi can claim today that he has control. He can say things are not too bad, but we don’t really know, he’s issuing the numbers. What we do know, and there’s the crux, is that he was 6 weeks late in starting to acknowledge the epidemic, in contacting the outside world, in acknowledging his mistakes, and in acknowledging that such mistakes are baked into the model that keeps him in power.

Phase 1 is complete denial, not a word. Phase 2 is damage control, massaging the numbers downward. Phase 3 is “close all the doors, not to worry, nothing to see here, we got this, no you can’t come in, too risky!”

But, yeah, praise him while you can. The only praise he cares about is from people just as clueless as he is anyway.

The Party is a highly effective vehicle for protecting its own interests and survival. For other things, perhaps not so much. Viruses can be quite deadly at times. Combine them with politics and the risk factor rises exponentially.

Tragedy assured. Just not every single time.

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Symbols of Strength

Apr 072017

April 7, 2017 Posted by Raúl Ilargi Meijer at 8:35 am Finance Tagged with: attack, business, North Korea, Putin, symbol, Syria, Tomahawk, Trump, Xi Jinping 7 Responses »

I don’t know anything more than anyone else does, outside of the decision makers’ circle, about the reasoning behind the Tomahawk missile attack on a Syrian airport. Have the US neocon warmongers won over Trump and the White House, as I see suggested? Have the Goldmanites? Is that the same group of people? If Trump has conceded to the warmongers, will Putin be next in line? Should Russia have pushed through when it had the upper hand in Syria, and ‘finished’ the job?

All these things, and many more, are possible. What’s certain is that Trump’s popularity will surge in America. Nothing unites like a Tomahawk, it seems. Plus ça change… But what has really happened? ABC reports that the Syrian army appears to have been warned in advance of the attack, and pulled out its people and as much of its material as it could.

That means either the Americans have warned them, or more likely the Russians have, as the US knew they would when it told Moscow about the impending ‘operation’ before it took place. And that makes it largely symbolic then, doesn’t it, as former National Security Adviser Richard Clarke suggests to ABC. Of course that would change if there are additional, and more deadly attacks, and that could happen any moment now. For now it’s more or less plausible though.

But why launch a symbolic attack on Assad? Why not go ‘bigly’ if you really want him gone? It’s not exactly a first warning. Is it perhaps a symbol meant for Putin to understand? Does the US tell Moscow that it should better control Assad? Doesn’t sound convincing. But it still sounds better than Trump putting on a show for domestic consumption only. It may make him more popular, but he can do without the protests.

There’s another element in all this that deserves more scrutiny. Sort of linked to the Putin-Assad connection. That is, why was the attack launched at the very moment that Xi Jinping was sitting down for dinner at Mar-a-Lago? Trump had reason to show the world that he’s willing to use his strength. You can question the whole thing, but it makes sense, from a military point of view, in more than one way.

And the biggest threat to the US, and perhaps the world, is not Assad. It’s North Korea. The US had to tell China that its protégé is getting out of hand. That has been going on for a while of course, but Kim fired a bunch of rockets recently, and one of these days that could lead to a -nuclear?- ‘accident’. Countries like South Korea and Japan are getting very nervous, and the US has vowed to protect them. As Xi is well aware.

So the symbolism here may be directed, in a pretty direct way, at Xi Jinping. Get your boy under control or we soon will have no choice but to do it for you. And we don’t want to do that, because you will lose face if we do, and if that happens the two of us may get into a conflict, on opposite sides. Which neither of us should want. It would be bad for business. And while you’re here to discuss business, let’s get this out of the way first.

As I said, I could be wrong in much of this, but I don’t believe for a second that the attack taking place while Xi is at the ‘Winter White House’, is a coincidence. That, too, is a symbol. And it’s not about starting a war, the US has been active in Syria all along, albeit more secretly. That would suggest it’s useful to wonder why this attack was executed the way it was, and why there is so much fanfare surrounding it, why this specific one had to make all the headlines.

Before dinner, Trump reportedly said he had already struck a friendship with Xi, and “I have gotten nothing, absolutely nothing.” Jovial banter between two men, and their delegations, who are extremely wary of each other. So much so that direct open serious talk is difficult, that is done on the sidelines and in backrooms by assistants. It’s the kind of situation in which people talk, communicate, in symbols.

Volkswagen and China: A Perfect Fit

Nov 062015

November 6, 2015 Posted by Raúl Ilargi Meijer at 9:30 am Finance Tagged with: China, defeat device, GDP, Growth, Merkel, Volkswagen, VW, Xi Jinping 1 Response »

Jack Delano Long stairway in mill district of Pittsburgh, Pennsylvania 1940

If Angela Merkel wants to get rid of one of her major headaches, we suggest she should tell Volkswagen to move its operations from Wolfsburg to China. It may seem a strange thing to do at first blush, with 750,000 German jobs on the line, but bear with us here, because this could well be the only way to preserve at least some value for VW’s stock- and bondholders.

And several layers of German government, as well as German pension funds, are major investors. In a company that has now lost 40%, over €32 billion, of its market cap, and, according to an estimate by UBS, faces €35 billion or more in costs over the various emissions scandals. Count your losses, German pensioners! And the way things are going, and the way the scandal is widening, this may still be a conservative number.

Here’s the ‘thing’: after the most recent admissions coming from the carmaker and its affiliates it may well have become impossible for -international- lawmakers and lawyers alike to not go after Volkswagen with all they’ve got. First the EPA found a few days ago that defeat devices were installed in larger diesel engines too, those used in Porsche and Audi cars, instead of just the smaller ones whose testing by the University of West Virginia started this whole Teutonic drama.

Now we find that for VW’s petrol engines, too, various emissions have gone severely underreported. Porsche’s official reaction to the new diesel findings was that the company was ‘surprised’. Maybe that has something to do with the fact that the new Volkswagen CEO, Mueller, ran Porsche before being promoted to his present gig?! ‘Surprised’?

Other than that ‘surprise’ comment, both Audi and Porsche have reportedly flatly denied the very existence of the defeat devices in their products, even as the EPA research looks solid. Perhaps they should have been advised by their vast legal staffs that flat denial at this point in the game is a dangerous move.

VW has had ample time to come clean, with the EPA, with German regulators, as well as with a wide range of other regulators across the globe. But it’s abundantly clear they haven’t come clean. Moreover, thus far they’ve mostly been allowed to do their own in-house testing. And yes, that is as crazy as it sounds.

If and when the company is found to not have spoken the truth and nothing but the truth after the initial EPA findings (which, remember, followed a multi-year period of blatant lies, denial and deceit), replacing a CEO or pointing fingers at employees will no longer suffice. Heads will have to roll, and they will have to roll straight into prison cells.

At the same time, the company will be ordered, by regulators, lawmakers and judges, to pay fines so hefty its very existence will be in danger. VW lost 40% of its market cap and stands to lose 40% more in fines. An attractive investment? Only until the next lie gets exposed, one would presume.

This is no longer about the cost of repairs. And it’s no longer about greater fools still buying VW cars either. You can’t keep on lying to disguise your earlier lies and expect to get away with it just because you’re a large corporation.

That may not seem obvious or intuitive in today’s environment, but because attacks on VW will come from a multitude of sources -a dozen countries and ten dozen lawyers from all over the world-, regulators won’t want to be found going easy on VW as -some of- their peers go for the jugular. At some point, it gets to be about credibility.

Credibility of the EPA, and of all the other regulators. South Korea and Japan sales are plummeting, and India of all places is now getting on the bandwagon. This is not just a Merkel headache, it’ll be a migraine attack soon. Move the whole thing to China, Angela! Cut your losses…

Why China? We first thought of the VW-China connection because of this Jen Sorensen comic, but thought right away that it would be even much more applicable to China than it is (and it very much is, of course) to the US. That is, the idea of a political system with a built-in defeat device. China’s defeat device is its ‘official numbers’. The government says it wants X% growth, and that’s what comes out a year later.

What defeat device? Well, for one thing, Chinese President Xi Jinping looks to be starting a new personality culture in the vein of Mao, and presumably to that end last week introduced a new 5-year plan. But let’s be frank, these are things that don’t fit in a 2015 economy that relies on trade with the entire world.

The 2016-20 plan, which spans all corners of nation-building, represents Xi’s best chance to enact his reforms and establish a legacy before party retirement rules compel him to clear the way for a successor in 2022. “It bears Xi Jinping’s fingerprints, as does everything else in the Chinese government now. He is the top man, not first among equals, just first. One-man rule is back in China,” said Stein Ringen, a professor of sociology and social policy at the University of Oxford. “This is Xi saying, ’I am in charge and I will continue to be in charge.’”

That Xi goes down this path anyway shows us that he still seeks total control in the Mao or Deng Xiao Ping tradition, even though that is not remotely possible in an even half-open economic system. In China’s economy today, GDP growth can neither be planned nor fabricated. But the numbers still can! Which is where the defeat device comes in.

Xi Jinping cannot resist the temptations of a personality culture and at the same time demands a minimum 6.5% GDP growth over the next five years. A volatile combination. Question then is: what happens if and when growth is much lower than that? Who is Xi going to blame? And who are the Chinese people going to blame? What are the odds that a sub-6.5% growth rate will lead to mayhem?

But that’s just one side of the tale. There are many western observers, quite a few of them quite knowledgeable, who put Chinese GDP growth already at much less than 6.5 %. Lombard Street, Chris Balding, the Li Keqiang Index, Capital Economics, Danny Gabay, you just Google them, there are far too many critical views to ignore. And they on average put REAL China GDP growth at less than half XI’s 6.5% number.

And so again: what will happen when Mao-wannabe Xi can no longer fudge the numbers enough to make his 1.3 billion people believe? What will happen when the PBoC cannot buy sufficient assets with sufficient printed mullah to keep markets appear steady that haven’t been steady in ages?

The 5-year plan calls for GDP to double from 2010-2010, and for per capita income to do the same. Imagine if the US or EU set such goals. There’s no prediction, whether from the OECD or IMF or one of various central banks that comes even close to being correct after just one year, let alone five.

Xi Jinping’s 5-year plan should be read in the same way that one reads Alice in Wonderland. It is wishful thinking devoid of any sense of reality, and it’s only the inbuilt ‘official number’ defeat device that can provide it with an air of importance.

Apparently, China’s emissions numbers follow the same path, and the link to Volkswagen is again awfully easy to make in that respect too:

China has been consuming as much as 17% more coal each year than reported, according to the new government figures. By some initial estimates, that could translate to almost a billion more tons of carbon dioxide released into the atmosphere annually in recent years, more than all of Germany emits from fossil fuels.

The adjusted data, which appeared recently in an energy statistics yearbook published without fanfare by China’s statistical agency, show that coal consumption has been underestimated since 2000, and particularly in recent years. The revisions were based on a census of the economy in 2013 that exposed gaps in data collection, especially from small companies and factories.

Illustrating the scale of the revision, the new figures add about 600 million tons to China’s coal consumption in 2012 — an amount equivalent to more than 70% of the total coal used annually by the United States.

In other words, the deceit is built-in, it’s a feature not a flaw. That goes for both China’s and Volkswagen’s emissions models, and it goes for Xi Jinping’s 5-year plan. One common element seems to be desperation, the knowledge that certain aspired conditions cannot be met, and the subsequent decision to then fudge and cheat. That decision is made necessary by one thing only: incompetence.

We don’t want to harp this horse to death, the overall idea should be clear by now. But while writing, we do get new ideas popping up. Like those 750,000 Germans who depend on Volkswagen, directly or indirectly, for their jobs, can all move to China, and settle in some of the abundant ghost cities.

Their homes in Wolfsburg et al can then be made available to the 1 million or so refugees that Germany expects to settle in this year. Win win win, everybody happy.

But we remain anxious about what will happen if and when it becomes clear that the Chinese doubling of GDP and incomes is just a weird fantasy of a man who feels omnipotent enough to think he can control global financial markets. China has malinvested to such an extent that major busts are inevitable.

The British steel industry knows exactly what we mean. And predictions are that a year from now, all US aluminum smelters will be closed. China exports deflation. And that is being felt in its domestic economy too. So it looks like either Xi will need to crack down on his people, or they will crack down on him. Neither is an enticing prospect.

But he can’t tell the truth either, because it’s too far removed from the fairy tales he’s been telling. Just like Volkswagen.

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