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Monthly Archives: December 2020

There is Almost No Seasonal Influenza in the U.S. This Year

Source : CDC

Deleted Words from Xi’s Economic Policy Speak Volumes

KAtsuji Nakazawa wrote . . . . . . . . .

When it comes to statements issued after key meetings of the Chinese Communist Party, what is not written — especially what has been deleted from previous statements — often carries much more significance than the complex language that remains.

This year’s Central Economic Work Conference offers a good example. It was held Dec. 16-18 to discuss China’s economic management in 2021. In a statement released afterward, concern that the Chinese economy could face greater “downward economic pressure” had disappeared.

A year has made a big difference. At the previous Central Economic Work Conference, which began on Dec. 10, 2019, Chinese President and party General Secretary Xi Jinping issued a warning using those words.

Looking back, the conference was held weeks before the outbreak of the new coronavirus began to terrorize the global economy. Two days before the meeting, the first virus patient in Wuhan, Hubei Province, began showing symptoms, according to Chinese authorities.

As it began to unfold, however, Chinese citizens and people around the world were left in the dark about the outbreak. Information did not surface, at least not widely, for a while.

It was not until mid-January that the seriousness of the outbreak began to be discussed. Then, on Jan. 20, the head of a Chinese government’s expert team finally declared there was no doubt about “human-to-human transmission.”

Xi’s warning of “downward economic pressure” at last year’s gathering came before it was possible to predict the economic damage that the coronavirus outbreak would wreak.

A year later, and despite China and the world going through a historic bout of economic turbulence, Xi made no mention of and ignored any “downward economic pressure.” True, the Chinese economy is recovering, but something seems off.

It hints at Xi’s desire to declare to the world that China has become “the only major economy with positive growth this year,” as the Central Economic Work Conference statement put it.

In China, the country’s fight against the virus and its success in fending off the outbreak’s economic effects are already regarded as a part of history Chinese can be proud of. There is even a virus-themed exhibition being held in Wuhan.

The gap between Xi’s confidence and the world’s grim reality is glaring.

When the party in 2019 talked of downward economic pressure, the biggest factor weighing on the Chinese economy was the impact of the country’s fierce economic confrontation with the U.S. and President Donald Trump.

Earlier last year, Xi was ringing alarm bells, repeatedly referring to “black swans” and “gray rhinos” that could shatter the economy.

The 2019 Central Economic Work Conference came one month before Vice Premier Liu He, a close aide to Xi, flew to Washington and signed the “phase one” trade deal.

By the time the conference was held, Xi had endured months of wrangling with the U.S. in negotiations that at one point produced a draft agreement that Beijing later decided to scupper itself.

It was on Jan. 15, 2020, that Trump and Liu smiled for photos at the White House, trade deal in hand.

Tragically, in Wuhan that day, the outbreak was giving way to crisis.

Then-unimaginable coronavirus-related nightmares would go on to play out around the world. Trump, who leaves office in less than a month, failed to cope with the outbreak, allowing it to ravage the U.S. So far, the virus has killed more than 322,000 people in the country.

No “phase two” trade deal is on the horizon. The U.S. was looking forward to round 2 as an opportunity to pressure Beijing into tackling hefty industrial subsidies and other structural issues.

China’s eventual success in halting the virus’s spread — as well as the trade negotiations being thrown into limbo — seems to have provided a respite to China and Xi himself.

The Trump administration, however, continues to ramp up pressure. On Friday, it added dozens of Chinese companies, including Semiconductor Manufacturing International Corp., a leading contract chipmaker, and DJI Technology, the world’s biggest consumer drone producer, to its trade blacklist.

This year’s Central Economic Work Conference statement used an unfamiliar term to describe the macroeconomy’s direction — sharp turns — as in there will not be any.

This suggests that the world’s second-largest economy will maintain the status quo, that monetary policy will be neither further loosened nor tightened.

In 2008, after the collapse of Lehman Brothers, the party talked of growing downward economic pressure.

The current pandemic has dealt a far bigger blow to the global economy than Lehman did 12 years ago. Nevertheless, China’s leader is staying away from that phrase.

His reticence is, in effect, a message to the Chinese people: Grow confident.

But at the end of the day, despite Xi’s bravado, it will probably be the coronavirus that ends up affecting his political fortunes in the coming year.

Even if China largely succeeds in controlling the virus at home this winter, that alone will not improve the country’s overall economy as many of the nations that buy China’s exports are still taking an economic beating.

Meanwhile, China finds itself in a chilly international political environment.

A survey conducted this past summer by the Pew Research Center shows negative views of China at record highs in nine countries — the U.S., U.K., Germany, South Korea, Australia, Canada, Spain, the Netherlands and Sweden.

The results show China’s strategy to improve its external image has failed.

Beijing has not helped itself by taking hard-line stances in the past few years, like introducing the highly controversial Hong Kong national security law earlier this year and initially remaining mum about the coronavirus outbreak.

Suspicion of China has also been fueled by a significant delay in the country’s acceptance of a full-scale team from the World Health Organization to investigate the origins of the coronavirus in Wuhan and elsewhere. As things stand now, the WHO investigative team is to arrive in China in January, more than a year after the first coronavirus case was confirmed.

Wuhan citizens’ lives have since returned to normal, and vaccinations are underway in some parts of the world, but a full-scale international probe into the origins of the pandemic has yet to begin.

For Xi and China, 2021 is to be a special year. July will mark the 100th anniversary of the party’s establishment. Before facing such a big moment, Xi will want to portray China’s success in halting the virus’s spread as the biggest accomplishment of his nine years in power.

If it truly were such a success, logic would have it that other countries around the world would be singing China’s praises. That is not the case.

There are high hopes that the world will go back to normal in 2021. But if the world does not fully emerge from the coronavirus crisis by summer, there will be repercussions, including a significant impact on how the Tokyo Olympics will be staged.

The contrast of a world struggling to control a pandemic that originated in China and a Chinese Communist Party patting itself on the back for its response to the same crisis as a way to celebrate its 100th anniversary will only spark new frictions. Brace for a rough 2021.


Source : Nikkei Asia

News in Cartoons Around the World

U.S. Pending Homes Sales Fell in November, 2020

Source : Bloomberg

U.S. Retail Sales Return to Pre-pandemic Trajectory

Source : Statista


E-commerce Retail Sales as a Percent of Total Sales

Source : Federal Reserve Bank of St. Louis

The Wall Street Polarization in 2020

Top 5 Companies % of S&P500 Market Cap

Source : BofA Global Investment Strategy and Bloomberg

U.S. Inequality Worsen: Value of Financial Assets (Wall St) Relative to Economy (Main St) Hit All-time High of 6.3

Source : BofA Global Investment Strategy

Boston Dynamic Robots Dancing to the Tune of Do You Love Me

China Set to be Largest Economy in 2028

Andrew Moddy wrote . . . . . . . . .

China is expected to overtake the United States as the world’s largest economy in 2028, five years before previously forecast, and its economy will more than triple in size over the next 15 years, according to a new report.

The World Economic League Table 2021, produced by the Centre for Economics and Business Research, a London-based economic research consultancy, also predicts that China will become a high-income country by 2023, well within the 14th Five-Year Plan (2021-25) period.

China’s successful handling of the pandemic compared with Western countries was one of the major factors in it moving up the rankings. In last year’s report, the size of its economy was predicted to exceed that of the US in 2033.

Douglas McWilliams, deputy chairman and founder of the CEBR, said the economic performance of China was one of the main features of this year’s report, which analyzed 193 countries.

‘”The big news in this forecast is the speed of growth of the Chinese economy,” he said.

“Other Asian economies are also shooting up the league table. One lesson for Western policymakers, who have performed relatively badly during the pandemic, is that they need to pay much more attention to what is happening in Asia rather than simply looking at each other.”

Asian economies are predicted to make major strides over the next 15 years, according to the report.

Indonesia is expected to rise from being the 15th largest economy in 2020 to the eighth in 2035. Over the same period, the Philippines is expected to rise from being the 32nd largest economy to being the 22nd; Bangladesh from 41st to 25th; and Malaysia from 40th to 28th. India, which has been badly hit by the pandemic, lost its slot as the fifth-largest economy in the league table to the United Kingdom and is not expected to reclaim that spot until 2024.

By 2035, three of the top five economies will be in Asia.

The report also highlights the brutal impact of the COVID-19 pandemic on the global economy-not only killing an estimated 1.7 million people, but also wiping $6 trillion off the world economy’s output.

Kay Daniel Neufeld, the CEBR’s head of macroeconomics, said the pandemic has hit European countries particularly hard. Italy’s GDP is predicted to contract by 11 percent this year, Germany’s by 8 percent, and Spain’s by 8 percent.

“The pandemic has tested the political and economic fabric of European economies unlike anything seen during peacetime,” Neufeld said. “Governments of all political colors have subscribed to the need to prop up their economies with vast stimulus programs, even though many countries were still struggling to bring their debt levels under control following the global financial crisis.”

The report points to the importance of China’s domestic economy in driving growth forward and highlights the new “dual circulation “strategy, which President Xi Jinping first outlined in May. It aims to harness both domestic and external economic forces, with the domestic market as the mainstay and the domestic and foreign markets complementing each other.

The report predicts that China will grow 2 percent this year, 5.7 percent annually from 2021 to 2025, 4.5 percent annually from 2026 to 2030 and 3.9 percent from 2031 to 2035. By 2035 it will have an economy of $49.1 trillion, 35 percent bigger than the $36.2 trillion of the US. Its GDP will be more than three times its 2020 size of $14.8 trillion within 15 years at current prices. Using constant price measures, it will be 2.35 times bigger at $34.9 trillion, compared with $14.1 trillion in 2020.

The report said the economy was benefiting from measures to improve the ease of doing business, such as improved import declaration forms, greater ease in getting construction payments and strengthening creditors’ rights.

It also ranks among the most competitive in the world in the technology sector, with high scores in technology governance, innovation and ease of access to tech funding, according to the report.

McWilliams said one of the main factors driving China’s tech industry was the sheer scale of the domestic market.

“Scale is especially critical in tech. The US used to be the only country to have that and the European Union has tried to achieve with the Single Market, but with partial success,” he said.

The report also predicts the UK will be among the better-performing European economies despite Brexit. By 2035, its economy is forecast to be 23 percent bigger than France’s. It would also still be bigger if Scotland becomes independent from the UK.

McWilliams said one of the UK’s strengths is its robust tech sector, particularly digital, but it will be boosted by strong consumer spending once the pandemic ends.

“The UK consumer is notoriously spendthrift, and we have calculated there is £200 billion ($267.8 billion) of savings waiting to be spent,” he said.

The report also predicts the pandemic will result in a faster transition to a greener global economy. It said the past year has seen a dramatic decline in fossil fuel usage, and some governments have pushed forward the dates when sales of combustion-engine vehicles will be banned.

Pablo Shah, managing economist at the CEBR, said, “After the dust eventually settles on the COVID-19 pandemic, another defining feature of the 2020s will be the restructuring of economies towards greener production methods.

“While a political consensus on the need for intervention was already forming by the start of 2020, the pandemic will accelerate this transition, with green investments a cornerstone of many governments’ economic stimulus packages,” Shah added.

McWilliams, whose consultancy has been producing the annual report since 2009, said it is now clear how China and the rest of Asia were reshaping the global economy.

“One of my frustrations has been how the West has failed to understand how rapidly the Asian economies are catching up and overtaking their Western counterparts,” he said.


Source : China Daily


World Economic League Table 2021 . . . . .

China’s Antitrust Crackdown on Tech’s Giants Leads to Massive Losses

Source : Bloomberg