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Daily Archives: April 30, 2022

Chart: China Overall Electricity Consumption in Q1 2022

From January to March, the electricity consumption of the whole society reached 2,042.3 TWh, a year-on-year increase of 5.0%.

In March, the overall electricity consumption was 694.4 TWh, a year-on-year increase of 3.5%.

Source : China Electricity Council

In Pictures: 1935 Auburn 851 Cabriolet

Source : Bring A Trailer

Russia Moving Closer to a Gold Standard – Official

Russian experts are working on a project to create a two-loop monetary and financial system in the country, Secretary of the Security Council Nikolay Patrushev said on Tuesday, in an interview with Rossiyskaya Gazeta.

He explained that the project involves the provision of the Russian currency with both gold and a range of goods representing a currency value. As a result, the ruble exchange rate would correspond to its real purchasing power parity, he said.

To ensure the sovereignty of any national financial system, it is necessary that its means of payment have intrinsic value and price stability, and is not tied to the dollar, Patrushev said.

Another important condition for Russian economic security is the restructuring of its economy based on modern technologies, he added.

“We are not against a market economy … but … the West allows other countries to be its partner only when it is beneficial for it,” Patrushev stressed, noting that Russia’s development should be based on its internal potential.

On March 25, the Bank of Russia announced a fixed price for buying gold with rubles. It set a price of 5,000 rubles ($59 at the time) for a gram of gold.

The security secretary also stressed that Washington was trying to solve its problems at the expense of the rest of the world, thereby creating a “human-induced global crisis.” And its European allies would be the first to suffer from those actions, Patrushev said.

While the White House is discussing a possible default by Russia, the situation is such that “it’s time for them to declare their own default,” Patrushev said, pointing out that the US’ external debt has exceeded $30 trillion.

Source : RT

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Gold-backed ruble could be a game-changer (INTERVIEW) . . . . .

China’s RCEP Trade Gets Off to a Good Start

China’s trade with other countries in the Regional Comprehensive Economic Partnership (RCEP) rose 9.5% year-on-year in the first quarter after the free trade agreement came into effect for most members Jan. 1, customs data showed.

Trade between China and the 14 other RCEP countries expanded to $449.4 billion, the most for the same period in at least four years, according to Caixin calculations based on data released by the General Administration of Customs. The growth rate slowed from 31.5% a year earlier when trade was boosted by the recovery from a Covid-related slump in 2020.

Source : Caixin

China Policymakers Clash Over How to Counter Property Slump

Sun Yu and Tom Mitchell wrote . . . . . . . . .

Chinese regulators led by vice-premier Liu He are concerned that the government is underestimating the economic impact of its crackdown on the property sector and Covid-19 lockdowns in Shanghai and other cities, according to officials and policy advisers.

But other senior officials have opposed efforts by Liu, President Xi Jinping’s longtime financial and economic adviser, to ease the pressure on the real estate sector, six Beijing-based government officials and policy advisers told the Financial Times.

The policy disagreements within the Chinese government highlight the difficult choices it faces as it tries to shore up growth in the world’s second-largest economy while also pursuing a tough zero-Covid strategy and taming heavily indebted property developers.

China’s gross domestic product was up 4.8 per cent year on year in the first quarter, but a 3.5 per cent fall in retail sales in March suggested anti-Covid controls were slowing an economy already suffering from real estate market woes. On Tuesday, state media reported that Xi called for accelerated investment in a wide range of critical infrastructure sectors but did not specify an amount or timeframe for the effort.

Liu, who heads a powerful committee that co-ordinates policy between the central bank and China’s banking, securities and other regulators, has supported recent moves by many regional governments to ease restrictions on property purchases.

But according to the officials and policy advisers, two other vice-premiers — Han Zheng and Hu Chunhua — have sided with the housing ministry in wanting to maintain the pressure on developers by tightly regulating how they can use project revenues.

Chinese vice premier Liu is concerned that the government is underestimating the economic impact of its crackdown on the property sector © Saul Loeb/AFP/Getty Images
Liu’s Financial Stability and Development Committee wants to give debt-laden developers more freedom to deploy revenues from buyers who pre-pay for their homes. Over the past year, local governments have ringfenced sales revenues so they are only used to complete the relevant project.

“It is already common for lenders, be they banks or bond investors, to give repayment extensions to developers,” said a government adviser who shared Liu’s concerns. “Continued weakening of the industry may cause bad debts to spike and the entire financial sector to go under.”

An executive at Sunac, a large developer based in the port city of Tianjin, said real estate firms should be allowed to use sale proceeds from new projects to pay off debts owed on older projects to help avoid defaults.

“If we have collected Rmb1bn ($153mn) in revenue that would be spent over three years on one project, why can’t we earmark Rmb100mn of that for use elsewhere and [repay it] later on,” said the executive, who asked not to be named.

Han and Hu’s supporters argued that fears about the impact on China’s largely state-owned banking sector were overblown. “Not every bank will go under,” one of the people said. “We can always have healthy banks bail out troubled ones.”

While Liu has long been regarded as China’s most powerful economic and financial official, Han is the highest-ranking of the three vice premiers. Han sits on the Chinese Communist party’s most powerful body, the politburo standing committee, and is considered a leading candidate to replace Li Keqiang as premier next year.

Liu has also urged local governments in areas affected by Covid lockdowns to protect supply chains and help companies resume operations.

But confronted with China’s worst economic conditions and outlook since at least the beginning of the pandemic, financial policymakers have responded over recent weeks with only modest easing measures.

Their reticence stems in part from fears that stronger stimulus measures would have only limited effectiveness, especially in regions brought to a standstill by Covid containment lockdowns.

Liu and Yi Gang, governor of the People’s Bank of China and a highly respected technocrat who was appointed central bank chief at Liu’s insistence, are also wary of broad-based rate cuts. They fear these could undermine progress over the past five years at stabilising China’s overall debt-to-GDP ratio.

Liu and Yi also share growing concerns that with US interest rates now higher than China’s for the first time in years, rate cuts could weaken the renminbi and spark destabilising capital flight.

“Current economic policy may not be [aggressive] enough,” said an influential Beijing academic, who asked not to be named because he didn’t have university approval to speak with the media. “But since the US began raising rates, the renminbi has begun to depreciate. If we [cut rates] renminbi depreciation could get out of control.”

Almost every expression of policy support from the PBoC and central government’s state council over recent weeks has been qualified by caveats that they would not resort to “flood-like stimulus” and remained determined to “keep macro debt levels generally stable”.

On Tuesday, such central bank comments halted a sharp sell-off sparked by fears that harsh lockdown measures in Shanghai might be extended to Beijing.

The comments by the PBoC reiterated pledges to use “prudent” monetary policy to support small and medium-sized enterprises, which have borne the brunt of the lockdowns, while also promising to boost banks’ lending capacity.

But similar assurances by Liu in mid-March, as the benchmark CSI 300 index was poised to fall to a two-year low, had only a temporary effect. The rally quickly faded when the PBoC announced only a 25 basis-point cut in banks’ reserve requirement ratios, potentially releasing just about Rmb500bn in new lending into China’s Rmb114tn-a-year economy.

“Liu and Yi are afraid of reinflating bubbles,” said one person who has worked closely with Yi. “They want to provide liquidity to those who need it, but think they can do that [through bank reserve requirement cuts and targeted lending guidelines] rather than using broad measures.”

“Opening up the flood gates is great for other parts of the country that are not affected by lockdowns but for those that are, it’s not going to make much difference.”

Source : FT

Survival Of The Fittest: The Rise Of BA.2.12.1

William A. Haseltine wrote . . . . . . . . .

Contrary to the popular belief that Covid infections are receding universally, recent reports show that several countries are in the midst of accelerating Covid rates. This draws cause for concern with the Summer fast approaching. Recall that Summer 2021 was dominated by Delta variant infections. This Summer may be in for something similar. The current increase is almost certainly due to new members of the Omicron family of viruses.

Current estimates suggest that BA.2 variants have replication rates at least 30% greater than BA.1 variants. Two variants, BA.4 and BA.5 in Europe, were recently identified as strains to monitor by the World Health Organization. Figure two illustrates how rapidly descendants of Omicron have diversified and established themselves not only in the United States, but around the world.

One such subvariant is already causing significant case numbers in the American Northeast. In the GISAID SARS-CoV-2 database, BA.2.12.1 is attributed to roughly 2,000 sequenced infections, which suggests that the actual number of BA.2.12.1 cases is at least in the tens of thousands. A recent analysis by the CDC suggests that BA.2.12.1 comprises at least 19% of new cases while BA.2 lineages overall comprise over 90%.

As its lineage name suggests, BA.2.12.1 is a descendant of the BA.2 virus. BA.2 was the main driver of the winter wave of Omicron infections that peaked in the United States on January 14th, 2022, when the daily average was over 800,000 new infections. Part of BA.2’s viral fitness was its remarkably high transmissibility, and another was its expert evasion of the immune system, including antibodies developed from previous infections and vaccinations.

The BA.2 virus’s viral fitness is attributed to its wealth of mutations within and external to the Spike protein. The BA.2 genome contains 53 amino acid mutations, 29 of which are in the Spike protein, far outnumbering the Spike mutations of previous variants of concern and interest.

One mutation lies in the receptor-binding domain. This is a substitution of lysine for glutamine at position 452 (L452Q). This mutation is notable for two reasons. First, L452Q has been previously identified in several variants of concern, like Lambda, Delta, Delta plus, and Epsilon. Second, unlike many mutations where we must only speculate on their impact on viral fitness, L452Q was studied and found to increase escape immunity, allowing the virus to attach more strongly to human cells and avoid neutralizing antibodies.

The second mutation is more mysterious. It is a substitution from serine to leucine at position 704 (S704L). Unlike L452Q, S704L is a relatively rare mutation by way of major variants, and its exact impact on the virus is unstudied. Based on its position in the S2 region of the Spike protein, we can speculate that the mutation may affect either viral fusion or furin cleavage efficiency, but further study would be welcome.

We can say with near certainty that BA.2.12.1 is at least as transmissible and immune evasive as BA.2. It is unlikely that the two Spike mutations would decrease either of these facets of the virus strain. However, due to the wealth of BA.2 cases in previous months, the BA.2.12.1 virus may be impeded by antibodies developed from infections during that wave, which could explain why cases are low relative to the Omicron wave.

However, it is critical to remain vigilant in our surveillance of these subvariants. Recent reports from Hong Kong note that Omicron BA.2 subvariants deliver a similar fatality risk to those infected relative to earlier strains of SARS-CoV-2. This is contrary to many assumptions that Omicron is less severe than previous strains. Additionally, there are indications that Omicron is as dangerous in terms of long-term complications in children as the Delta variant of last summer.

We also note the growing danger of long Covid. As many as 30-50% of Omicron recoverees describe at least some lingering issue post-infection. This is independent of vaccination status and severity of their given infection—the rate increases for those hospitalized.

A new wave of Omicron with BA.2.12.1 or another variant yet to be identified could be as catastrophic as the wave from December to February. At the time of writing, over 1 million people died in the U.S. due to Covid-related complications. We should make every effort to keep that number from continuing to increase. One such avenue is to continue surveilling new variants to inform public health measures and aid the development of Covid-19 treatments.

Source : Forbes