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Daily Archives: June 29, 2022

U.S. Q1 GDP Revised Down

Inflation is revised up.

Source : Bloomberg

Humour: News in Cartoons

Alarm in Beijing After Announcement Zero-COVID Policy May Last Five Years

Helen Davidson wrote . . . . . . . . .

Authorities in Beijing have sparked confusion and alarm after announcing the strict zero-Covid policy could be in place for the next five years, including mass mandatory testing and travel restrictions.

The notice, published on Monday afternoon, was attributed to Cai Qi, the Beijing secretary of the Chinese Communist party. The original text said: “In the next five years, Beijing will unremittingly grasp the normalisation of epidemic prevention and control.”

The notice was first posted by Beijing Daily and republished by other state media outlets. It spread widely across social media, but soon the reference to “five years” was removed from most online publications, and a related hashtag on Weibo was deleted.

It committed to maintain and improve the city’s “strict management of the joint prevention and control coordination mechanism”, and the emergency response system, including those designed to shut down circulation and transfer of the virus through “isolation, management and control… as soon as [transmissions] appear”. It also noted the continuation of strict residential inspections, the “normalisation” of regular testing, and the management of entry and exit to the city.

China’s authorities, under direction from President Xi Jinping, have repeatedly committed the country to the zero-Covid policy, despite the rest of the world choosing a path of coexistence or mitigation. Xi has ordered authorities to balance zero-Covid with economic growth, as the unpredictable measures grate with locals.

Monday’s announcement and the subsequent amendment sparked anger and confusion among Beijing residents online. Most commenters appeared unsurprised at the prospect of the system continuing for another half-decade, but few were supportive of the idea.

“Countdown to escape China,” said one Weibo user.

“The ultimate goal of fighting the epidemic is to return to normal life, and it seems that everyone has forgotten about this,” another noted.

A hashtag related to “in the next five years Beijing will unremittingly grasp the normalisation of epidemic and control” was viewed nearly 1m times before it was removed within a few hours.

Authorities have not clarified the statement or the removal of the reference to five years. Some observers suggested the “five years” phrase was a term used often in government announcements, but which appeared to be a timeline in this context, or that it was erroneously added in by the original publisher of the notice – the Beijing Daily.

The Beijing Daily did not provide clarification when contacted by the Guardian.

China’s “dynamic zero” strategy was effective during outbreaks of earlier variants, but was challenged by the high transmissibility of Omicron. The policy resulted in a lengthy, at times chaotic, and economically damaging lockdown in Shanghai, and tough travel and social curbs in Beijing. Other cities have also undergone arduous lockdowns, either city-wide or neighbourhood specific. Many cities and provinces have enacted compulsory mass testing every few days for residents who wish to move about the city.

On Sunday, Beijing announced in-person schooling would restart. Shanghai authorities also reported no new cases at the weekend for the first time since March. However, the threat of sudden lockdowns or travel curbs persists. Last week, Shenzhen contained a neighbourhood and locked down several residential buildings, after a single case was reported. On Sunday, it was extended to close entertainment venues and parks, as case numbers climbed to a dozen.


Source : The Guardian

As a Heat Wave Grips the US, Lessons from the Hottest City in America

Julia Kane wrote . . . . . . . . .

Summer is not something to look forward to in Phoenix, Arizona. For many in the hottest city in America, summer is something to survive.

Masavi Perea, 47, knows this well. A former construction worker, he’s now the organizing director of Chispa Arizona, a grassroots group that fights for clean air and water, healthy neighborhoods, and climate action in Latino communities. One of his top priorities is to protect the people in West and South Phoenix who are most likely to suffer, get sick, and even die from extreme heat.

Heat is the number one weather-related killer in the U.S. Last year, there were 338 heat-related deaths in Maricopa County, where Phoenix is located — the most of any county in Arizona. Like many other aspects of climate change, extreme heat highlights inequities, such as who lives in a neighborhood with plenty of shade and green space, and who lives in a neighborhood with more pavement than parks.

In a recent study, Dr. Vivek Shandas, a professor of climate adaptation at Portland State University, analyzed temperatures in 108 different urban areas. He found that areas that underwent redlining — the government’s practice of excluding people of color from federally-insured mortgages — were consistently hotter than other areas. “For communities of color, immigrant communities, and lower income communities living in those historically redlined areas, disinvestment brought lots of concrete, asphalt in the form of highways and freeways, big box stores, industrial facilities,” said Shandas. The areas that were redlined are still the hottest areas within cities — sometimes by 18 degrees Fahrenheit, Shandas found.

And that’s outdoors. Within homes, the difference is often greater. On the same day during a heat wave, a home in a wealthy neighborhood with tree-lined streets and access to air conditioning might be 75 degrees, while a home a few miles away in a low-income neighborhood with lots of pavement and no access to air conditioning might be over 120 degrees. “That’s where we run into some pretty big disparities in terms of health outcomes,” Shandas said. “They end up getting exposed to temperatures that are lethal in terms of human health and wellbeing.”

In Phoenix and in other cities across the country, Perea and countless others have been working to help those who are the most vulnerable keep safe from the rising temperatures. “Phoenix is a bellwether,” said Dr. Melissa Guardaro, a research professor at Arizona State University. “People are still dying, and every heat death is an unnecessary death,” she said. But in many ways, the city is better prepared than others that are experiencing more and more extreme heat due to climate change. While more needs to be done, Phoenix does have protocols in place for when extreme heat hits, and was the first city in the country to fund an office of heat response and mitigation. These steps offer an example for other cities throughout the country that are grappling with deadly heat. “Right now it’s happening in Phoenix, but soon, it’s going to be happening everywhere,” Perea said.

Though it may sound basic, Perea says that the first step towards adapting to the heat is to talk with the people who are most at risk. Too often, Perea has seen government officials and nonprofit organizations come into neighborhoods like West Phoenix to try to tell people what to do without bothering to listen. “When people from the outside come to these communities, they already have the solutions. So people, community members, they don’t buy it. They don’t feel part of it,” he said. When outsiders try to communicate with them “from the top down,” it goes nowhere.

A few years ago, Perea participated in a project that took a different approach. A coalition of community based organizations, including Chispa, researchers from Arizona State University and the Nature Conservancy, and city and county officials came together to create hyper-local heat plans for the three neighborhoods most at risk in the Phoenix metropolitan area.

At first, people were distrustful. They could look around their neighborhoods and see streets and parks that had been neglected for years. “People were not expecting the government to do anything,” Perea said. But he and others with roots in the community were able to bring people into face-to-face meetings with local government officials and researchers. Once the people in power started listening to the community, “that’s when many solutions came up, many solutions from our own people,” he said.

At an individual level, people can keep their homes cooler by taking simple, low-budget steps, like using foam tape to seal gaps around doors, or making larger renovations, like installing insulation. At a community level, neighbors can check in on one another, paying particular attention to the elderly or those who might not have as many social connections. At a city level, governments can reverse decades of disinvestment by adding and maintaining green spaces and tree cover and targeting upgrades, like pavement that reflects the sun’s heat, to certain areas. Finally, at a state and federal level, policymakers can make electricity more affordable and offer assistance programs for people who struggle to pay their utility bills.

In the West Phoenix neighborhood that Perea worked with, some of the solutions people proposed included: adding shaded walkways for common routes (along with water fountains), expanding the warning system that lets residents know extreme heat is imminent, and offering first aid training so they could recognize the signs of heat exhaustion and heat stroke to help each other.

When trying to protect people from extreme heat, “you really need to drill down to the local level in order to do effective interventions,” said Guardaro, who wrote a paper on the process of developing the heat plans in Phoenix. Locals were able to mark the routes children take walking to school and the bus stops that people without cars rely on the most so the group could prioritize where to plant trees or build shade structures. “There are limited funds, and we want to make sure that when we’re making investments, it’s the proper investment in the proper place,” Guardaro said. To do that, local expertise is essential.

Perea says he has seen some improvements as a result of the process. For example, the neighborhood he worked with prioritized renovating a local park. Green spaces help cool neighborhoods and provide a place for people to go when their homes are overheated. The city spent $500,000 to add a new playground (which is shaded), picnic areas with tables and grills (which are also shaded), a walking path, more trees, and a public restroom.

Before, “it was a very depressing park,” Perea said. Now, “that park in the evenings is totally different. You see it’s full of people playing and walking and enjoying their community.”

People need to understand the risks associated with extreme heat and what can be done about them. That’s where Jessica Bueno’s work comes in. Bueno is director of the Urban Heat Leadership Academy, a program run by the Nature Conservancy and the Phoenix Revitalization Corporation, a local nonprofit.

The Urban Heat Leadership Academy is a five-month program that meets roughly twice a month and teaches Phoenix residents about how to address the urban heat island effect. It also connects them with academics researching solutions and local government officials responsible for managing the problem.

“The city comes up with plans all day,” said Bueno. “But if residents aren’t implementing it and holding the city accountable, nothing happens.” The goal of the Urban Heat Leadership Academy is that residents learn how to hold the city accountable, advocate for themselves, and implement their own solutions.

In the long term, Phoenix would be in a much better position to protect residents from the heat “if we could figure out how to give safe, affordable, livable housing to everybody who needed it,” said Guardaro, the ASU researcher. In the short term, cooling centers can provide lifesaving relief. That’s where Rosalyn Gorden and other graduates of the academy chose to focus their efforts.

During the pandemic, a cooling center at the Wesley United Methodist Church, a predominantly Black church in South Phoenix, closed down due to staffing shortages. With a grant from The Nature Conservancy and the Phoenix Revitalization Corporation, the graduates reopened the church cooling center, providing an indoor, air-conditioned space, along with cool drinks and snacks, games and activities for children, and toiletries and other supplies for homeless people. It’s open every day from 9 a.m. to 8 p.m., and it’s the only cooling center in South Phoenix that allows people to bring their pets. The facility is staffed by one full time employee, by nearby nursing students who require community health outreach hours to complete their degree program, and by volunteers from the church and surrounding community.

Gorden grew up in South Phoenix, raised two children there, and remembers serving meals to the homeless with her mother at the church, where her family have long been members. The Urban Heat Leadership Academy “opened the door for me to be able to start getting involved in the community, and to be a part of decision-making,” Gorden said. Reopening the cooling center was “a wonderful opportunity” to do something to help people in her neighborhood, she said.

Last week, the first heat wave of the summer hit the Southwest. In Phoenix on Saturday, temperatures climbed to 114 degrees Fahrenheit, tying the daily record. More extreme heat is coming, but that doesn’t mean that more people have to suffer or die.


Source : Grist

How Bad Is China’s Manufacturing Exodus?

Yang Jinxi, Qu Yunxu, Du Zhihang and Denise Jia wrote . . . . . . . . .

China’s strict pandemic controls, which are blocking production and logistics, threaten to add impetus to the manufacturing exodus from the country that has been picking up speed over the past decade, international trade experts say.

The COVID policy disruptions add to pressures from rising labor costs in China and worsening Sino-U.S. trade tensions. With low labor costs and surging domestic demand, Southeast Asia and India have become the most popular destinations for investors.

In April, Apple said it started making its iPhone 13 at an Indian factory owned by Taiwanese contract manufacturer Foxconn. Prime Minister Narendra Modi’s government is pursuing a “Made in India” campaign, aiming to turn the country into a global manufacturing powerhouse by cutting red tape and attracting investment.

Still, China retains tremendous advantages as a manufacturing center built up over the past several decades, and its enormous and rapidly expanding domestic market provides a powerful incentive for investment in capacity of all kinds. Southeast Asian nations, and even India, still have enormous hurdles to overcome in competing with China, trade experts say.

So far, most of the manufacturing leaving China has been in lower-end processes and hasn’t hurt China’s dominant position, many industry participants say. But the trend is forcing a transformation and upgrade of China’s manufacturing toward higher-value goods, creating risks and opportunities for domestic manufacturers, they said.

A Chinese trade official said the outflow of foreign trade orders is controllable, and its impact has been limited.

Manufacturing moving out of China is “in line with the law of economics,” Li Xingqian, director general of the Ministry of Commerce’s foreign trade department, said June 8 at a regular State Council briefing. China’s position in global industrial and supply chains is stable as China has a complete industrial system, with advantages in infrastructure, industrial capacity and professional talent, Li said. China’s business environment is continuously improving, and the attraction of the domestic market is still growing, he said.

Uncertain export outlook

China’s exports grew 16.9% in May from a year earlier, accelerating from April’s 3.9% increase and climbing well above the 8% gain projected by economists, customs data showed. China posted a trade surplus of $78.76 billion in May, up from a $51.12 billion surplus in April.

Exports rebounded as COVID-related bottlenecks on production and logistics eased, but the outlook remained uncertain as global consumer demand cools amid economic slowdowns and high inflation.

All manufacturing bases, including China, now face worries about weak demand in developed countries. Inflation in Europe and the U.S. are at the highest levels in 40 years, eroding consumers’ purchasing power and willingness to spend on nonessential goods.

Export orders for delivery in June and July, usually the peak season for booking goods for the back-to-school and holiday seasons, didn’t come in as expected, several people in the export sector said.

Weak demand in Europe and the U.S. was reflected in declining shipping prices, said Lin Jie, founder of Worldwide Logistics Group. Shipping costs from Shanghai to U.S. West Coast ports declined by 5.1%, and to the East Coast by 4.6% in the week of June 17, compared with the same period last month, according to the Shanghai Shipping Exchange.

The drop in shipping rates means clients that placed orders earlier are paying higher transit costs. While this hasn’t led to widespread cancellations, it could affect subsequent orders if demand does not pick up by July, said Zhang Huafeng, Los Angeles chief representative at Transfar Shipping.

It may take until the end of this year for American importers to work down inventories built up last year, said Wang Huanan, general manager of the Xiamen unit of Hailian (China) International Freight. Only certain categories, such as auto parts, clothing and luggage, have relatively low inventories, Wang said.

Last week, U.S. President Joe Biden said that to help curb inflation he was considering lifting tariffs that his predecessor imposed on $350 billion a year of Chinese goods, including bicycles, baseball caps and sneakers, during a tit-for-tat trade war. But it’s not a simple decision, and advisers within the administration are divided on the matter.

Dropping the tariffs would boost China’s exports, but the key is the timing, Wang said. July is traditionally the busiest month for exporters as goods for year-end holidays need to be shipped by then, he said.

China still the world’s factory

Neither Southeast Asia nor India can replace China as the global manufacturing hub in the near future as they are mainly engaged in labor-intensive and low value-added manufacturing, several foreign trade participants told Caixin. They also face problems such as incomplete industrial chains and low labor efficiency to varying degrees, experts said.

To foreign companies, China is not only a manufacturing base but also a huge market, said He Xiaoqing, president of consulting firm Kearney Greater China. In 2020, global companies had $1.4 trillion of domestic sales, far more than their exports of $900 billion, showing the attractiveness of China’s local market, He said.

The share of finished products among China’s exports should slowly decline over time, said Gao Shiwang, director of the industry development department at the China Chamber of Commerce for Import and Export Machinery and Electronic Products. Taking machinery and electronics as an example, higher-value-added integrated circuit exports increased 32% to $153.8 billion in 2021, surpassing those of cellphones, Gao said.

Vietnam, especially, has been one of the biggest beneficiaries of factories leaving China. The country offers manufacturers access to the 10-member Association of Southeast Asian Nations (ASEAN) free trade bloc and preferential trade pacts with countries throughout Asia and the EU as well as the U.S.

In the first five months this year, Vietnam’s exports rose 16.7% year-on-year to $153.29 billion, compared with a high base in the first half of 2021.

China’s outflow of factories to Southeast Asia is mainly concentrated in textiles, furniture and low-end assembly of consumer electronics. From the fourth quarter of 2021 to the first quarter of 2022, about 5% of China’s textile, 7% of household goods and 2% of mechanical and electric goods orders moved to ASEAN countries, U.S. import data shows.

Among Apple’s top 200 suppliers, the number of companies setting up factories in Vietnam increased from 17 in 2018 to 23 in 2020, including seven Chinese mainland companies, according to Everbright Securities.

So far, Vietnamese electronics factories are still mainly engaged in low-end assembly. For example, Apple AirPods and iPhone manufacturer Lixun Precision’s subsidiary in Vietnam mainly produces connectors and computer peripherals. Chinese company Lens Technology makes iPhone glass in its Vietnam factory.

Even though many orders now go to Vietnam, more than half of them come from China, Transfar’s Zhang said. U.S. clients are still actually doing business with Chinese companies, it is just that the goods are shipped from Vietnam, he said.

The export capacity of the whole of Southeast Asia, especially Vietnam, is overloaded and has little room to handle more orders in the short term, Zhang said. In the medium to long term, Vietnam’s rapid growth in the past three years has reached a bottleneck, with diminishing land and labor cost advantages, he said.

Shipping costs from Vietnam and Indonesia to the U.S. are much higher than from China, as those countries have fewer direct shipping vessels, and transit times are about a week longer from Ho Chi Minh City to Los Angeles than from Shanghai, Zhang said. Normally, the shipping cost from a Vietnamese port is $300 per container more than from a port in China. In the first few months this year, the price premium widened to $3,000 per container.

Deng Shengpeng, whose company makes furniture hardware parts in Anji, Zhejiang Province, opened a factory in Vietnam in 2018. The skyrocketing shipping costs this year made it hard to land new orders, he said.

Labor costs are still much lower in Vietnam than in China, but its land cost advantage is diminishing. Workers in Deng’s Anji factory are paid about 7,000 yuan ($1,046) a month and work 10 hours a day, while those in Vietnam make 2,500-3,000 yuan a month and work 8 hours a day. Deng has also witnessed a surge in land prices in Vietnam in recent years. Before 2018, 1 sq. meter of land cost $20-$30. Now the price is $160 per sq. meter, he said.

Chinese companies’ factories in Vietnam rely on raw materials and parts from China. Supply chains blocked due to pandemic lockdowns earlier this year also affected production in Vietnam.

Yang Zhongwei is the production manager of a Chinese router parts maker’s subsidiary in Vietnam. The factory needs to import all of its materials from China, which usually take a week to arrive. In the past two months, materials from Suzhou and Kunshan were delayed by more than a month, causing clients to threaten cancellation of orders, Yang said.

Yang’s company is considering switching to local sourcing, but it is not easy because Vietnam has a weak industrial base and costs are higher. For example, carbon tapes on printers costs about 21 yuan per roll, three times the price of those sold in China on Alibaba’s Taobao, Yang said.

In India, Chinese smartphone makers set up factories aiming at the huge domestic market. With 1.4 billion people, almost as many as in China, and a high proportion of young people, India has drawn Chinese brands including Xiaomi, Meizu, Vivo and Oppo to build factories. Many Chinese phone parts makers have also set up factories there. Now Chinese brands account for nearly two-thirds of India’s smartphone market.

But India has been getting tough on Chinese companies since border tensions escalated two years ago. In 2020, India banned more than 200 apps, many of them Chinese, including the wildly popular video platform TikTok. India accused Xiaomi’s India unit of moving money out of the country illegally.

India does have an edge in software services, thanks to its education system and labor cost advantages, said Li Zhiqiang, managing director of China Telecom India. But in terms of network infrastructure and support, India still lags behind. For example, many Chinese companies’ factories in India don’t have fiber optic coverage, Li said.

India also has a shortage of smart manufacturing talent. India has a relatively successful elite education system, but its training of technicians in high-end equipment operation and maintenance can’t meet market demand, Li said.


Source : Nikkei Asia

Chart: Holiday Budgets Rebound From COVID Slump

Source : Statista