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IMF Head Urges China to End Mass Lockdowns

David McHugh wrote . . . . . . . . .

It is time for China to move away from massive lockdowns and toward a more targeted approach to COVID-19, the head of the International Monetary Fund said days after widespread protests broke out, a change that would ease the impact to a world economy already struggling with high inflation, an energy crisis and disrupted food supply.

IMF Managing Director Kristalina Georgieva urged a “recalibration” of China’s tough “zero-COVID” approach aimed at isolating every case “exactly because of the impact it has on both people and on the economy.”

Georgieva made the comments in a wide-ranging interview Tuesday with The Associated Press in which she also cautioned it is too early for the U.S. Federal Reserve to back off on its interest rate increases and held out hope that an energy crisis driven by Russia’s war in Ukraine will speed the push into renewables in Europe. She also called increasing hunger in developing countries “the world’s most significant solvable problem.”

In China, protests erupted over the weekend in several mainland cities and Hong Kong in the biggest show of public dissent in decades. Authorities have eased some controls but have showed no sign of backing off their larger strategy that has confined millions of people to their homes for months at a time.

“We see the importance of moving away from massive lockdowns, being very targeted in restrictions,” Georgieva said Tuesday in Berlin. “So that targeting allows to contain the spread of COVID without significant economic costs.”

Georgieva also urged China to look at vaccination policies and focus on vaccinating the “most vulnerable people.”

A low rate of vaccinations among the elderly is a major reason Beijing has resorted to lockdowns, while the emergence of more-contagious variants has put increasing stress on the effort to prevent any spread.

Lockdowns have slowed everything from travel to retail traffic to car sales in the world’s second-largest economy. Georgieva urged it “to adjust the overall approach to how China assesses supply chain functioning with an eye on the spillover impact it has on the rest of the world.”

The Washington-based IMF expects the Chinese economy to grow only 3.2% this year, on pace with the global average for the year.

The Communist Party has taken steps in the direction Georgieva recommends, switching to isolating buildings or neighborhoods with infections instead of whole cities and made other changes it says are aimed at reducing the human and economic cost. But a spike in infections since October has prompted local authorities who are facing pressure from above to impose quarantines and other restrictions that residents say are too extreme.

Asked about criticism of a crackdown on protests, a Chinese Foreign Ministry spokesman defended Beijing’s anti-virus strategy and said the public’s legal rights were protected by law.

The government is trying to “provide maximum protection to people’s lives and health while minimizing the COVID impact on social and economic development,” Zhao Lijian said.

China, a founding IMF member, has a prestigious single seat on the the organization’s 24-member executive board, unlike most countries that must share a seat. Its 6% voting share is behind only the United States and Japan.

While China’s policy ripples out worldwide, Georgieva said the greatest risk facing the global economy is high inflation that requires central banks to raise interest rates, making credit more expensive for consumers and businesses. Coupled with that is the need for governments to take care of the most vulnerable people without undermining central bank efforts with excess spending.

“Policymakers are faced with a very difficult time in the year ahead,” she said. “They have to be disciplined in the fight against inflation. Why? Because inflation undermines the foundation for growth, and it hurts the poor people the most.”

Asked if the U.S. Federal Reserve should pause interest rate increases that are strengthening the dollar and putting pressure on poorer countries, Georgieva said that “the Fed has no option but to stay the course” until inflation credibly declines.

“They owe it to the U.S. economy, they owe it to the world economy, because what happens in the United States if inflation does not get under control can have also spillover impacts for the rest of the world,” the Bulgarian IMF chief said.

Inflation data is still too high in the U.S. and Europe and “the data at this point says: too early to step back,” Georgieva said.

She warned that international tensions between the China and the West and between Russia and the West threatened to restrict trade and its beneficial effect on economic growth and prosperity. She added that while there are concerns about supply chains disrupted by the pandemic, “we have to work harder on finding a way to counter these protectionist instincts” while being honest about supply concerns.

Georgieva said the world was already seeing signs of increased hunger before Russia’s invasion of Ukraine disrupted grain supplies to Africa and the Middle East. More investment in resilient agriculture and support for small farmers as well as efforts to reduce food waste would be part of the solution, she said.

“We have to admit in the wealthiest societies, in the wealthier families, that we waste food on a daily basis, even in quantities that are sufficient to feed the rest of the world,” she said. “Hunger is the world’s most significant solvable problem.”

Yet hunger has been increasing in recent years.

The world needs “a focus on food security in a comprehensive way that reduces waste, increases productivity and most importantly, focuses more attention on small-scale farming, where a great deal of livelihoods of people, especially in developing countries like that, would go a long way to bring this solvable problem finally to an end,” Georgieva said.

Russia’s war also created an energy crisis after Moscow cut off most natural gas supplies to Europe as Western allies supported war-torn Ukraine. The resulting high energy prices have created an opportunity to “accelerate the transition to low-carbon energy supplies” through incentives for green investments.

Source : AP

Chart: China Manufacturing Activities Continue to Contract in November 2022

Activity in China’s manufacturing sector contracted for the fourth straight month as Covid-19 outbreaks across the country and stringent measures to contain infections continued to dampen both supply and demand, a Caixin-sponsored survey showed Thursday.

The Caixin China General Manufacturing Purchasing Managers’ Index (PMI), which gives an independent snapshot of the country’s manufacturing sector, rose to 49.4 in November from 49.2 the previous month. It was the fourth straight month of readings below 50, which signal contraction.

Source : Caixin

Chart: Institute of International Finance Forecast Global Recession in 2023

See large image . . . . . .

Source : Twitter

Charts: Inflation in Japan’s Capital Surges in November 2022

Source : Nikkei

Read more at Reuters

Consumer inflation in Japan’s capital rises at fastest pace in 40 years . . . . .

China Economy: Avoiding ‘Middle-income Trap’ Is Key in 2023

China needs to get its economy back on track as soon as possible to avoid falling into the “middle-income trap”, and the deepening of market-oriented reforms is key, according to a Chinese government adviser.

And the growth rate of the world’s second-largest economy next year could potentially surpass 5 per cent, said Wang Yiming, vice-chairman of China Centre for International Economic Exchanges.

But for this to happen, coronavirus disruptions must be mitigated or ended; government policies to boost the economy must be effective; and reform and opening up must be expedited to improve market confidence, he said on Wednesday at an event organised by the Hong Kong Institute for Monetary and Financial Research.

“China’s current economic growth rate is lower than its potential. This may lead to some medium- to long-term impacts, which are rather structural in nature,” Wang warned.

“For example, there are changes in the micro scene, such as enterprise decisions becoming more short-term in nature, risky investment appetite being reduced, and household consumption becoming more prudent.

“It takes some time for all of these to be rectified.”

Wang’s comments add to the recent concerns that other government advisers have shared publicly, with some flagging the urgent need for China’s economic policymakers to realise the country’s full growth potential.

While the current recovery momentum is still weak, it is “very important” to bring the economic growth back to a reasonable range, explained Wang, who has also served as vice-president of the Development Research Centre of the State Council.

China’s economy grew by 3.9 per cent in the third quarter of this year, up from the 0.4 per cent growth in the second quarter. And economic growth over the first three quarters of the year stood at 3 per cent, missing market expectations.

Economists with investment banks Goldman Sachs and UBS expect China’s gross domestic product (GDP) to increase by 4.5 per cent in 2023. Those at Nomura were slightly more conservative at 4.3 per cent, and Morgan Stanley’s team was more optimistic with their 5 per cent projection.

If China aims to fulfil its target of reaching the per capita income level of a medium-developed country by 2035 – with a per capita GDP of at least US$20,000 – the annual GDP growth rate should be no less than 4.73 per cent, Wang said while noting that this could be “very difficult” to achieve due to the nation’s ageing population.

As China’s per capita GDP exceeded US$10,000 two years ago, it is in the process of moving from middle- to high-income, which is a special phase of instability, and the country may become caught in the middle-income trap if economic growth stagnates, he added.

To avoid being in such a perilous position, in which growth slows and a nation becomes unable to generate further economic momentum or grow rich, the key is to increase productivity and unleash the vitality of the market, Wang said.

“These are unlikely to be achieved simply through countercyclical adjustment policies. It must be achieved through deepening reform and opening up,” he added.

In particular, China should enhance market-oriented reforms in the realms of labour, land, capital, technology and data.

For example, reforming the hukou household registration system – which dictates access to public services based on the birthplace of the holder – by providing basic public services to rural migrants settling in cities would unleash the consumption potential of 300 million people, he said.

Reviving consumption is “particularly important” for China’s economic recovery, especially as dwindling external demand has suppressed exports and manufacturing investment, Wang said.

In the first 10 months of 2022, China’s retail sales increased by 0.6 per cent, but they fell by 0.5 per cent last month.

China’s exports also declined by 0.3 per cent in October compared with a year earlier, down from 5.7 per cent growth in September.

“In the past three years, we have taken many measures to protect the 160 million market players, and the recovery of production is obviously better than the recovery of consumption,” Wang said.

“So, if consumption is not activated and exports are falling, it will be difficult to maintain the balance between the supply and demand ends of the economy.”

Source : SCMP


国家发展和改革委员会主任 何立峰 . . . . . . . . .










(五)网络安全保障和数字经济治理水平持续提升。在全国人大的指导推动下,加快健全法律法规体系,强化网络安全机制、手段、能力建设,完善数字经济治理体系,提升网络风险防范能力,推动数字经济健康发展。一是法律和政策制度体系逐步健全。相继颁布实施《网络安全法》《电子商务法》《数据安全法》《个人信息保护法》,修改《反垄断法》,制定新就业形态劳动者权益保障政策。中央全面深化改革委员会第二十六次会议审议通过了《关于构建数据基础制度 更好发挥数据要素作用的意见》,初步构建了数据基础制度体系的“四梁八柱”。二是网络安全防护能力持续增强。建立网络安全监测预警和信息通报工作机制,持续加强网络安全态势感知、监测预警和应急处置能力。完善关键信息基础设施安全保护、数据安全保护和网络安全审查等制度,健全国家网络安全标准体系,完善数据安全和个人信息保护认证体系,确保国家网络安全、数据和个人隐私安全。基本建成国家、省、企业三级联动的工业互联网安全技术监测服务体系。三是数字经济治理能力持续提升。建立数字经济部际联席会议等跨部门协调机制,强化部门间协同监管。提升税收征管、银行保险业监管、通关监管、国资监管、数字经济监测和知识产权保护、反垄断、反不正当竞争、网络交易监管等领域的信息化水平,推动“智慧监管”。有序推进金融科技创新监管工具试点、资本市场金融科技创新试点、网络市场监管与服务示范区等工作,探索新型监管机制。




















Source : 中国人大

Chart: U.S. Inflation vs. Wages – Inflation Is Winning

Source : Chartr

Younger Chinese Are Spurning Factory Jobs That Power the Economy

David Kirton wrote . . . . . . . . .

Growing up in a Chinese village, Julian Zhu only saw his father a few times a year when he returned for holidays from his exhausting job in a textile mill in southern Guangdong province.

For his father’s generation, factory work was a lifeline out of rural poverty. For Zhu, and millions of other younger Chinese, the low pay, long hours of drudgery and the risk of injuries are no longer sacrifices worth making.

“After a while that work makes your mind numb,” said the 32-year-old, who quit the production lines some years ago and now makes a living selling milk formula and doing scooter deliveries for a supermarket in Shenzhen, China’s southern tech hub. “I couldn’t stand the repetition.”

The rejection of grinding factory work by Zhu and other Chinese in their 20s and 30s is contributing to a deepening labour shortage that is frustrating manufacturers in China, which produces a third of the goods consumed globally.

Factory bosses say they would produce more, and faster, with younger blood replacing their ageing workforce. But offering the higher wages and better working conditions that younger Chinese want would risk eroding their competitive advantage.

And smaller manufacturers say large investments in automation technology are either unaffordable or imprudent when rising inflation and borrowing costs are curbing demand in China’s key export markets.

More than 80% of Chinese manufacturers faced labour shortages ranging from hundreds to thousands of workers this year, equivalent to 10% to 30% of their workforce, a survey by CIIC Consulting showed. China’s Ministry of Education forecasts a shortage of nearly 30 million manufacturing workers by 2025, larger than Australia’s population.

On paper, labour is in no short supply: roughly 18% of Chinese aged 16-24 are unemployed. This year alone, a cohort of 10.8 million graduates entered a job market that, besides manufacturing, is very subdued. China’s economy, pummelled by COVID-19 restrictions, a property market downturn and regulatory crackdowns on tech and other private industries, faces its slowest growth in decades.

Klaus Zenkel, who chairs the European Chamber of Commerce in South China, moved to the region about two decades ago, when university graduates were less than one-tenth this year’s numbers and the economy as a whole was about 15 times smaller in current U.S. dollar terms. He runs a factory in Shenzhen with around 50 workers who make magnetically shielded rooms used by hospitals for MRI screenings and other procedures.

Zenkel said China’s breakneck economic growth in recent years had lifted the aspirations of younger generations, who now see his line of work as increasingly unattractive.

“If you are young it’s much easier to do this job, climbing up the ladder, doing some machinery work, handle tools, and so on, but most of our installers are aged 50 to 60,” he said. “Sooner or later we need to get more young people, but it’s very difficult. Applicants will have a quick look and say ‘no, thank you, that’s not for me’.”

The National Development and Reform Commission, China’s macroeconomic management agency, and the education and human resources ministries did not reply to requests for comment.


Manufacturers say they have three main options to tackle the labour-market mismatch: sacrifice profit margins to increase wages; invest more in automation; or hop on the decoupling wave set off by the heightened rivalry between China and the West and move to cheaper pastures such as Vietnam or India.

But all those choices are difficult to implement.

Liu, who runs a factory in the electric battery supply chain, has invested in more-advanced production equipment with better digital measurements. He said his older workers struggle to keep up with the faster gear, or read the data on the screens.

Liu, who like other factory chiefs declined to give his full name so he could speak freely about China’s economic slowdown, said he tried luring younger workers with 5% higher wages but was given a cold shoulder.

“It’s like with Charlie Chaplin,” said Liu, describing his workers’ performance, alluding to a scene in the 1936 movie “Modern Times”, about the anxieties of U.S. industrial workers during the Great Depression. The main character, Little Tramp, played by Chaplin, fails to keep up with tightening bolts on a conveyer belt.

Chinese policymakers have emphasised automation and industrial upgrading as a solution to an ageing workforce.

The country of 1.4 billion people, on the brink of a demographic downturn, accounted for half of the robot installations in 2021, up 44% year-on-year, the International Federation of Robotics said.

But automation has its limits.

Dotty, a general manager at a stainless-steel treatment factory in the city of Foshan, has automated product packaging and work surface cleaning, but says a similar fix for other functions would be too costly. Yet young workers are vital to keep production moving.

“Our products are really heavy and we need people to transfer them from one processing procedure to the next. It’s labour intensive in hot temperatures and we have difficulty hiring for these procedures,” she said.

Brett, a manager at a factory making video game controllers and keyboards in Dongguan, said orders have halved in recent months, and that many of his peers were moving to Vietnam and Thailand.

He is “just thinking about how to survive this moment,” he said, adding he expected to lay off 15% of his 200 workers even as he still wanted younger muscles on his assembly lines.


The competitiveness of China’s export-oriented manufacturing sector has been built over several decades on state-subsidised investment in production capacity and low labour costs.

The preservation of that status quo is now clashing with the aspirations of a generation of better-educated Chinese for a more comfortable life than the sleep-work-sleep daily grind for tomorrow’s meal their parents endured.

Rather than settling for jobs below their education level, a record 4.6 million Chinese applied for postgraduate studies this year. There are 6,000 applications for each civil service job, state media reported this month.

Many young Chinese are also increasingly adopting a minimal lifestyle known as “lying flat”, doing just enough to get by and rejecting the rat race of China Inc.

Economists say market forces may compel both young Chinese and manufacturers to curb their aspirations.

“The unemployment situation for young people may have to be much worse before the mismatch could be corrected,” said Zhiwu Chen, professor of finance at the University of Hong Kong.

By 2025, he said, there may not be much of a worker shortfall “as the demand will for sure go down.”


Zhu’s first job was to screw fake diamonds into wristwatches. After that he worked in another factory, moulding tin boxes for mooncakes, a traditional Chinese bakery product.

His colleagues shared gruesome stories about workplace injuries involving sharp metal sheets.

Realising he could avoid reliving his father’s life, he quit.

Now doing sales and deliveries, he earns at least 10,000 yuan ($1,421.04) a month, depending on how many hours he puts in. That’s almost double what he would earn in a factory, though some of the difference goes on accommodation, as many factories have their own dorms.

“It’s hard work. It’s dangerous on the busy roads, in the wind and rain, but for younger people, it’s much better than factories,” Zhu said. “You feel free.”

Xiaojing, 27, now earns 5,000 to 6,000 yuan a month as a masseuse in an upscale area of Shenzhen after a three-year stint at a printer factory where she made 4,000 yuan a month.

“All my friends who are my age left the factory,” she said, adding that it would be a tall order to get her to return.

“If they paid 8,000 before overtime, sure.”

Source : Reuters

Chart: Contribution to U.S. Inflation

Source : Wall Street Journal

Charts: Port of LA Has the Quietest October Since 2009

According to Gene Seroka, head of the Port of Los Angeles.

Source : Bloomberg and Wolfstreet