Links for Tuesday, April 28, 2020

BUSINESS AND TECHNOLOGY:

The amount of nonperforming loans at 24 of China’s listed municipal and rural commercial banks cumulatively rose by 20.31% year-on-year to 99 billion yuan (about $14 billion) in 2019, largely driven by bad loans at banks in northeastern China and the region including Beijing and the port city of Tianjin, according to a report published Friday by global accounting firm PricewaterhouseCoopers (PwC).

But the city [Shenzhen], which has long attracted the best and brightest from all parts of China, is also home to millions of small and medium-sized enterprises and these are having a much harder time recovering — in large part because state-owned banks don’t like to have too much to do with them.

HSBC Holdings PLC said its net profit for the first quarter sank [by 57% compared with a year earlier] as Europe’s largest bank by assets strengthened its provisions against losses from borrowers hit by the coronavirus.

The U.K.-based, Asia-focused bank set aside $3 billion to cover potential loan losses in the first quarter of the year, five times the amount it estimated would be needed in February when the disease was mainly affecting Asia. Provisions in the first quarter of last year were $585 million.

Cloudflare today announced a new partnership with JD Cloud & AI [in Chinese] that will see the company expand its network in Chinato an additional 150 data centers. Currently, Cloudflare is available in 17 data centers in mainland China, thanks to a long-standing partnership with Baidu, but this new deal is obviously significantly larger.

The nation’s macro leverage level, or the total debt-to-GDP ratio, is likely to rise continually, and the task of the macroeconomic policies is to keep the ratio stable, the People’s Bank of China said. Ideally, the policies should strike a balance between economic stability and risk prevention to leave room for long-term, sustainable growth, PBOC Governor Yì Gāng 易纲 said in an article written for the magazine run by the country’s forex regulator on Sunday.

China’s tech companies have been eager to position themselves as health surveillance providers, using QR codes, “smart gates,” and even smart payment devices to mass screen students while minimizing unnecessary human contact. Some health code systems (in Chinese) even claim to text parents when their children enter and leave school.

With a health QR code called Fuxuema (Back to School Code) and existing smart campus systems, Tencent is the leader of the pack. Other companies like the state-owned China Mobile, however, are also jumping in.

In this era of pandemic uncertainty, Chinese and Hong Kong-listed firms have come to one consensus on how to best survive it: sit on their wallets and preserve cash.

They are retaining profits instead of distributing them to shareholders, with the most Hong Kong dividend payers in at least 35 years opting not to do so in the first quarter.

  • Startup accuses Tesla of bullying
    Chinese auto startup labels Tesla a ‘bully’ in trade secrets spat / Caixin (paywall)
    “Chinese electric car startup Xpeng Motors has accused Tesla Inc. of engaging in a ‘fishing expedition’ to ‘bully’ its smaller competitor, firing the latest legal salvo in an ongoing case of alleged intellectual property (IP) theft.”
  • Insurance firm sues in bid to close deal
    Anbang unit sues Mirae to complete $5.8 billion hotel deal / Bloomberg via Caixin
    “An Anbang Insurance Group Co. unit sued to force South Korea’s Mirae Asset Global Investments Co. to complete its $5.8 billion purchase of a portfolio of U.S. luxury hotels as the coronavirus pandemic roils financial markets and travel.”

SCIENCE, HEALTH, AND THE ENVIRONMENT:

The coronavirus outbreak in France was not caused by cases imported from China, but from a locally circulating strain of unknown origin, according to a new study by French scientists at the Institut Pasteur in Paris.

Genetic analysis showed that the dominant types of the viral strains in France belonged to a clade — or group with a common ancestor — that did not come from China or Italy, the earliest hotspot in Europe.

Chinese scientists say the novel coronavirus will not be eradicated, adding to a growing consensus around the world that the pathogen will likely return in waves like the flu.

It’s unlikely the new virus will disappear the way its close cousin SARS did 17 years ago, as it infects some people without causing obvious symptoms like fever. This group of so-called asymptomatic carriers makes it hard to fully contain transmission as they can spread the virus undetected, a group of Chinese viral and medical researchers told reporters in Beijing at a briefing Monday.

As spending on wind power stations nearly tripled in the first quarter, China’s power generation facilities received more investment than its power distribution grids for the first time in any quarter since 2013.

A total of 59.6 billion yuan ($8.4 billion) was invested in power plant projects, up by 30.9% year-on-year, while investment in energy transmission declined by 27.4% to 36.5 billion yuan in the first three months of 2020, according to data released Wednesday by the National Energy Administration.

POLITICS AND CURRENT AFFAIRS:

The E.U. on Monday denied bowing to Chinese pressure to water down a report on coronavirus disinformation to soften criticism of Beijing.

The New York Times said that, under pressure from Beijing officials, the E.U. had delayed publication of a regular report on disinformation trends last week, and toned down the final version.

Two weeks after French Foreign Minister Jean-Yves Le Drian summoned China’s ambassador to France, Lú Shāyě 卢沙野, over the embassy’s publication of a post that derided France’s care for its senior citizens during the pandemic, another critical post was published Sunday on the diplomatic mission’s website.

The article, titled “Why the COVID-19 epidemic is so politicized,” was attributed to an anonymous Chinese diplomat. Seeking to explain why questions have been asked about China’s responsibility in the spread of the virus, the article said “some Westerners are beginning to lose confidence in liberal democracy,” and “some [Western countries] have become psychologically weak.”

Foreign Ministry spokesman Gěng Shuǎng 耿爽 on Tuesday repeated its past rejection of [White House trade adviser Peter] Navarro’s claims that the Chinese side had held back supplies of vital personal protective equipment amid the COVID-19 pandemic. “Navarro has been a consistent liar with no credibility,” Geng told a regular news briefing Tuesday in Beijing.

Beijing has lashed out at American politicians for “telling barefaced lies” over the devastating COVID-19 pandemic after US President Donald Trump and his senior aides renewed their threat to seek damages over China’s mishandling of the global crisis.

“They have only one objective: to shirk their responsibility for their own poor epidemic prevention and control measures and divert public attention,” Chinese foreign ministry spokesman Gěng Shuǎng 耿爽 said on Tuesday, without naming Trump.

“I don’t know what the motive is behind calling for an investigation, seeking damages and compensation. This is political manipulation.”

  • A key ruling on whether Meng’s [Mèng Wǎnzhōu 孟晚舟] extradition case meets [the] test of ‘double criminality’ will be delivered to the media in a socially distanced courthouse lock-up.
  • A hearing on Monday was conducted remotely, with Meng and lawyers attending by teleconference.

For weeks [starting in early January], the PDB [President’s Daily Brief] — as the report is known — traced the virus’s spread around the globe, made clear that China was suppressing information about the contagion’s transmissibility and lethal toll, and raised the prospect of dire political and economic consequences.

But the alarms appear to have failed to register with the president, who routinely skips reading the PDB…

The People’s Liberation Army’s Southern Theatre Command, which oversees the South China Sea, said the USS Barry destroyer intruded into “waters around the Paracel Islands without permission” on Tuesday, prompting the command to scramble air and sea patrols to “track, monitor, verify, identify and expel” it.

The United States has pledged its full support for Taiwan’s participation in World Health Organisation events during a rare telephone call between the two sides’ health ministers — a move observers said was certain to spark a protest from Beijing and further strain cross-strait and U.S.-China relations.

The pandemic has upended the usual pageantry of the National People’s Congress, in which 3,000 deputies — and thousands more officials, political advisers and journalists — crowd into Beijing meeting halls for two weeks. The virus has turned the platform for projecting power into a dangerous infection risk for Chinese President Xí Jìnpíng 习近平 and other top Communist Party leaders.

The Chinese embassy in New Delhi on Tuesday said it was “deeply concerned” about the ICMR’s [Indian Council of Medical Research] decision.

“It is unfair and irresponsible for certain individuals to label Chinese products as ‘faulty’ and look at issues with pre-emptive prejudice,” embassy spokeswoman Jī Róng 嵇蓉 said in a statement, without specifying which individuals.

A remote mountain mine in the California desert is poised to get a boost from the Pentagon, which sees the metals it extracts there as vital for national defense — but vulnerable to Chinese dominance over the supply chain.

The Mountain Pass mine is the only domestic source for rare-earth minerals, which are needed for electronics, lasers, magnets and other applications used in weapons systems. The minerals require special processing after extraction, which is now done in China because the U.S. doesn’t have any facilities.

Eight former senior military leaders have issued an open letter seeking to prevent the change [that would see the federal and military retirement savings program invest in China], which is set to take effect in the second half of this year…

The result, the letter said, will be that a portion of money in the fund will be invested in Chinese companies including “weapons manufacturers, U.S.-sanctioned entities and other malevolent enterprises of the Chinese Communist Party.”

SOCIETY AND CULTURE:

“My dear darlings, welcome to my livestream!”

This warm salutation comes not from a seasoned online broadcaster, but from a 49-year-old rural official hoping to sell some sweet potatoes to his audience.

With the COVID-19 pandemic disrupting markets and supply chains, China’s low-level officials — city mayors and heads of villages, townships, and counties — are increasingly turning to livestreams and short videos to help boost online sales of local products farmed or produced by their constituents: anything from pineapples, honey, and mushroom sauce to tea and salted duck eggs.

On 6 January, I wrote a short memo to our newsdesk: “Something we probably want to keep an eye on are these severe viral pneumonia cases that have been racking up (now 44) in Wuhan — China has said that it is not SARS.”

Since then, I have been reporting on coronavirus from Beijing, Hong Kong, Shanghai and most recently Wuhan. I could not have known then how my life would soon be consumed by this story. I have spent the four months since constantly weighing the risks to my family, my colleagues and the people we interviewed against my responsibility as a journalist.