Home » Editor's Choice » China rising: ‘Asian century began in May 2020’ (May 25)

China rising: ‘Asian century began in May 2020’ (May 25)

Post-virus everything is going to change. That’s the dominant view of national and international media. But how exactly do they see the future? This regular digest section gives some of their answers and views/Edited by George Hamilton

In this edition (May 25):

 

  • CHINA RISING: China’s the winner post-virus – back to work while the West flounders. But others say the virus has, for China’s leaders, dangerously slowed economic development, and BoJo sees perils in depending on China for nationally critical supplies.
  • #1 ‘Asian century began in May 2020’

    Region has emerged as an economic zone as closely integrated as the European Union

  • #2 Spectre of unemployment overshadows China’s progress

    The country’s leadership will embark on major infrastructure spending to protect jobs as global trade growth slows

  • #3 Boris Johnson wants self-sufficiency to end reliance on Chinese imports
  • Prime Minister may intervene to “repatriate” crucial manufacturing capacity
  • Coronavirus pandemic will put human development in reverse, warns UN

    The pandemic will trigger the first decline in human development since records began, the UN has warned.

  • Campsites have a field day with 60% surge in bookings

    Campsites in the UK have experienced a surge in bookings as Britons prepare for a staycation this summer.

  • …and, finally, while the rest of us have to cut our own hair, models are also resorting to DIY:
  • Coronavirus: models do their own photoshoots

    Models taking their own photos at home have been told to avoid cluttered locations

Asian century began in May 2020

Economic historians may date the start of the Asian century to May 2020, when most Asian economies bounced back to full employment while the West languished in coronavirus lockdown. Asia has emerged as an economic zone as closely integrated as the European Union, increasingly insulated from economic shocks from the United States or Europe.

Google’s daily data on workplace mobility uses smartphone location to determine the number of people going to work – by far the most accurate and up-to-date available reading on economic activity. As of May 13, Taiwan, South Korea and Vietnam were back to normal levels. Japan and Germany had climbed back to 20% below normal. The US, France and the UK remain paralyzed. Google can’t take readings in China, but the available evidence indicates that China is on the same track as Taiwan, South Korea and Vietnam.

Asia’s short-term surge followed its success in disease prevention. But the long-term driver of Asian growth is China’s emergence as a tech superpower. China is expected to pass a $1.4 trillion of new government investments in 5G broadband, factory automation, self-driving cars, artificial intelligence and related fields.

Asia now acts as a cohesive economic bloc. Sixty percent of Asian countries’ trade is within Asia, the same proportion as the European Union. Intra-Asian trade surged year-over-year, while trade with the United States stagnated.

The surge in Chinese trade with Southeast Asia, South Korea and Taiwan shows the extent of Asian economic integration. China’s exports to Asia have grown much faster than its trade with the US, which stagnated after 2014. China’s stock market meanwhile is this year’s top performer

Healthcare technology companies, though, led the Chinese stock market, with Alibaba Health Information more than doubling year to date. China’s ambition to lead the world in artificial intelligence and big data analysis in the health sector got a boost from the Covid-19 pandemic, to the consternation of US officials.

The US Commerce Department has imposed controls on sales of semiconductors to Chinese firms on Washington’s “entity list,” if they are produced anywhere in the world with US technology.

But that is the last card that Washington has to play. Semiconductor manufacturing equipment is America’s last control point among critical technologies. In US corporate boardrooms and engineers’ Internet chat rooms, the question is not whether, but when China will reverse engineer American or Dutch machines and produce its own. China may not be able to buy high-end computer chips, but it can hire all the chip engineers it wants anywhere in the world. Taiwan now dominates chip fabrication, and a tenth of Taiwan’s chip engineers are now working at double pay on the Chinese mainland, according to media reports.

In the past, China has established its high-tech autonomy much faster than most observers expected. Its number two telecommunications equipment firm ZTE nearly shut down in April 2018 after Washington embargoed sales of the Qualcomm chips that power its smartphones. By December 2018, Huawei was producing its own Kirin chipset, with more power than the Qualcomm product. China still uses American software to design chips, and depends on Taiwanese foundries using US equipment. If China reaches self-sufficiency in chip production quickly, the last stronghold of US tech dominance will fall. Asia Times May 21

Spectre of unemployment overshadows China’s progress

On the eve of the Chinese Communist Party’s centenary, Covid-19 has destroyed at a stroke ambitions for doubling the size of its economy in the decade to 2020. A 9.8pc slump in output between January and March – the first for almost 30 years – put paid to that.

And even as the Chinese led the world out of lockdown, the rest of the world’s struggle with the virus – and potential overhauls of vulnerable supply chains – threatens a limpid recovery in exports, as trade tensions with the US flare up again.

Economists expect China to muster growth of between 2-3pc this year, far short of the 6.1pc seen in 2019 and the double-digit rates seen a decade ago. The loss of face from disappointment on growth pales into insignificance against the imperative of stemming rising unemployment, and potential social unrest, among its 1.3 billion population.

Joanna Davies, a China watcher at Fathom Consulting, says: “If our forecast is correct, then around 27pc of China’s labour force will be underutilised or unemployed this year, performing roles with little or no economic return. Such elevated levels will risk social instability – piling pressure on Beijing to relax restrictions, enact policy stimulus and return things to ‘normal’.”

In as much as “official” Chinese data can be trusted, the urban unemployment rate stood at 6pc in April. But according to UBS analysis, the figures do not include some migrant workers and self-employed: the bank estimates that up to 80m people had lost their jobs or were not working across sectors such as manufacturing, construction or retail at the end of March.

Although the bank expects around half of these to have returned to work by now, a record crop of graduates is meanwhile expected to flood into the labour force this year. The bank also forecasts that 10 million jobs in export-oriented industries are under threat thanks to the reignited trade fight with an electioneering US President Donald Trump, leaving overall employment some 15 million below 2019 by the end of the year.

With Washington ratcheting up export restrictions against Chinese tech giant Huawei last week, this will partly take the form of “new infrastructure”: a major spending programme on 5G networks, data centres, artificial intelligence and labs.

The spending spree suits both the need to spur the economy as well as President Xi Jinping’s agendas of economic nationalism and tech “decoupling” from the US. A Chinese state-backed news outlet said spending on tech infrastructure could hit 17.5 trillion yuan (£2 trillion) by 2025.

Beijing is also accelerating more traditional forms of infrastructure. According to figures from S&P Platts Global, nine airport projects were approved worth £10.1bn between January and April, equivalent to more than half the approvals by value seen for the whole of 2019. More than 20 rail schemes – comprising 3600km of track – have been rubber-stamped already this year.

Analysts are also keeping a wary eye on China’s banking system amid worries over soaring – and under-reported – bad loans exposed by slowing growth.

Seasoned watchers like UBS’s head of China research Tao Wang expect the virus to usher in a more cautious period, with spending on ambitions for economic imperialism through the Belt and Road Initiative reined in.

Rising de-globalisation trends meanwhile “will likely lead to a shortening of supply chains and weaker global trade even after the virus is controlled and the global economy normalises.” For China the task of shaking off the economic malaise caused by Covid-19 is only just beginning.  Daily Telegraph May 22

Boris Johnson wants self-sufficiency to end reliance on Chinese imports

Boris Johnson has ordered civil servants to draw up plans codenamed Project Defend to end Britain’s reliance on China for vital medical supplies and other strategic imports in light of the coronavirus crisis.

Project Defend is assessing the national resilience of “essential supplies”. A source said it had been tasked with “planning for future events — no matter what they might be”. A second “capabilities” group is looking at where the government needs to support industry to “onshore” critical production such as pharmaceutical supplies.

One source suggested that these groups would feed into the government’s review of post-Brexit state aid rules to make them more flexible to support industries that were of strategic national importance to the UK.

The work carried out by officials was leading to a reassessment of what was considered to be in the national security interest, a source said.

The UK is strategically dependent on China for 71 critical goods categories.
Whitehall sources said there was obvious concern in particular about the future supply of medicines. Most drugs sold in Britain have a complicated multinational supply chain with about 70 per cent of active ingredients made in China and much of the manufacturing, especially of generic drugs, done in India. Overall between 80 to 90 per cent of the UK’s supply of generic medicines are imported.

The government review is understood to include PPE and drugs but is looking at all areas of vulnerability particularly after the aggressive stance taken by China in response to international criticism of its initial handling of the Covid-19 crisis. “The way China has been acting has really alarmed people in Downing Street,” said one person familiar with their thinking.

The UK’s approach is being mirrored by other European countries. On Monday President Macron of France and Angela Merkel, the German chancellor, called for greater EU sovereignty on medical products.

The work is linked to separate government proposals to make it harder for foreign companies to buy up strategically important British companies that have lost value during the pandemic. The Times May 22

Coronavirus pandemic will put human development in reverse, warns UN

Education, health and living standards improved year on year for the majority of the world’s population since the UN Development Programme (UNDP) began measuring them in 1990. This year, however, for the first time in four decades, that trend will reverse, widening inequality globally.

The UN programme described a “triple hit to health, education and income” that will cause global per capita income to fall by 4 per cent this year. “The combined impact of these shocks could signify the largest reversal in human development on record,” it said.

One of the starkest measurements is the blow the virus has struck to education, leaving 60 per cent of the world’s children without access to learning. Such figures have not been seen since the 1980s. Even that deprivation, however, is uneven and highlights a “digital divide” that handicaps the poorest.

While experts note big gaps even within the UK between the most and least privileged school pupils, global disparities are more severe. Remote learning means 20 per cent of children in developed countries are missing out on education, a figure that soars to 86 per cent in the developing world.

Even the financial crisis, from 2007-2009, did not change the annual global trend of improvement.

Pedro Conceição, director of the UNDP’s human development report office, said the pandemic had shown internet access as a “new necessity”.

The pandemic was magnifying pre-existing tensions “between people and technology, between people and the planet, between the haves and the have-nots,” he said.

“Even after an epidemic ends or economic growth returns, the impacts of a shock can leave lasting damage. The effects are unequally distributed. The Times May 22

Campsites have a field day with 60% surge in bookings

Campsite owners are looking forward to a record-breaking season when ministers give the green light for domestic tourism.

Cool Camping, a booking platform, said reservations for this summer are up 60 per cent year on year. Last Sunday was the company’s busiest day ever in terms of booking revenue.

The Caravan and Motorhome Club, which runs 2,500 campsites and grounds in the UK, said bookings are up 14 per cent year on year. Campsite operators say bookings are particularly strong for August and September, indicating that Britons are hopeful that lockdown restrictions will be eased to allow holidays.

“The people we are speaking to are still very wary about coming into contact with people and maintaining social distancing. Camping offers exactly that, so it really is going to be the perfect way of holidaying in 2020 when rules are relaxed”, said Jonathan Knight, founder of Cool Camping

Campsites are understood to be considering introducing bookable slots for shower blocks, while some are also restricting the number of bookings to avoid bottlenecks.

Cornwall and Devon are by far the most popular destinations in terms of bookings, Mr Knight said. He said reservations for sites in England “were surging”, while there were very few bookings for Wales and Scotland where stringent lockdown measures remain in place. The Times May 22

Coronavirus: models do their own photoshoots

An entourage of experts is usually on hand to help fashion models look picture perfect for the camera, but in lockdown they have had to become their own stylists, make-up artists, lighting technicians and photographers.

Social distancing rules mean that high-street brands and online fashion retailers have scrapped professional photoshoots and asked models showcase the latest looks at home by posing for selfies.

It has transformed the style of summer collections from Zara, the Spanish retailer, and the fashion website Asos, which now feature images of women straddling staircases and lounging in their living rooms. One Zara model photographed herself in high heels after climbing on top of her kitchen hob, and another woman wearing a striped summer dress chose to perch on a sofa cushion while holding a coffee cup.

Olivia Smith, 27, from Cheshire, who models for Asos, said: “I was trying to shoot bikini videos in the garden while my dad was mowing the lawn. Occasionally my sisters will help me out but that can be more hassle that it’s worth because you have a certain way you want to look. One of my sisters is definitely better than the other at taking my photos. I have to find corners of my house that work or areas of my garden and get experimental with the way I shoot.”

The models are given guidance to follow, which include instructions to “ensure all the of the product is in view” and “shoot in a tidy place”.

Oscar Abdulla, 25, a freelance photographer based in London who has shot for Adidas and Asos, said that lockdown had changed the industry dramatically. “High-end shoots can have 30 people or more on set, but now I’ll go into the studio solo. Some clients are asking to send products to my house to do shoots for their Instagram lifestyle content but are having to ask me if any of my housemates or close friends could model.” The Times May 23