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March 23, 2020
Trivium China

MONDAY, MARCH 23, 2020

The Tip Sheet

Know China Better.


"The vast majority of the country is now a low-risk area."

- Mi Feng, National Health Commission official

Context: Nearly two months to the day after Wuhan was first locked down, the National Health Commission announced that most localities in China are now considered “low-risk”. New locally transmitted infections have dropped to zero, but the risk of asymptomatic transmissions and cases imported from abroad mean that the crisis is not over yet. More in the Tip Sheet below.

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Driving the Day

1. Local virus transmissions remain near zero

On Sunday, Wuhan reported no new coronavirus cases for the fifth straight day.
And in the country as a whole, on Sunday, there were no new locally transmitted cases.

But…there are increasing numbers of confirmed asymptomatic cases (Caixin).

Some context: Asymptomatic cases are not counted in the official tally.

And imported cases remain a problem (Reuters):

  • “China had 39 new confirmed cases on Sunday, the National Health Commission said, down from 46 a day earlier.”
  • “All of them involved travellers arriving from abroad, many of whom are Chinese students returning home.”
What that means: The government will increase efforts to quarantine everybody arriving to China from abroad.

There is some good news. According to National Health Commission official Mi Feng, speaking on Sunday (
  • “The vast majority of regions within the country are low-risk regions [for the virus].”

Get smart: Beijing feels increasingly confident that the virus is under control. That means that the focus is increasingly on getting the economy up and running again.

Get smarter: We are not out of the woods yet. There are concerns that asymptomatic cases could spread the virus and cause another large-scale outbreak.

Caixin: 独家|每天仍检出多例无症状感染者 援鄂疾控工作队暂缓撤回
Reuters: China sees drop in new coronavirus cases; all new cases imported 国务院联防联控机制3月22日15时在北京召开新闻发布会

Finance & Economics

2. Local government bonds ramp up

Local governments are stepping up to the plate to get bonds out the door:

  • As of March 19, local government special bond issuance totaled RMB 1.02 trillion so far in 2020.
Why that’s important: That’s a whopping 80% of the RMB 1.29 trillion “early approval” bond quota for Q1.

The biggest provincial issuers so far:
  • Guangdong (RMB 124 billion)
  • Shandong (RMB 81 billion)
  • Sichuan (RMB 62 billion)
Three other provincial-level jurisdictions have issued at least RMB 50 billion:
  • Beijing
  • Jiangxi
  • Henan

Some context: 85% of issuance is going to infrastructure spending – up from 25% in Q1 2019.

Get smart: This is accelerated issuance – meaning that it brings forward local government funding. It’s not a massive overall increase for local bond issuance, so don’t read this as stimulus.

Get smarter: The bottleneck for investment is not just on the financing side – there aren’t enough shovel-ready projects to kickstart infrastructure spending.

China Securities Journal: 地方专项债发行破万亿 疏通项目堵点是关键


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Politics & Policy

3. Magical sympathy tour

Tip Sheet readers know that as COVID-19 has been brought under control in China, Beijing has used medical aid donations to burnish its international image.

  • The past several weeks have seen high profile messages of support from China’s top leaders to foreign heads of government.
Now Xi Jinping is doubling down on his public relations blitz.

On Saturday, Xi sent messages of solidarity to:
  • German Chancellor Angela Merkel
  • French President Emmanuel Macron
  • Serbian President Aleksandar Vucic
  • King Felipe VI of Spain
Xi’s comments to Merkel were representative of the tone that China wants to convey (SCMP):
  • “Public health crises are the common challenges facing humankind, and unity and cooperation are its most powerful weapons.”
  • “China is willing to provide help within our capabilities.”
Beijing’s support prompted a particularly strong reaction from Serbia’s Vucic, who, last week, thanked China and put the EU on blast:
  • “European solidarity does not exist…the only country that can help us is China.”

Get smart: While the US and EU may remain broadly skeptical of China’s intentions, for many countries, Chinese aid is a godsend.

Get smarter: China is stepping up to fill a global leadership vacuum.

READ MORE 习近平就西班牙发生新冠肺炎疫情向西班牙国王费利佩六世致慰问电 习近平就德国发生新冠肺炎疫情向德国总理默克尔致慰问电
SCMP: Coronavirus: Xi Jinping calls leaders of France, Spain, Germany and Serbia with offers of support
Washington Post: Europe is closing borders amid coronavirus outbreak. They may be hard to reopen

Politics & Policy

4. Premier Li urges more support for SMEs

On Friday, Premier Li Keqiang inspected government agencies in Beijing to see how efforts to control the coronavirus epidemic and restart the economy are going.

As part of his tour, he spoke to officials in Henan and Guangdong.

He also spoke to two of the biggest companies in those provinces:

  • Foxconn
  • Guangzhou Automobile Group (GAC)
Here’s what they told him (
  • “The companies reported that the SMEs that they work with are facing relatively large difficulties.”
  • “This is hindering them [Foxconn and GAC] from fully resuming production and leading to a lack of components.”
Li’s reaction ( 2):
  • “Premier Li urged related departments to act quickly to facilitate simultaneous work and production resumption among all enterprises, large and small, and allow productive factors to flow freely across various sectors and industries.”
  • “The Premier also required authorities responsible for financial support to put in place detailed policies to truly alleviate the financial strain on those small businesses.”

Get smart: The sad truth is that the central government has urged more support for SMEs for over a year now – and their efforts have been largely ineffective.

READ MORE 李克强考察疫情防控与生活物资保障服务平台、国务院复工复产推进工作机制和宏观政策协调机制 Premier Li presses for upswing of economic development

Politics & Policy

5. Central government steps up employment support

Premier Li Keqiang has said several times in the past two weeks that employment is the government’s top priority.

Li reiterated that message again on Friday, in instructions to a national conference on stabilizing employment (

Some context: The official unemployment rate for February clocked in at 6.2% – the highest on record.

So, it’s unsurprising that, on Friday, the General Office of the State Council released a list of measures to keep employment stable.

Some highlights:

  • SMEs who retain all employees could have all unemployment insurance premiums for 2019 refunded.
  • SMEs who hire fresh graduates will get subsidies.
  • Government investment projects that employ lots of people will be prioritized.
  • Start-ups will see less onerous approval requirements and more fiscal support. 
  • Local governments are encouraged to create a business environment that encourages street vendors and pop-ups.

Get smart: None of these measures are silver bullets. If overall growth remains in the doldrums, unemployment will remain a major problem.

READ MORE 李克强对统筹推进疫情防控和稳就业工作电视电话会议作出重要批示 国务院办公厅关于应对新冠肺炎疫情影响强化稳就业举措的实施意见


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