China policy and market round-up: Covid-19 cases rise, top Hubei officials sacked, MasterCard gets nod for China entry
In this round-up, the number of novel coronavirus infections increased by 14,840 in a single day after the Hubei province changed its diagnosis methodology, China has put the former mayor of Shanghai in charge of Hubei amid the prolonged outbreak, and regulators have given the green light to MasterCard’s long-awaited entry to the Mainland market.
The World Health Organization (WHO) has officially named the novel coronavirus, which first broke out in China at the end of last year, as Covid-19. It stands for Corona Virus Disease 2019.
Hubei province, the epicentre of Covid-19, reported a shocking 14,840 newly confirmed infections for February 12. This has brought the total number of people infected in the Mainland to 59,804 — including 5,911 cured and 1,367 dead — since the outbreak started, data from the National Health Commission showed.
The new cases in Hubei the previous day had stood at 1,638 — down from 2,097 on February 10 and 2,618 on February 9.
Chinese officials said the sharp rise in new cases came after the criteria used to identify infection cases were expanded to include the results of clinical diagnosis — such as CT scans — in addition to lab testing. Before the change, confirmed cases only referred to those that tested positive using the nucleic acid test.
The new infections in Hubei on February 13, the second day the new diagnosis methodology was adopted, reached 4,823. The latest figures showed that Covid-19 has infected over 63,850 people in the Mainland.
New cases outside Hubei, however, have dropped for 10 consecutive days, from 890 on February 3 to 267 on February 13.
Nationwide new deaths have stayed above three digits over the past two days, with 121 declared dead on February 13 and 254 the day before.
As the epidemic persists, China announced its decision on Thursday to remove the top officials for Hubei province and its capital city, Wuhan.
Ying Yong, the mayor of Shanghai, was named the new provincial party secretary, the de facto highest office, succeeding Jiang Chaoliang. The sitting municipal party secretary of Wuhan, Ma Guoqiang, will be replaced by Wang Zhonglin, who was holding the same position for Jinan city, the capital of Shandong province.
Officials from China and the European Union held a call on Wednesday afternoon. Diplomatic and health officials discussed the latest developments on Covid-19, prevention measures, as well as the diagnosis and treatment of infected patients, according to the National Health Commission.
Zhong Nanshan, a celebrated epidemiologist who made his name during the Sars outbreak in 2003, said in an interview with Reuters earlier this week that the peak of the Covid-19 epidemic should come in mid or late February, and that he hopes the outbreak “may be over” by April.
The New Development Bank (NDB) said it is ready to provide its contribution to China, including emergency financing, to help curb the spread of the novel coronavirus. The multilateral development bank is in the process of consultations with the Chinese government concerning specific action, it said in a Tuesday press release.
According to the NDB, which was founded by Brazil, Russia, India, China and South Africa in 2015, the Chinese government has allocated over Rmb71bn ($10bn) in funds to contain the outbreak.
China is calling for members of the World Trade Organization (WTO) to refrain from overreacting to the Covid-19 outbreak or implementing unnecessary restrictions on trade, according to numerous media reports. China reportedly made the appeal at the end of a WTO committee meeting on Tuesday.
The Hong Kong Monetary Authority (HKMA) held a special teleconference with 10 banks on Tuesday, discussing how the banking industry can extend support to small and medium-sized enterprises (SMEs) that are facing cash flow pressure amid the epidemic.
Eight banks on the HKMA call have already launched measures to support SMEs, with the remaining two banks expected to follow suit shortly. These include delaying repayments or extending loan tenors while reducing fees, providing unsecured loan products and expediting loan approvals, as well as sector-specific measures regarding not only retail and catering but also import and export, as well as transportation.
For retail customers facing personal financial difficulties, banks have introduced or will introduce measures such as principal moratoriums for residential mortgages and fee reductions for credit card borrowing, according to the regulator.
China reported a 3.8% year-on-year increase in fiscal revenues for 2019 to Rmb19.04tr ($2.7tr), and a sharp 8.1% rise in fiscal expenditure to Rmb23.89tr, data from the Ministry of Finance (MoF) showed on Monday.
The government’s tax revenues stood at Rmb15.8bn, climbing only 1% year-on-year. In comparison, the 2018 tax revenues were up 8.3% from the previous year.
The MoF on Tuesday assigned an additional Rmb848bn of local government bonds quota, the second round of ‘early allocation’ for 2020 following Rmb1tr assigned in November last year. These include Rmb290bn quota for special purpose bonds, as well as Rmb558bn of general purpose bond quota. The Rmb1tr from last November were all for special bonds.
The local governments are allowed to repay the general bonds with their fiscal revenues, but special bonds need to be repaid from revenues from specific infrastructure and public welfare projects.
According to the MoF, local governments issued Rmb714.8bn of special bonds in January.
The People’s Bank of China (PBoC) and China Banking and Insurance Regulatory Commission have approved MasterCard to set up a bank card clearing business in the country, through a joint venture with local firm NetsUnion Clearing Corp. The JV has been given a year to complete preparation, before it needs to applying to the PBoC again to begin official operations.
Foreign card companies, including MasterCard’s US peers American Express and Visa, have long waited to enter the Chinese market, which is dominated by UnionPay.
MasterCard’s approval this week came after the US and China signed the phase one trade deal in January. China agreed to accelerate the process of accepting and making decisions on applications from US electronic payment services suppliers.
The Chinese central bank issued its first renminbi bills in Hong Kong this year on Thursday. Its last transaction was conducted on December 20, 2019.
The latest Rmb20bn three months bill was sold with a coupon of 2.55%, and the Rmb10bn one year bill was priced at 2.6%. The tranches saw books of Rmb52.02bn and Rmb31.69bn, respectively.
The US Department of Justice (DoJ) brought new charges against Huawei Technologies Co, accusing the Chinese telecommunications conglomerate and its subsidiaries of racketeering conspiracy and conspiracy to steal trade secrets, according to an update on its website on Thursday.
The company and its subsidiaries stole intellectual property from six US technology companies “in an effort to grow and operate Huawei’s business” which it has done successfully, the DoJ said. The superseding indictment also includes new allegations about the firms’ involvement in business and technology projects in countries subject to sanctions, including Iran and North Korea, added the DoJ.
Chinese media Huanqiu.com published a statement from Huawei on Friday morning, calling the allegations “groundless” and “unfair”.