Need To Know: April 19
Building Backlash Against China Over Covid-19
Usually, heated political rhetoric is just hot air. On this issue, we think not. It will be the most powerful force shaping our world for the near future.
Wuhan Institute of Virology: inside the lab raising questions
Senior American intelligence officials now say they suspect the virus did not start in a Wuhan wet market, as the Communist Party says, but escaped from a Chinese government lab in the city. Read more here.
Meantime Sen. Tom Cotton (R-AK) and Rep. Dan Crenshaw (R-TX) introduced a bill on that would allow Americans to sue China in federal court for “death, injury, and economic harm caused by the Wuhan Virus.”
In the American system, the bill would have to pass in both the House and the Senate before being signed by the President.
We note this story for two reasons:
1) As we said before, politicians will shift blame in any way they can. “Opaque” China is a perfect and perhaps very worthy mark. In the current climate, a vote against this bill would very hard for most American politicians to explain. That said, partisan rancor is at an all-time high in the U.S., and there is a powerful China lobby in Congress.
2) Part of that China lobby are Bloomberg and the Washington Post, two media outlets with deep commercial ties to China typical of the American media. Both argued vehemently China could not and would not be sued over the virus because of American law. We noted American law had already been changed to allow families of victims of 9/11 to sue Saudi Arabia. The Cotton-Crenshaw bill is modeled on that legislation.
One of the reasons we have launched this venture is because we consider the largest American media organizations to be not only facile, but compromised.
Bloomberg was in the news again this week for killing an investigation into the wealth of Communist Party elites in China. The company successfully silenced the reporters involved. And it sought to keep the spouse of one of the reporters quiet, too.
Bloomberg loses millions on its media operation. It’s a loss-leader for its lucrative financial information terminals, for which the fastest growing market by far is China.
The money losing Washington Post is owned by Jeff Bezos whose Amazon.com gets most of the products it sells in China.
The Washington Post also takes millions every year to run an insert called ChinaWatch, which is propaganda from the Ministry of Information in Beijing.
TV networks ABC, CBS, and NBC are all owned by companies with multi-billion dollar movie studios whose profitably depends on sales of movie tickets in China. Each has altered scripts to please Beijing.
Consider that when you read everything they report.
More Grim News on China’s Economy
China’s economy recorded the first contraction in decades in the first quarter as Covid-19 shut down large parts of the world’s second-largest economy.
Unprecedented fall
Gross domestic product shrank 6.8% in the first quarter from a year earlier, missing the consensus forecast of a 6% drop and logging the worst performance since at least 1992 when official releases of quarterly GDP started. Factory output fell 1.1% in March, retail sales slid 15.8% and investment decreased 16.1% in the first three months of the year.
As official data from Beijing is dubious, we also note this study which may indicate the decline is worse.
A Peking University survey shows China’s job market has severely weakened, with the number of new positions offered shrinking by 27 percent in the first quarter.
New jobs are vital for China’s stability, and a key reason Beijing sets an annual gross domestic product growth target to ensure the economy produces enough to prevent social unrest.
The study released this week showed companies with foreign investment, including joint ventures, were particularly aggressive in cutting new hiring, with job posts tumbling more than 30 per cent.
Export-oriented manufacturers, particularly those shipping electronic equipment, garments and apparel, also pulled back on recruitment. Between February 10 and the end of March, job ads in the export sector plummeted 26 per cent.
Recruitment ads in China’s entertainment and services sector fell by more than 40 percent from a year earlier, followed by similar declines in education, sports, information technology and finance.
Small businesses are China’s biggest job creators, and the study also showed fewer were hiring in the first quarter. An earlier study from Tsinghua University said Chinese small businesses saw their income plunge nearly 70 per cent in March, with firms in the hospitality and education sectors struggling the most.
Before the coronavirus outbreak, analysts had predicted Beijing would set a 6 per cent growth target for 2020, leading to about 11 million jobs.
But as the global economy hurtles towards its steepest downturn in nearly 100 years, experts expect Beijing will downscale those goals or dropped them entirely.
Moon Shot
South Korea’s left-leaning ruling party won a landslide victory in Wednesday’s general election.
Few observers would have bet on such a result last year. With the economy weak, and North-South relations in a deep freeze, President Moon Jae-in was expected to become a lame duck. Facing a hostile legislature, he would have had little control over the national political agenda.
What changed the dynamic? Covid-19.
While the real credit should probably go to a well prepared civil service, the Moon government acted with alacrity and demonstrated competence absent in China, Italy, Spain, and the United States. In fact, Seoul not only tested widely but exported test kits to other nations.
Moon’s ruling Democratic Party won a majority, picking up forty-three seats to collect 163 out of 300. That is the most ever won by a single party. Combined with parliamentary allies, it controls 180 seats.
In contrast, the conservative United Future Party had its worst legislative result since 1960. The UFP and its smaller ally will only have 103 seats, barely a third. The rest will be held by independents.
Unusual for Korean presidents, whose popularity tends to precipitously decline as their terms proceed, Moon will be in a stronger political position during the last half of his presidency. He is most likely to move decisively on domestic policy, which means to the left on economics.
This agenda likely will include increased social spending, additional employment regulation, and further restrictions on the chaebol, or family-owned industrial conglomerates. The latter could dramatically upend traditional power structures.
Where is Kim?
A minor celebration of a major holiday in Pyongyang has raised more questions about how pervasive Covid-19 is in North Korea.
Official Photo
April 15 marks Kim Il-sung’s birthday, the Kim who founded the Democratic People's Republic and grandfather of current ruler Kim Jong-un. It’s a day that normally includes an immense military parade and synchronized public performances involving tens of thousands.
But the Korean Central News Agency said only that a group of senior government, party and military officials paid tribute at the Kumsusan Palace. There was no mention in North Korean state media of Kim Jong Un visiting the mausoleum where the bodies of his grandfather and father, Kim Jong-il, are laid.
Some North Korean observers theorized that Kim may have skipped it over concerns about COVID-19. Kim has paid respects at the mausoleum during the holiday since inheriting power in 2011. State media typically reports on his visit the same day or following morning.
North Korea has officially denied it has any Covid-19 cases. Though it did ask UNICEF and Doctors Without Borders for gloves, masks, goggles and hand hygiene products.
In late March, the Japanese daily Yomiuri Shimbun reported that more than 100 North Korean soldiers who were stationed at the border with China died from the virus. The South Korean newspaper Chosun Ilbo also claimed that Kim was spending "considerable time" away from the capital of Pyongyang due to the virus.