Connect with us

Emerging Markets

Beijing’s vaccine diplomacy steals a march on Washington



China is promising preferential access to its Covid-19 vaccines to countries across Asia, Africa and Latin America, as Beijing uses inoculations as a new tool to bolster its ties with nations neglected by the US.

Wang Yi, China’s foreign minister, has spearheaded the effort, pledging that Malaysia, Thailand, Cambodia and Laos will be among the “priority” recipients of Chinese vaccines.

China aspires to be a global vaccine supplier with four Chinese products now in phase 3 trials, the final stage intended to ensure safety and effectiveness before approval for public use.

Although US pharmaceutical groups, including Johnson & Johnson and Moderna also have advanced vaccines in development, Washington has shown no interest in helping to distribute them overseas.

“The United States has ceded the field to China in terms of bilateral vaccine deals in south-east Asia,” said Aaron Connelly from the International Institute for Strategic Studies, a think-tank.

As part of China’s bid to eclipse the Trump administration and its America First agenda, Mr Wang said Beijing was ready to inoculate south-east Asia against the pandemic during a four-day trip across the region last week.

He met Indonesian officials to reaffirm an agreement signed in August between Chinese company Sinovac and Biofarma, a state-owned pharmaceutical company in the country. Under the deal, Sinovac will provide at least 40m doses of its CoronaVac vaccine, which is in phase 3 clinic trials, by March 2021, with deliveries due to begin next month.

Indonesia, with about 350,000 infections, has the highest number of cases in south-east Asia. 

“This could give Beijing leverage over Indonesia if Jakarta is too reliant on Chinese vaccines, or could leave Indonesia waiting longer if the Chinese vaccines turn out to have low immunogenicity,” Mr Connelly said.

China is determined that “vaccine diplomacy” succeeds where “mask diplomacy” failed, said Huang Yanzhong from the Council on Foreign Relations, a think-tank.

China pushed back against the idea that it was using “vaccine diplomacy” to bolster influence in a briefing on Tuesday. Zhao Xing, a foreign ministry official, said the goal was “co-operation” to speed up delivery for developing nations, adding: “This is China being a responsible great power.”

An earlier charm offensive by China collapsed after several European countries rejected Chinese-made masks and other protective equipment as substandard. But China “is likely to be the ultimate winner in increasing influence during the global vaccine race”, he said.

China’s promises of preferential access have extended beyond Asia. Beijing has pledged to help most developing countries, including the entire African continent. It has also pledged a $1bn loan to Latin American and Caribbean nations to fund procurement.

Chinese state media this month reported that Brazil’s Sao Paulo state had signed a deal to receive an early shipment of 46m doses of Sinovac’s vaccine, which is in phase 3 trials in the country.

Beijing has also joined the World Health Organization-backed Covax initiative, which aims to provide 2bn vaccinations by the end of next year. The Trump administration has refused to sign up to the programme.

Experts debate whether China will be able to overcome logistical and regulatory hurdles to fulfil its grand promises. China is not alone in offering vaccines to the developing world. Indonesia also secured 100m doses of vaccines from AstraZeneca, the Anglo-Swedish pharmaceutical company, that will be delivered next year.

But strong state support and a lack of pressing demand within China, where the virus’s spread has been almost entirely halted, gives Chinese vaccine makers an advantage, according to analysts.

Being able to win — or at least establish a prominent place — in the global vaccine race would be a coup for China’s scientific development model, which carefully orchestrates collaboration between the state and private sector.

The Chinese government sees this as a “historic moment” to move beyond a string of scandals over faulty vaccines that damaged public trust in the sector and “leverage its economic and technological expertise to contribute to a public good”, said Karen Eggleston from Stanford University.

Chinese officials have estimated that the country’s annual capacity for Covid-19 vaccines could reach 1bn doses by next year.

Three of the vaccines in phase 3 trials — two developed by state-run Sinopharm and one from Sinovac — use an inactivated form of the virus to elicit an immune response. The fourth candidate, developed by Tianjin-based CanSino alongside a research team from the Academy of Military Medical Sciences, uses a weakened common cold virus as a carrier.

China’s vaccine makers’ search for foreign partners has been driven in part by necessity, as the lack of infections in China made phase 3 trials within the country impossible.

China may face a backlash if there are quality concerns over its vaccines, said Jennifer Huang Bouey from the Rand Corporation, a think-tank. “It’s a risk China is willing to take given the huge benefits — not only a better narrative of global health leadership but also to open up new markets for China.”

According to estimates from Essence Securities, a Chinese brokerage, if Chinese vaccine makers captured just 15 per cent of the market in middle and low-income countries that could mean total sales of nearly Rmb19bn ($2.8bn).

Within China, companies have begun to increase production and distribution of vaccines to hundreds of thousands of people as part of a controversial emergency use programme that enables their use even before phase 3 trials are completed. This has given Chinese companies a head start in fulfilling obligations at home and building up manufacturing capacity.

China’s global charm offensive has not been without setbacks. In Bangladesh, Sinovac’s attempt to run phase 3 trials in the country has been thrown into doubt over a funding disagreement after Bangladesh said it was unwilling to foot the bill for vaccine development.

Sayedur Rahman, a member of Bangladesh’s National Research Ethics Committee, said that in return for the phase 3 trial, Sinovac offered 110,000 doses free and a transfer of some technologies, which was considered not enough for a trial of more than 4,000 people costing about $4m to run.

“Why should Bangladesh invest money on [research for a product] which is not yet a confirmed vaccine?” Mr Rahman asked.

Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Emerging Markets

South Korea looks to fintech as household debt balloons to $1.6tn




South Korea Economy updates

After her family business of ferrying drunk people home was hit by closures of bars due to Covid-19 curfews and social distancing, Lee Young-mi* found herself juggling personal debts of about Won30m ($26,000).

The 56-year-old resident of Suncheon in South Korea was already struggling to pay off or refinance four credit cards, but now faces the prospect of those debts rapidly multiplying after her husband was diagnosed with cancer.

“We’ve had little income for more than a year as not many people are out drinking until late into the night,” said Lee. “Now my husband won’t be able to work at all for the next three months after his surgery.”

Lee’s story is playing out across Asia’s fourth-largest economy as self-employed workers, who make up nearly a third of the labour force, have seen their incomes reduced sharply due to coronavirus restrictions. Now, after struggling for years to keep a lid on household debts that hit a record Won1,765tn ($1.6tn) in March, Seoul is looking to fintech companies and peer-to-peer lenders for answers. 

Chart showing increase in South Korea's household debt

Among them is PeopleFund, which touts tech-based investment products backed by machine learning that allow borrowers to refinance their higher-interest loans from banks and credit card companies.

The company has loaned at least $1bn to more than 7,500 customers since it was established in 2015. Its products allow borrowers to switch their debts to fixed-rate, amortised loans at annual interest rates of about 11 per cent, a change from the riskier floating rate, interest-only loans common in South Korea. 

PeopleFund has received about Won96.7bn in financing from brokerage CLSA, and along with Lendit and 8Percent is one of the first among the country’s 250 shadow banks to win a peer-to-peer lending licence. 

“The country’s most serious household debt problem is with unsecured non-bank loans, whose pricing has been too high. We can offer more affordable loans to ordinary people unable to receive bank loans,” Joey Kim, chief executive of PeopleFund, told the Financial Times.

The proliferation of digital lenders and fintechs in South Korea, where higher-risk borrowers are often cut off from bank financing, has been encouraged by the country’s government.

“We hope that P2P lenders will help resolve the dichotomy in the credit market by increasing the access of low-income people to mid-interest loans,” said an official at the Financial Supervisory Service.

South Korea’s household debt situation has become more pressing since the onset of the pandemic, with increases in borrowing for mortgages, to cover stagnating wages and to invest in the booming stock market. South Korean households are among the world’s most heavily indebted, with the average debt equal to 171.5 per cent of annual income.

South Korea’s household debt-to-GDP ratio stood at 103.8 per cent at the end of last year, compared with an average 62.1 per cent of 43 countries surveyed by the Bank for International Settlements.

Much of the new debt has been risky. Unsecured household loans from non-bank financial institutions were Won116.9tn as of March, up 33 per cent from four years ago, according to the Bank of Korea, much of it high interest loans taken out by poorer borrowers.

Getting on top of the problem has taken on national importance. In a rare warning in June, the central bank said the combination of high asset prices and excessive borrowing risked triggering a sell-off in markets and a rapid debt deleveraging.

“If financial imbalances increase further, this could dent our mid-to-long-term economic growth prospects,” BoK governor Lee Ju-yeol said in July.

The country’s economic planners, however, are struggling to contain debt-fuelled asset bubbles without undermining South Korea’s fragile economic recovery.

The government has attempted to address the danger by tightening lending rules. Regulators in July lowered the country’s maximum legal interest rate that private lenders can charge their customers from 24 to 20 per cent.

Economists caution that rising debt levels increase South Korea’s vulnerability to an economic shock. 

They also warn that the asset quality of financial institutions could be hit by a jump in distressed loans when the BoK rolls back monetary easing, expected in the fourth quarter.

“Monetary tightening is needed to curb asset bubbles but this will increase the household debt burden, holding back consumption further,” said Park Chong-hoon, head of research at Standard Chartered in Seoul. “The government is facing a dilemma.”

For Lee Young-mi, however, the 11 per cent rate offered by the PeopleFund is still too high. “I am not sure how to pay back the debt.”

*The name has been changed

Source link

Continue Reading

Emerging Markets

European and Chinese stocks rise after calming words from Beijing




Chinese equities updates

European shares chased gains in China after calls from Beijing for greater co-operation with Washington helped sooth jitters over a regulatory crackdown in the world’s biggest emerging market.

Europe’s Stoxx 600 index rose 0.7 per cent on Monday to hit new all-time highs, while the UK’s FTSE 100 rose 1 per cent led by economically sensitive stocks including banks and energy groups. London-listed lender HSBC gained 1 per cent after it reported second-quarter figures that easily beat analysts’ expectations.

The gains came after the China Securities Regulatory Commission, Beijing’s market regulator, called on Sunday for closer co-operation with Washington, stressing the country’s efforts to improve transparency and predictability after a crackdown on tutoring groups obliterated the market value of the $100bn sector’s biggest companies.

Chinese listings in the US have become a geopolitical flashpoint as Beijing has sought to exert greater control over the country’s powerful tech sector. The US Securities and Exchange Commission said on Friday that Chinese groups that sought to sell shares in America would be subject to stricter disclosures.

Shares in China rebounded after their worst month in almost three years, with China’s CSI 300 benchmark of Shanghai- and Shenzhen-listed blue-chips rose 2.6 per cent on Monday, while Hong Kong’s Hang Seng index added 1.1 per cent. The city’s Hang Seng Tech index, which tracks big internet groups including Tencent and Alibaba, reversed early losses to rise 1 per cent. Futures tracking Wall Street’s benchmark S&P 500 index climbed 0.6 per cent.

Last month, China’s cyber-security regulator announced plans to review all foreign listings by companies with data on more than 1m users after top leaders in Beijing called for an overhaul of how the country regulates initial public offerings in the US. The crackdown came just days after the $4.4bn listing of ride-hailing group Didi Chuxing.

The intensifying scrutiny of how Chinese groups access capital markets has pummelled stocks, delivering the worst month for China tech groups listed in the US since the global financial crisis. The Hang Seng Tech index fell 17 per cent last month.

“While we do not consider it prudent to completely avoid investments in China, further volatility can be expected until the first quarter of 2022, by which time we believe most regulatory changes may already be in place,” analysts at Credit Suisse wrote in a note on Monday.

Meanwhile, data released by China at the weekend showed that factory activity grew at the slowest pace in 15 months in July as demand contracted for the first time in more than a year.

Government bonds were steady with the yield on the benchmark German 10-year Bund, which moves inversely to its price, gaining 0.01 percentage points to minus 0.45. The equivalent US 10-year yield was steady at 1.234 per cent.

Bond yields have been falling in recent weeks, despite higher than expected inflation readings in the US and indications from the US federal Reserve last week that it was moving a step closer to the day when it would start tapering its $120bn in monthly asset purchases.

The euro rose 0.1 per cent against the dollar to $1.1885, while the pound gained 0.1 per cent to purchase $1.3924. Prices for global oil benchmark Brent crude fell 1 per cent to $74.66.

Unhedged — Markets, finance and strong opinion

Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here to get the newsletter sent straight to your inbox every weekday

Source link

Continue Reading

Emerging Markets

Turkey battles to quell wildfires as residents and tourists flee




Turkey updates

Turkey has contained more than 100 wildfires after a series of blazes near its Mediterranean coastline killed six people and forced thousands of residents and foreign tourists to flee holiday resorts, the government said on Sunday.

Winds gusting at 50km per hour, low humidity and temperatures hovering near 40C have made controlling the fires difficult, Bekir Pakdemirli, the forestry minister, said on Twitter and in comments reported in state-run media.

The fires began on July 28, and the simultaneous start of so many conflagrations raised suspicions they may have been deliberately set, Pakdemirli said, although he did not offer evidence of arson.

About 100 Russian nationals were evacuated from the Bodrum peninsula in western Turkey on Saturday and moved to hotels elsewhere, the Russian consulate in the city of Antalya said in a statement, according Sputnik, a Russian state media outlet. Local tourists were also among the evacuees, with some forced to leave by sea as the blaze cut off other escape routes.

Flights from Russia, Turkey’s biggest source of tourists, only resumed in late June after Moscow suspended charter trips amid a record outbreak of Covid-19 cases in Turkey in the spring. Coronavirus-related travel restrictions to Turkey have hammered its tourism sector, which directly and indirectly accounts for about 13 per cent of gross domestic product.

Villagers water trees to stop the wildfires that continue to rage in the forests in Manavgat, Antalya, Turkey © AP

The forestry ministry website showed at least 15 active fires on Sunday. Villagers and forestry workers were among the six people who died, according to Turkish media. Mehmet Oktay, mayor of the resort town of Marmaris, said one volunteer firefighter had died and another 100 people had been injured in a spate of fires that have scorched more than 10,000 hectares near the town.

A half-dozen fires continued to sear areas mostly inaccessible by road, and the number of blazes across Turkey meant not enough firefighting planes were available, he said. “It’s heartbreaking, and I am fighting back tears to concentrate on the emergency at hand. It will take more than a decade to restore this land,” he said.

Thousands of farm animals and untold numbers of wild animals also perished in the fires, which one meteorologist estimated reached 200C.

Wildfires are an annual occurrence in south-west Turkey’s pine forests, and one expert told CNN Turk television that 95 per cent are deliberately or accidentally sparked by people.

Yet the scale of the current conflagration is remarkable, and some are blaming climate change for the disaster. Turkey recorded its highest ever temperature in a south-eastern town last month, and much of the country has been gripped by drought this year, while deadly floods struck north-east Turkey last month.

Several other Mediterranean countries are battling blazes this summer, including Cyprus, Greece, Lebanon and Italy, and scientists have said the extreme weather events across the globe this summer may be the result of global warming.

Source link

Continue Reading