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China: the trade shows must go on



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Good morning from Singapore, where there is at long last at least a glimmer of hope that regional travel in the east Asia region might be possible in the not too distant future, even without a vaccine for Covid-19 yet available.

The reason for this optimism is the recent announcement by authorities in Singapore and Hong Kong that they will soon allow each other’s residents to travel relatively freely between the region’s two leading financial centres. So long as people test negative for coronavirus, they will be able to travel quarantine-free between the south-east Asian city-state and the Chinese special administrative region.

Now imagine that other Chinese cities — say Beijing, Shanghai, Guangzhou and Shenzhen — could be integrated into this scheme. There is a rough template for it already. China has long allowed international travellers to stay visa-free in certain cities for a number of days between transit flights, provided they do not leave city limits. This has made it easy for someone travelling from London to Hong Kong to fly via Beijing and conduct a few days of business in the Chinese capital without ever having to apply for a formal visa.

If Singapore, Hong Kong and some of China’s largest cities could all agree to allow quarantine-free travel, it could be the start of a long-awaited return to normal in the Asia-Pacific region — and help revive events such as the Canton Fair, which is the main subject of today’s post.

Policy watch looks at steps taken by the EU markets regulator to quell some investor concerns about post-Brexit trading while our chart of the day highlights how China has become the dominant force for bilateral lending in sub-Saharan Africa.

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China trade

A virtual Canton Fair

On March 12 China’s premier, Li Keqiang, issued a surprising statement. The country’s largest and longest-running trade fair, held annually in the southern city of Guangzhou since 1957, would hold its spring session as normal.

It seems inconceivable now, given the speed with which the coronavirus pandemic has spread across the world, but at the time holding the Canton Fair did seem like it might be possible. By early March, China had successfully contained the virus, especially in cities and provinces far away from its centre in central Hubei province, and it was not yet clear that major outbreaks would emerge in other parts of the world.

In these circumstances, holding the Canton Fair as scheduled would be an important symbol that the world’s second-largest economy was still open for business. After all, the fair was famous for not missing a session since its establishment in 1957 — surviving traumatic events such as the Great Leap Forward famine of 1959-61 that killed tens of millions of people, the decade-long turmoil of the Cultural Revolution and the Tiananmen Square protests and ensuing massacre in the spring of 1989. Chinese officials did not want to see the fair’s streak broken.

In the end, however, this year the government had to bow to reality. As outbreaks gathered pace in late March in Europe, the US and across the developing world, China closed its borders to foreign travellers — including foreign residents with valid permits to live and work in China.

The Canton Fair’s spring session was postponed from April to June and moved online only. Its autumn session, also convened virtually, concluded on October 24. Guangzhou’s hotels, restaurants and bars had to do without hundreds of thousands of visitors.

So in terms of keeping the fair’s long streak alive, do two online sessions count — or is this cheating?

Mr Li’s government says it was a triumph. Both he and President Xi Jinping “attended” the spring session’s online opening ceremony and “visited” online booths. Some 26,000 exhibitors displayed their wares on the fair’s website to registered buyers from 217 countries and regions.

“The virtual Canton Fair blazed a new path of international development,” its organisers argue. They contend this is just the beginning of a brave new future for the event: “A Canton Fair that never ends will be built with integrated online and offline functions to make new contributions for Chinese and foreign companies to develop broader markets.”

For Guangzhou in particular, the significance of the fair extends far beyond its inaugural session in 1957 and what it said about the city’s relative openness even during the darkest periods of Maoist China.

For Guangzhou, the significance of the fair extends far beyond its inaugural session in 1957
For Guangzhou, the significance of the fair extends far beyond its inaugural session in 1957 © Alamy

China’s largely Beijing-based rulers have waxed and waned in their enthusiasm for foreign trade over the centuries. But no matter whether such commerce was actively encouraged or barely tolerated, Guangzhou has long prided itself on being one of country’s leading trade centres.

The city is dotted with ancient mosques which stand as monuments to Guangzhou’s trading links to the Arab world, which date back at least 1,300 years. And not far from the Canton Fair’s cavernous exhibition halls on the banks of the Pearl river is Shamian Island, where western traders were allowed to establish trading posts in the late 18th century.

With such a proud heritage at stake, letting the fair formally lapse was not an option for the Chinese government — not even during a once-in-a-century pandemic. Having saved face with this year’s two online sessions, Beijing’s hope now is that the fair can resume business as usual in the spring of 2021. If it can, it will be an important sign that life is continuing to return to normal — at least in this part of the world.

The Canton Fair’s official name is the China Import and Export Fair, but it is a misleading one. The event has always been about exports, with a focus on matchmaking domestic manufacturers with foreign buyers. Over time this emphasis became problematic for the Chinese government, especially as US President Donald Trump railed against China’s trade surpluses and sought to slow down its export sector.

So two years ago, at a time of heightened trade tensions with the US, President Xi Jinping’s administration launched the annual China International Import Expo, held every autumn in Shanghai. The idea was to show the world that it need not fear China’s export prowess, for it also has a huge and growing demand for imports.

The CIIE’s third annual session will open next week. But unlike the Canton Fair, it is attempting to pull it off in the real rather than virtual world, with a 20 per cent year-on-year increase in floor space to meet demand from exhibitors. Attendees will be subject to a sophisticated array of health checks and monitoring as organisers hope to keep the event Covid-19 free.

Charted waters

China has emerged as the biggest bilateral lender to Africa over the past two decades, transferring nearly $150bn to governments and state-owned companies. But as FT reporters on the continent note, the pandemic has revealed the fragmented nature of Chinese lending as well as Beijing’s reluctance to fully align with global debt relief plans. China’s share of bilateral debt owed by the world’s poorest countries to members of the G20 has risen from 45 per cent in 2015 to 63 per cent last year, according to the World Bank.

Bar chart of Repayments on bilateral debt due this year ($bn) showing China is the dominant bilateral lender in sub-Saharan Africa

Policy watch

EU investors will still be able to trade dual-listed companies such as IAG, the parent of British Airways
EU investors will still be able to trade dual-listed companies such as IAG, the parent of British Airways © Andy Rain/EPA-EFE/Shutterstock

The EU markets regulator has taken steps to partly assuage investor concerns about trading after Brexit by indicating EU investors will be able to trade sterling-quoted shares of European companies listed in London, Phil Stafford and Jim Brunsden write.

The Paris-based European Securities and Markets Authority on Monday made the policy change because of concerns among businesses and some EU governments that the bloc’s regulations could fragment the share market and cut European companies out of deep pools of capital in London.

Esma said that trading of EU shares on a UK exchange in pounds will be exempt from an EU rule, known as the share trading obligation, which determines which venues investors can use to trade. That means EU investors will still be able to trade dual-listed companies like AstraZeneca, Relx, Tui, British Airways parent IAG and G4S in London as those companies are listed in sterling.

However, many Irish companies, like Ryanair, Kingspan and Bank of Ireland will remain vulnerable as they trade in euros. One industry lobbyist in Brussels said it was “the narrowest of accommodations”, adding that it “does not solve what Ireland needs”.

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Emerging Markets

Narendra Modi’s popularity slips as Covid crisis hammers India




Narendra Modi’s popularity has fallen during India’s deepening Covid crisis, according to an opinion poll, as the country reports more than 400,000 daily infections in a brutal second wave.

The prime minister’s approval rating fell to 65 per cent on May 4, down from 74 per cent at the end of March, according to Morning Consult, the US data company — the lowest level since the agency began tracking Modi’s rating in August 2019.

The Indian leader’s disapproval rating also rose to its highest level since the tracker was launched, climbing to 29 per cent from 20 per cent.

Modi’s approval rating remained high compared with other global leaders, but the country’s health and humanitarian crisis has taken a toll.

The prime minister has a strongman reputation but has been accused of indifference in the face of the Covid-19 disaster as he campaigned in state elections even as the outbreak worsened.

“One of the things that Modi has really been good at is perception management. He’s always been very good at messaging,” said Ronojoy Sen, senior research fellow at the Institute of South Asian Studies in Singapore. “This is the first time I would say that his messaging has been awry.”

India’s death toll from the second wave has reached about 4,000 people per day © AP

Modi’s government has sought to deflect blame for the calamity on to state governments and the public for failing to follow pandemic protocols.

As deaths have risen, Harsh Vardhan, the health minister, has also cited official data to boast that India’s fatality ratio was lower than those of richer countries.

However, in a stinging letter to Modi on Friday, Rahul Gandhi, leader of the opposition Congress party, sharply criticised the government for a “lack of a clear and coherent Covid and vaccination strategy as well as hubris in declaring premature victory”.

The letter called for more decisive action to control the spread of the virus, as well as greater scientific tracking of the virus and its mutations.

“Allowing the uncontrollable spread of this virus in our country will be devastating not only for our people but also for the rest of the world,” Gandhi wrote, adding that India was a fertile ground for the virus to mutate into “a more contagious and a more dangerous form”.

India reported a record 414,188 infections and 3,915 deaths on Thursday. There have been more than 234,083 confirmed deaths from the disease in the country.

However, most experts believed the figures severely undercounted the magnitude of the crisis because of a lack of testing, especially in small towns and rural areas.

“Right now, data is very corrupted,” Gautam Menon, a professor of biology at Ashoka University, told a recent seminar. “It’s good in some states and it’s very bad in other states.”

Many epidemiologists believe India’s latest outbreak is set to peak in the coming weeks and caseloads will gradually fall, partly helped by lockdowns implemented by some state governments.

The country’s vaccination campaign is losing momentum, however, because of an acute shortage of jabs. The Modi government has been accused of failing to adequately plan its inoculation campaign.

India administered 1.6m vaccines on Thursday and the seven-day moving average of daily vaccinations has fallen to 1.4m, down from a peak of 3.6m in mid-April.

Many Indians were incensed to see Modi boasting of the huge sizes of crowds gathered for his recent election rallies in West Bengal state as the country struggled to access life-saving drugs, hospital beds, oxygen and vaccines.

The prime minister’s Bharatiya Janata party lost its bid to seize power from the Trinamool Congress party in Sunday’s election despite Modi’s efforts.

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Emerging Markets

Africa celebrates suspension of Covid vaccine patents




African health officials were on Thursday celebrating what one called a “bold and wonderful” breakthrough after the Biden administration threw its weight behind a temporary suspension of intellectual property rights on Covid-19 vaccines.

African Union officials hope that at least three countries — South Africa, Senegal and Rwanda — will develop the capacity to produce vaccines for the continent, including the mRNA-type vaccines that emerged as an innovative technology against Covid-19.

John Nkengasong, director of the Africa Centres for Disease Control and Prevention, welcomed the US administration’s backing of an IP waiver, a position that is supported by dozens of developing countries led by South Africa and India.

It would, he said, “definitely be a great influence to facilitate the mRNA manufacturing agenda”, adding that there are “very focused discussions” about producing vaccines on the continent.

South Africa has some of the continent’s most advanced vaccine knowhow, including Aspen, a Durban-based company that plans to “finish and fill” — though not make from scratch — 300m doses of Johnson & Johnson’s vaccine this year. The Pasteur Institute in Dakar, Senegal, also has vaccine-producing experience, making small quantities of yellow fever jabs each year.

John Nkengasong, director of the Africa Centres for Disease Control and Prevention, welcomed the Biden administration’s backing of an IP waiver © Zacharias Abubeker/FT

In addition, Paul Kagame, president of Rwanda, suggested Kigali could become a vaccine hub. “It is important for Africa to forge public-private partnerships for vaccine manufacturing on our continent,” he said last month, adding that Africa needed to accelerate a continental approach to medicines regulation. “Vaccine equity cannot be guaranteed by goodwill alone,” he said, adding that it was time for African countries to stop “being sorry for ourselves” and act.

Africa is extremely dependent on India for its vaccine production, a weakness that has been exposed by a temporary Indian government ban on the export of Covid-19 jabs. Less than 1 per cent of Africans have received a single dose of Covid-19 vaccine and new supplies have all but dried up.

Officials warned there was still a long way to go before African manufacturers could start production. “The fact that the US has indicated it is willing to waive IP rights does not mean that it is actually going to happen,” said Ayoade Alakija, co-chair of the Africa Vaccine Delivery Alliance, who anticipated pushback from pharmaceutical companies and perhaps other countries in the EU and elsewhere.

The first step, said Rebecca Enonchong, a Cameroonian technology entrepreneur and board member of the World Health Organisation Foundation, was to “ensure the patent issue was not an issue”. But even then, she said, it would take time to build up the physical and skills capacity necessary to make mRNA vaccines. There is also a global shortage of vaccine inputs, including nucleotides, enzymes and lipids as well as of vials, caps and syringes. “I think it is unlikely that we will be able to ramp up for this pandemic,” Enonchong said.

Kiran Mazumdar-Shaw, chair of Biocon, a Bangalore-based biotech company, said she did not see IP as the biggest obstacle. “Today, everybody is talking about patents, patents and patents. Even if they don’t enforce patents, how many people can produce Moderna vaccines at scale?” she said, referring to one of the mRNA vaccines.

Building manufacturing capacity in the developing world was “the next big issue”, said Fatima Hassan, founder of the Health Justice Initiative, a South African campaigner for access to vaccines. There had been at least 50 applications already to a WHO hub for transferring mRNA technology, she said, which “indicates that there is definitely interest around the world”.

Two decades ago, South Africa led the battle, along with Brazil, against pharmaceutical companies’ defence of patents on HIV medicines. Legal victories finally forced companies to slash prices of antiretroviral drugs for developing countries, but not before millions of people had died of the disease. South African diplomats pressing for the temporary suspension of patents on Covid-19 vaccines said that “passing this waiver makes ethical, epidemiological, and economic sense”.

Additional reporting by Amy Kazmin in New Delhi

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Emerging Markets

A harrowing brush with Covid as India is ravaged




As a foreign correspondent, my job is to tell India’s stories, not be part of them. But when I started feeling feverish while writing an article about Covid-19 vaccine policy last month, I had a gut feeling that the Sars-Cov-2 virus had found me.

I hoped it was exhaustion that I’d sleep off but the next day, still feverish, I was urged to take a Covid test. A leading diagnostic lab chain, which earlier had run an efficient home-testing service, had stopped answering its phones and responding to online requests. But a doctor friend persuaded one of the lab’s phlebotomists to collect my sample. Two days later, the results confirmed I was part of the ferocious coronavirus wave battering India and pushing its healthcare system to breaking point.

Over the following days, my physical symptoms remained mild. But it was still harrowing to be sick from a notoriously unpredictable virus knowing that drugs, hospital beds and oxygen were scarce. I suffered constant anxiety knowing I’d struggle to get medical help if I took a turn for the worse.

I quickly discovered that I’d been so focused on avoiding infection that I had no clue what to do once sick. A friend connected me to a Kolkata-based infectious disease specialist, who felt I was at low risk for severe illness. I’d had the first dose of a Covid vaccine 10 days before my fever started. But the doctor urged me to treat the illness aggressively from the start, given the chaos at hospitals.

He prescribed the antiviral drug, favipiravir, now undergoing clinical trials in the UK as a potential Covid-19 therapy but already approved in India for emergency use. Many of his patients had taken it, he said, and none suffered severely, including people in their 90s.

Normally, I’m reluctant to medicate. I knew favipiravir’s effectiveness as a coronavirus treatment wasn’t yet scientifically validated. But with hospitals turning away ailing patients, the logic of taking an experimental drug made sense. The challenge, I discovered, was to get hold of it.

I called five pharmacies, but all had run out of stock. A friend called six more to no avail. I panicked — the doctor wanted me to start the drug fast and Delhi was hours from the start of a weekend curfew. Then a friend, who’d heard I was Covid-19 positive, called.

“I’m looking for this drug,” I told her. “Any idea where I can get it?” She said she’d check. It turned out that people with foresight had prepared small emergency drug stashes. Her friend had such a stash and was willing to share it.

I was elated to get the pills to start treatment that night. But it wasn’t enough for the prescribed course. Days later I spent hours calling pharmacies in an unsuccessful hunt for more, before finally begging an industry friend to help.

My difficulties pale in comparison with the desperation, anger and grief beyond my sickroom. My Twitter feed was filled with pleas for hospital beds, oxygen cylinders, the antiviral remdesivir, plasma or a place in an intensive care unit. Top hospitals begged on Twitter for refills of dwindling oxygen supplies. Friends and many professional contacts were fighting for their lives. Doctor friends were weeping with impotent rage.

There was much grim news of death. A former Indian ambassador died after hours waiting in a hospital parking lot for admission; inpatients whose oxygen ran out; a top politician’s 34-year-old son, young journalists. Crematoriums struggled with an unprecedented flow of bodies.

I decided I had to tune out of the unfolding crisis, to ensure my physical recovery and to protect my mental health. I stopped checking Twitter. Newspapers piled up, unread.

Once I felt better and tuned back, I saw Narendra Modi’s government had cynically expanded eligibility for vaccination to all over the age of 18, despite an acute shortage of jabs.

And with thousands dying daily, often for want of medical help, the health minister was callously citing dubious official data to claim India’s Covid fatality rate was lower than richer countries — hardly consolation to grief-stricken families.

Today, I’ve recovered from my encounter with the virus. It will take far longer to get over the trauma of watching this calamity engulf the place I call home.

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