Actual: Coronavirus: What China Told the World
6 April 2020

In 2019, the GDP of China – a global market with a population of 1.4 billion people, amounted to about 14.2 trillion dollars, which allowed the country to take the second line in the world ranking of economies. China has a full range of manufacturing industries, has a great potential for development, a strong economy characterized by high stability and great opportunities to adapt to various scenarios. Although the pandemic has had a strong impact on the hotel business, tourism, catering and others, it has contributed to the rapid growth of industries such as e-Commerce, online medical care, and Express delivery. All these areas show the highest growth today.

China is the most important link in the world's production chains. The market has a huge growth potential, and is also characterized by a steady increase in the standard of living of the population, the growth of consumer ability, which, for example, allows us to fully meet the demand for high-quality agricultural products in the United States and other countries of the world.

shutterstock_1626627478.jpgToday, we can predict that due to the current situation, the maximum losses may be incurred by the world commodity markets, which have a large share of consumption in China and South-East Asian countries. China is the second largest consumer of oil, so, according to the latest estimates of BP, produced in 2018, its share in world demand is 13.5%.

However, according to statistics from open sources, in February 2020, China increased its sea oil imports in annual terms by 5.8% (35.8 million tons), which exceeded the January figure by 3.3%. Vedomosti newspaper comments on this fact: in January, more than 80% of oil shipments (33.8 million) were to tankers, sent to China before 2020, and in February, the share of such deliveries was 20% (7.3 million tons), so to correctly assess the impact of the virus situation, it is better to take into account the volume of oil transshipment to tankers sent to Chinese ports, and not the actual import of oil.

With this approach to calculating Chinese imports, the picture changes: in February, deliveries decreased by 12.6% (31 million tons), deliveries of liquefied natural gas decreased in February by 18.3% (3.62 million tons), coal deliveries fell by 7.4% (16.8 million tons), while both the results of 2019 and the results of January 2020 show growth. Prices of copper, Nickel, and aluminum for metals used in industry fell by 7% on average after the outbreak of the epidemic, which, according to the agency Moody's, is a characteristic indicator of the decline in the global economy.

Since January 23, the Chinese stock market has been closed for the new year holiday, which was extended due to the virus. After the opening on February 3, the exchange rate of the yuan declined and the market fell by almost 8%. It should be emphasized that Chinese sites are almost inaccessible to foreign investors.

Bonds of developed countries, according to the agency BBC, rose in price as investors began to buy up reliable assets and get rid of risky ones, which led to an increase in the cost of borrowing and debt service costs for governments and companies in emerging markets. Also, large-scale capital withdrawal, in turn, is accompanied by devaluation, rising import prices and reduced investment, which leads to a slowdown in the growth of developing countries' economies.

Chinese Ambassador to Russia Zhang Hanhui believes that the impact of the coronavirus on the economy of his country will be short-term, and for some industries, on the contrary, will be a source of explosive growth. According to him, "it is necessary to turn pressure into a driving force, the crisis into opportunities, consistently restore the production regime, increase the dynamics of policy regulation, in order to fully unlock the enormous potential and energy of China's development."

Relations between Russia and China, in his opinion, have shown their stability and reliability in the most difficult period for China at the beginning of the epidemic. Russia immediately sent a military plane with medical equipment and humanitarian aid, and leading Russian media have repeatedly published articles and reports expressing support for the PRC. According to the Chinese customs, the trade turnover between Russia and China in the first two months of 2020 increased by 5.6% compared to the same period in 2019, amounting to 17.1 billion dollars.

RBC daily cites data of the Bank "Russian standard" on the dynamics of Chinese transactions: in February, the number of payments through Alipay (only for non-residents) fell by 84% to last year's period, the payment amount for the same period fell by 82%, - "in January the number of payments decreased by 31.2%; the number and volume of transactions in the Chinese payment system Union Pay (foreign cards) decreased by 75% and 74% yoy, respectively, the number of payments via WeChat Pay in February 2020 January 2020 fell by 73% and the amount of payments by 72%". The banks do not disclose the physical volume of Chinese spending, but they say that the decrease in payments was insignificant.

Russia closed the border for Chinese citizens starting February 20. The flow of tourists from China was 75% of all tourists, the main season was late spring to early autumn. According to the Association of Tour Operators, 1.5 million tourists from China entered the Russian Federation in 2019, and the flow was expected to grow by 10% in 2020. According to preliminary estimates for February – March, tour operators will lose 2.8 billion rubles. if the situation does not change in the summer, the losses will exceed more than 30 billion rubles. However, after restrictions on the entry of tourists from China are lifted, the country will remain the largest "supplier" of Russian and world tourism.

At the same time, the decrease in transaction volumes is observed in the five popular segments of the consumer market, where a significant number of purchases are made by tourists: fast food, supermarkets, restaurants, hotels and boutiques, said Inna Yemelyanova, Director of the Bank's Acquiring Department.

Our analysts spoke with representatives of Russian businesses working in China. They shared interesting observations about the unspoken goals and tasks that China has managed to solve during the fight against coronavirus.

To date, the source of the virus in China remains uncertain. Age-related statistics of mortality from coronavirus, according to open sources, show that the greatest risk of death is the elderly:

  • infant mortality – 0%
  • children under 3 years of age – parts of percentages
  • up to 20 years – less than 1%
  • up to 40 years – 1.5%
  • 40 - 60 years – 2-3%
  • 60 - 70 years – 3.5-5%
  • 75 - 80 years – 7-8%
  • 80 and higher – 15%

What kind of government programs, previously impossible, has China implemented by "taking advantage" of the epidemic:

  • They have demonstrated to the whole world what China can do: put 1.5 billion people in full quarantine, build a mega hospital 1 in a week, put masks on all residents.
  • They have worked out a mechanism for mass and abrupt blocking of the entire country.
  • They have conducted a census of all foreigners.
  • Illegal teachers and people of similar professions were deported from the country. At the same time, foreigners left the country for economic reasons.
  • They have recalculated the population.
  • Due to the refusal of banks and food outlets to accept cash, there was a greater shift to using digital money for payment via the Chinese payment systems WeChat pay and Alipay.
  • After the shares of the leading Chinese companies, which were mostly owned by European and American financial corporations, fell significantly, within a few minutes at the direction of the party, these shares were bought simultaneously on all the world's leading exchanges at the direction of the party. Thus, almost all profits from these enterprises will now remain in China.
  • Weak, small businesses went bankrupt.
  • They have prohibiting the consumption of wild animals.
  • They have prepared for biological warfare in real mode, conducted military super-training. Demonstrated to the world how much all countries need China: thousands of factories and companies abroad have suspended their work, as there were interruptions in supplies from China.
  • The police and response services have massively introduced the use of drones.
  • The creation of mass thermal imaging systems with automatic calculation of specified anomalies has been worked out: the algorithms for working with video cameras have been upgraded due to people wearing masks, and the human gait is now taken into account in the recognition of identity recognition.
  • Systems for automatic delivery of goods, as well as remote disinfection, are being created massively and quickly.
  • They worked out the system of the so-called "electronic concentration camp": they created a system for easily calculating all the social connections of the desired individual - who contacts them, who rode in the car with them, where they went, who they met. Under a plausible pretext, a structure for calculating social communications was created, which was tested by citizens themselves when they wrote and asked questions in the app about their health: in which car they were traveling, who they met, and whether there were any infected people among them.

As a result, the Chinese formed a "sediment" about the fact that the virus was "planted" from abroad. Before that, even trade wars could not change the positive attitude of Chinese citizens to the United States. As a result, the other day there was an emotional discussion that the virus is artificial, and someone should answer for it. In light of the events that are taking place, the Chinese people have rallied, and their faith in the party and the country has been strengthened.

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