China’s economy won’t save you

OMICRON is going precisely nowhere. Sinocism:

Shanghai says it has stopped community spread of Covid – Caixin

Shanghai announced on Tuesday that it had achieved the goal of no community spread in all of its 16 districts, a key milestone in its more than two-month battle against Covid that could embolden authorities to further ease restrictions. .

The city reached the milestone three days ahead of Friday’s goal. That means all of the city’s new cases in the past three days have been found among those in central quarantine or home confinement.

Shanghai crackdown on COVID-19 epidemic prevention and control rumors begins to take effect – Global Times

Shanghai Cyberspace Administration said in a statement on its official WeChat account on Tuesday that the city has been hit by a series of rumors since the outbreak. The public security services took mandatory criminal action against 25 rumor mongers and imposed administrative sanctions on 48 others.


The newspaper reports that several districts in Shanghai have completed all landscaping and spring flower planting work. The city will look great when it fully reopens, if all that landscaping would also be nice as a backdrop for a senior official visiting to celebrate Shanghai’s ‘victory’

Beijing seafood market temporarily closes due to coronavirus – Global Times

“As one of the major seafood trading venues in Beijing, the closure of Jingshen Seafood Market will affect the operation of the local seafood market,” said Fan Xubing, Chairman of Beijing. Seabridge Marketing, a cold chain food importer, to the Global Times. tuesday.

The market did not give an exact reason for the closure, but Fan said it could be linked to cases of Covid-19 caused by imported seafood found in Tianjin municipality, about 130 kilometers from Beijing.

Beijing requires traders in wholesale agricultural markets to take daily COVID-19 tests – Global Times

This follows recent cluster infections at a market in Yuegezhuang where a total of 50 cases were reported on Monday afternoon.

According to the guidelines, people entering wholesale agricultural markets must present a negative test result taken within 24 hours, except for out-of-town freight drivers, who must present negative test results within 48 hours. hours to enter markets but must receive antigen tests as soon as they enter and cannot exit trucks until test results are known.

Beijing’s COVID control and prevention still intense – China Daily

Beijing reported four clusters involving a market, a subway renovation project, a bus station and a branch of a logistics company, according to the Beijing Center for Disease Prevention and Control. The clusters had produced 140 cases by Monday afternoon.

Faced with this complicated situation, especially the cluster involving the bus station, which led to six confirmed cases, the city’s transport authority decided to strengthen control measures in the city’s traffic system.

“Starting Tuesday, passengers must show their green health codes before boarding buses and entering subway stations around and near locked and controlled areas,” said Rong Jun, a spokesperson for the city’s transportation commission.

Residents and guards suffer on Beijing’s zero Covid frontline | Financial Times $$

As the number of people in isolation increases, so does the demand for guards. In Guanghuali, a guard worked until recently as a restaurant chef. Another was a young student eager to earn money while his vocational school was closed. They receive 300 Rmb ($44) a day for their 12-hour shifts and sleep in tents set up on the asphalt.

“Almost anyone will do, they just have to be able to endure some suffering,” said Li Fei, a recruiter who has sent dozens of guards to quarantine sites around Beijing for the city government. . “There are a lot of people out of work right now,” Li said. “If they tell us they need 100 people, we can find them within hours.”

Beijing retail and industry upended by COVID restrictions | Reuters

Retail sales in the city of nearly 22 million people, a key indicator of consumption, fell 16.05% in April from a year earlier, according to Reuters calculations based on data from January to April published by the city’s statistics bureau on Tuesday, surpassing the nation’s 11.1. % contraction.

Disturbing developments in Tianjin and Sichuan:

China Covid: Shanghai hits three-day easing target with no community cases – Bloomberg

Meanwhile, in the northern port city of Tianjin, a new outbreak has emerged, likely triggered by an infection of a worker at a cold store, state broadcaster CCTV reported, citing authorities. local sanitary facilities. The city of nearly 14 million has detected 28 infections during a mass testing campaign, after an earlier outbreak in January caused disruption for global automaker Toyota Motor Corp. and Volkswagen AG.

Over 500 infections in a week: Small county in southwest China’s Sichuan grapples with Omicron surge – Global Times

Linshui County, under the city of Guang’an, about 90 kilometers from neighboring Chongqing, has recently come into the public eye as concerns have intensified over how such a small county will cope with a highly Omicron contagious.

The county is now into day two of mass nucleic acid testing with some 495,000 samples already collected. Another round will take place on Wednesday.

Since May 9, Guang’an has reported a tally of 588 infections, mostly from Linshui County. On Monday alone, Guang’an recorded 15 confirmed cases and 72 asymptomatic cases.

China detects new Omicron sub-variant believed to be more infectious

The patient, a 27-year-old Chinese man who had been vaccinated, arrived in the southern province of Guangdong on flight KQ880 from Kenya’s capital Nairobi, according to a report released Monday by the China Center for Disease Control and Prevention. diseases (Chinese CDC).

The lockdowns may swing from city to city, but until they deploy mRNA, they won’t end.

Meanwhile, the real estate slump is metastasizing into classic debt deflation with Chinese characteristics. Counterparty risk in defaulting developers means no one wants to buy a new property. This of course means that no recovery is possible for the developers. Rinse and repeat:

The two headwinds combined are obstructing the transmission of fiscal and monetary easing with no end in sight.

Tax revenues are crushed by the recession which inhibits spending. Goldman:

Budgeted tax revenue growth dipped in April compared to March, mainly due to large-scale VAT refunds and tightened Covid restrictions. Fiscal spending growth also fell, albeit to a lesser extent, indicating a tug of war between Covid restrictions and anticipated policy stimulus. The year-on-year contraction in government revenue from the real estate sector deepened in April compared with March, weighed by falling revenue from land sales and property-related tax revenue. Our fiscal deficit metrics widened significantly in April compared to March.

Budget expenditure growth also fell to -2.0% year-on-year in April from +10.4% in March, although less sharply than budget revenue. In detail, the decline in budget spending growth in April was mainly due to lower spending on social security and employment, energy saving and environmental protection, and agriculture and water conservation. Based on our estimates, the year-on-year growth of budgetary expenditure related to infrastructure decreased slightly to +2.4% in April from +8.5% in March14.

As for government property-related revenue, off-budget, land sales revenue growth collapsed to -37.8% year-on-year in April from -22.9% in March. At the same time, budgetary revenue from property taxes2 contracted by 22.0% YoY in April (compared to a gain of 10.6% YoY in March). Combining these two elements, we estimate that government revenue growth coming directly from the real estate sector fell to -32.9% year-on-year in April from -14.0% in March, suggesting that the real estate sector is not is not yet off the hook amid prolonged Covid restrictions, despite increasingly loosening local housing policies.

Same with monetary policy with credit impulse still falling and activity to follow:

Ipso facto, CNY has not finished falling. The excellent Ting Lu at Nomura:

The PBoC made net currency purchases of -$2.7 billion in April, a sharp reversal from March’s $3.7 billion and turned negative for the first time since August 2021. In other In other words, the PBoC’s net withdrew 17.6 billion RMB from the banking system in April. through foreign exchange after making a net injection of RMB 23.2 billion in March.

China’s interbank system has been teeming with liquidity in recent weeks, with the money market rate, DR007, averaging around 1.78% since early April. This rate is well below the PBoC’s short-term policy rate – the 7-day OMO reverse repo rate – of 2.1% and allows the PBoC to sell some foreign exchange positions to prevent the RMB to depreciate too quickly. USD/CNY fell from 6.31 on March 1 to 6.59 on April 29 and then to 6.80 on May 16.

On April 25, the PBoC cut the reserve requirement ratio (RRR) for foreign currency deposits by 1pp to signal its intention to prevent a rapid depreciation of the yuan. We expect the PBoC to reduce RRRon FX deposits by another 1pp to 7.0% before the end of 2022.

Given the still-strict Covid lockdowns, deteriorating economic outlook and falling exports, which have been the main driver of economic growth over the past two years, we expect the PBoC to sell currency , or at least refrain from buying currencies, over the next few months. .

The PBOC is not trying to prevent the fall of the CNY. He is terrified that they will become unruly in the face of capital outflows and significantly tighten domestic credit.

The Chinese economy will not save anyone. This is the problem, not the solution, of Fed tightening.

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