Credit Suisse CEO says bank can get by with fewer staff post-crisis

ZURICH • Credit Suisse expects to get by with fewer staff in the coming years as automation kicks off, chief executive Thomas Gottstein told Swiss newspaper NZZ, and as the bank positions itself towards more digital interactions and remote working in the post-Covid-19 world.

“Medium term, we will certainly be able to get by with fewer staff – primarily, as we continue to automate business,” Mr Gottstein said in the interview, published last Saturday.

“Many processes can still be streamlined. That is one of my priorities. But we also want to grow, especially in our business with very wealthy clients and in our Asian business.”

Mr Gottstein, the former head of Credit Suisse’s Swiss business, who became CEO in February, does not expect Credit Suisse to post a loss this year, even as he expects higher credit losses for the bank’s Swiss and international business in the next six to 12 months than the bank has seen over the past five years due to the global fallout from the coronavirus pandemic.

“I’m convinced we will absorb (these losses) and are correctly positioned from a strategic standpoint,” he said, noting the bank’s return on tangible equity in the first quarter had exceeded its full-year target.

Mr Gottstein expects employees to spend 10 to 20 per cent of their time working from home in the future, he told the newspaper, leading to savings on office space.

The bank will also benefit from a reduction in travel as videoconferencing takes off, he added, and in the future will operate fewer branches, as online banking receives a lasting boost following coronavirus lockdowns.

“As universal banks, we can learn a great deal from (digital providers such as Revolut and N26), especially when it comes to offering customers services via digital channels in the simplest, quickest and most convenient way possible,” Mr Gottstein said.

“In the coming months, we will respond to these new competitors with various offerings.”

Under Mr Gottstein’s predecessor Tidjane Thiam, Switzerland’s second-biggest bank had repositioned itself to focus on wealth management while whittling down its investment bank.

Mr Gottstein now sees “optimisation potential” within Credit Suisse’s investment banking and capital markets division, which has posted consecutive losses over recent quarters, but maintained the necessity of keeping the business.


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How to help heartland businesses survive Covid-19 crisis: 5 recommendations from Merchants association


FMAS recommends reducing Phase One to two weeks if community infection numbers remain low, so that businesses can reopen. The Government said Phase One is expected to last for at least four weeks. The association also proposes that food and beverage joints be allowed to have dine-in customers at 50 per cent capacity.


It suggests the Government give $500 vouchers to be distributed to households to spend at neighbourhood precincts, town centres and hawker centres.


It calls on banks to speed up loan processing where possible, so businesses can get the funds to tide over this period.


FMAS would like all town councils to waive the fees for outdoor display areas, outdoor refreshment areas and overhead signage for April to June, in addition to a 50 per cent rebate for the rest of the year.


It also requests an additional extension of support measures such as the property tax and commercial rental rebates, Jobs Support Scheme and foreign workers levy wavier since the reopening of businesses has been delayed.

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Program to clean up inactive Saskatchewan oil and gas sites to create 2,100 jobs

The Saskatchewan government is launching its Accelerated Site Closure Program (ASCP) to help people get back to work amid the coronavirus pandemic.

It’s a reclamation program that deals with abandoned, inactive oil and gas wells and facilities.

Through the federal COVID-19 Economic Response Plan, the ASCP will access up to $400 million over the next two years.

It’s being overseen by the Ministry of Energy and Resources and delivered in partnership with the Saskatchewan Research Council (SRC).

The province says the program will deal with 8,000 inactive wells and facilities, creating 2,100 full-time jobs.

“We have worked hard to develop a common sense, administratively simple program that creates much-needed jobs in the struggling oil and gas sector,” Energy and Resources Minister Bronwyn Eyre said.

“The ASCP will accelerate the retirement of wells and facilities, which have reached the end of their life cycle, and complete a substantial amount of environmentally important work in a short period of time. For that, we would like to acknowledge the support of the federal government.”

Questions about COVID-19? Here are some things you need to know:

Symptoms can include fever, cough and difficulty breathing — very similar to a cold or flu. Some people can develop a more severe illness. People most at risk of this include older adults and people with severe chronic medical conditions like heart, lung or kidney disease. If you develop symptoms, contact public health authorities.

To prevent the virus from spreading, experts recommend frequent handwashing and coughing into your sleeve. They also recommend minimizing contact with others, staying home as much as possible and maintaining a distance of two metres from other people if you go out.

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Analysis & Comment

Coronavirus: Two migrant workers taught me human values

I realised recently that I’ve never had a real conversation with a migrant worker, not one where we talk to each other as equals.

This came as a rude surprise, since I’ve always thought of myself as rather enlightened when it comes to such matters. After all, back in 2008 when I lived in Serangoon Gardens, I had refused to join my neighbours in signing a “not in my backyard” (Nimby) petition against the construction of a foreign workers’ dormitory in our estate. I had asked readers then to consider how they would feel if they or their child were treated likewise in another country.

But my views on and behaviour towards the migrant workers living in our midst have shifted little in the last 12 years. Fortunately, some of my fellow Singaporeans have moved faster and further towards greater solidarity; and it is thanks to the Welcome In My Backyard (Wimby) team that I got to be part of a discussion with two migrant workers as panel speakers.

For the first time, I heard for myself – via Zoom – a migrant worker speak about his encounters with some Singaporeans who made him feel like an alien.

“I really don’t want to highlight all these things… if you go on the MRT or somewhere else, some locals really react differently,” said Mr Ripon Chowdhury, who is in his early 30s. He has been here since 2010 and works in quality control at a shipyard.

“So if suddenly, we shift to an HDB estate,” the activist and blogger added, “they may think that these people are coming from a different planet. I just want them to welcome us as a friend, as a neighbour, as they treat others, and not feel that we are people coming from dorms, dirty places.”

The Wimby campaign was launched last month by a group of volunteers to encourage Singaporeans to welcome migrant workers relocated from dormitories to Housing Board estates as part of efforts to curtail the spread of the coronavirus.

Wimby’s Backyard Conversation, held on May 2, featured Mr Chowdhury and his Bangladeshi compatriot Islam Rockybul as panellists.

Mr Rockybul is chatty, smiles a lot and is a safety coordinator at a construction site in Fernvale.

“Every day, I receive a call from my home but once, one of my Singaporean friends asked me: ‘Rocky how are you?’ ” he said.

“You don’t know how I feel at that time, that someone in Singapore cares about me and is really asking, ‘Rocky how are you?’ It made my energy level very high.”

At which point, he was asked by forum moderator and Wimby campaign co-leader Nicholas Oh: “So how are you feeling now, Rocky?”

To which he replied: “Right now, I can express and even share on behalf of our migrant community, it feels really great.”

Referring to Mr Oh, his fellow moderator Jennifer Lim Wei Zhen of Wimby and panellist Seema Punwani of non-profit organisation (NPO) Transient Workers Count Too, Mr Rockybul added: “I don’t know Nick, I don’t know Jennifer. I don’t know Seema. We are from different countries, but for now, I feel we are like a family.”


So what did I learn from Wimby’s Backyard Conversation?

I learnt that I can enlarge my heart.

To do that, I need to keep working at becoming more generous and respectful in how I treat migrant workers.

Singaporeans can make the first move to reach out to migrant workers, said panellists Goh Wei Leong of HealthServe and Ruchi Trivedi of ItsRainingRaincoats, both non-profit organisations.

On migrant workers moving to stay in HDB estates, Dr Goh said: “Both sides are feeling strange. So I think we should just make the first move, be generous, start the conversation and I think the more conversations and friendships are formed, the better it is for all of us.”

That invitation gave me pause, for a handful of migrant workers live next door to my parents. We’ve passed them food, especially when we have more than we can finish, but never did it occur to me to invite them over for a drink or a meal. Perhaps it will be time to, when the circuit breaker is lifted and it’s safe for us to socialise once more.

As human beings, we are all social creatures and long to be welcomed, accepted and cared for.

Too often in Singapore, the discussion about how best to house migrant workers is couched in terms of their utility and the associated costs of their labour, not their humanity. Yet, surely the latter comes first.

“Where, after all, do universal human rights begin?” asked Mrs Eleanor Roosevelt, who as first chairman of the United Nations Commission for Human Rights oversaw the drafting of the Universal Declaration of Human Rights, adopted by the UN General Assembly in 1948.

“In small places, close to home,” was her reply, “so close and so small that they cannot be seen on any maps of the world.

“Yet they are the world of the individual person; the neighbourhood he lives in; the school or college he attends; the factory, farm or office where he works. Such are the places where every man, woman, and child seeks equal justice, equal opportunity, equal dignity without discrimination.

“Unless these rights have meaning there, they have little meaning anywhere. Without concerted citizen action to uphold them close to home, we shall look in vain for progress in the larger world.”


This pandemic has shone a harsh spotlight on the living conditions of migrant workers here.

We need to face reality, do an honest review and commit ourselves to doing better by these workers.

Singapore’s leaders need to show the way, not hide behind the worst instincts of those who prefer to keep things as they are for their own benefit.

“Leadership means influencing the community to face its problems,” writes leadership professor Ronald A. Heifetz, whose course on adaptive leadership at Harvard University was one source of inspiration when Deputy Prime Minister Heng Swee Keat launched Our Singapore Conversation.

“Progress on problems is the measure of leadership,” Prof Heifetz writes in his book Leadership Without Easy Answers. “Leaders mobilise people to face problems, and communities make progress on problems because leaders challenge and help them do so. If something goes wrong, the fault lies with both leaders and the community.”

And if things go right, both leaders and the community deserve credit for meeting the challenge together.

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World News

Halifax’s Mount Saint Vincent University shifting to online learning for fall 2020

Mount Saint Vincent University announced Thursday that it will shift to online course delivery for the fall 2020 semester due to COVID-19.

“Given anticipated need for continued physical distancing, and based on an assessment of our space relative to that need, it was felt that this was the best way forward,” said Gillian Batten, spokesperson for MSVU, to global news in an e-mail.

“Making the decision now provides the time needed to prepare for a successful fall. Fortunately, MSVU’s long history in distance education means we have a solid foundation from which to build.”

Batten said that through a new personalized advising program, “every new and returning MSVU student will be individually contacted this summer toward planning for their success this fall.”

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Seattle to shut 20 miles of streets to most vehicles amid coronavirus pandemic

Almost 20 miles (32 kilometres) of Seattle streets will permanently close to most vehicles by the end of May, Mayor Jenny Durkan said Thursday.

The streets had been closed temporarily to provide more space for people to walk and bike at a safe distance during the coronavirus pandemic, The Seattle Times reported.

Now the closures will remain even after Gov. Jay Inslee’s stay-at-home order is lifted.

The Seattle Department of Transportation will replace the temporary closure signs on the so-called Stay Healthy Streets with permanent markings, guiding drivers to other routes.

The program, which has rolled out in phases, has been implemented in the Aurora-Licton Springs, Ballard, Central District, West Seattle, Greenwood, Othello, Rainier Beach and Beacon Hill neighbourhoods.

Vancouver Mayor Kennedy Stewart says the city is looking at closing some streets to vehicles to give pedestrians and cyclists more space for social distancing.

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Earlier this month, the city worked with the park board to close Stanley Park to vehicle traffic as well as close eastbound lanes on Beach Avenue, along English Bay, from Hornby Street to Stanley Park Drive.

Calling the closures “incredibly successful,” Stewart said Wednesday that the changes are allowing more people stay active during the COVID-19 pandemic.

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World News

Liam Gallagher responds to Noel releasing unheard Oasis demo

Oasis is back … though not in the manner fans might have hoped for.

Some 11 years after quitting and ultimately breaking up the iconic Britpop band, Noel Gallagher — Oasis’s former lead songwriter and co-vocalist — revealed that he had “stumbled across” one of the band’s “old demos” earlier this week while digging through old CDs out of boredom during the COVID-19 pandemic.

Though the track, dubbed Don’t Stop…, isn’t exactly brand new, it was put out as a new Oasis single on Thursday and serves as the band’s first since 2009’s Falling Down. 

Its release instilled excitement in fans all across the globe, making them hopeful that it might indicate that a potential Oasis reunion may occur in the near future.

Liam Gallagher — the former lead singer and Noel’s younger brother — however, has implied that he had nothing to do with the recently uncovered track by indirectly responding to his estranged sibling on Twitter.

“Well there’s something missing in this god almighty stew and it’s your brother,” wrote the 47-year-old vocalist. “Your brother. Don’t forget your brother,” he added.

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Liam, of course, was referring to the fact that he’s not even included on the demo. That’s right, the nearly five-minute, acoustic track was written and performed instead by Noel, 52.

Sure, he’s known best for hits like Don’t Look Back in Anger, but toward the end of Oasis’s career, Noel sang on a large portion of the band’s material and often took centre stage when Liam wasn’t in the mood to perform.

Seemingly in response to Don’t Stop…, Liam expressed boredom by tweeting “Zzz” (with 196 Zs) only a few hours after the track’s release.

Last month, Liam, yet again tried his hand at reuniting the band, suggesting they put on a “one-off” charity concert to raise funds for COVID-19 relief efforts.

“Listen, seriously,” he wrote on Twitter. “A lot of people think I’m a c–t and I am a good looking c–t, but once this is put to bed we need to get Oasis back for a one-off gig for charity.

Noel — who frequently dismisses the idea of ever getting back together with his brother — surprisingly expressed thoughts about doing so in an interview with Vogue earlier this month. The verdict, however? Still negative.

“The only other thing I could come up with was burning his house down or smashing his car in,” joked Noel, “but that’s not going to solve anything, is it?”

Don’t Stop… was recorded only once, and that was during a soundcheck in Hong Kong, as suggested by Noel. It was later released as a bootleg, however.

Don’t Stop… is now available through all major streaming platforms.

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Coronavirus: Banks, insurers process thousands of applications for industry-wide relief measures

SINGAPORE – More than 340 applicants have asked DBS Bank to convert their credit card debt and Cashline balances into term loans since submissions opened on Monday (April 6).

The Republic’s biggest bank has also received more than 9,500 applications to defer payments on housing loans since February, when it announced its first round of relief measures.

Banks and insurers have been processing relief requests from customers who are hoping for help as they weather the fallout from the Covid-19 pandemic.

The Monetary Authority of Singapore announced a list of baseline measures on March 31 that include allowing individuals to defer payment of property loans and premium payments for life and health insurance plans.

Small and medium-sized enterprises (SMEs) that continue to pay interest and are in good standing with their banks and finance companies can choose to defer principal payments on their secured term loans up to Dec 31.

They will still be subjected to banks’ and finance companies’ assessment of the quality of the SMEs’ security.

A DBS spokesman said that the number of visitors to the bank’s SME online loan application page and total online loan applications increased by about five times last month, from a year ago.

United Overseas Bank has received more than 2,000 applications to defer mortgage repayments since Monday, said its personal financial services head Jacquelyn Tan. Applications for the bank’s property loan relief assistance before the baseline measures were announced also increased almost 10 times over five weeks.

“We have also seen a consistent increase in applications for unsecured credit relief,” Ms Tan said, of the response since the baseline measures were rolled out.

Maybank has received more than 800 applications to defer home loan payments from just this Monday to Wednesday (April 8), a spokesman said.

Requests to convert unsecured debts to term loans hit more than 500 in the same period.

“We have received a few hundred retail SME customers writing in or contacting the bank. Due to the surge in enquiries, we have put in place additional resources to ensure every customer receives adequate attention and assistance,” the spokesman said.

“We notice there are more requests from businesses in manufacturing, general wholesale trade, travel and restaurants.

“These SMEs typically command revenues of below $10 million, and most of them are seeking more than S$200,000 worth of working capital financing.”

OCBC Bank global commercial banking head Linus Goh said: “Over one third of SMEs that we have engaged are keen to receive assistance during this challenging period.”

CIMB Bank chief executive Victor Lee said that most of the enquiries that the bank has received are about its temporary bridging loan programme.

“Trade extensions requests have picked up as well,” he added. “As for our Consumer financial relief scheme, the Covid-19 CIMB Care Package, most of the enquiries and applications are on mortgage.”

A Standard Chartered Bank spokesman said: “We have received hundreds of companies’ applications for loan moratorium, which mostly are requests for the deferment of interest payments.”

“For retail banking, we have so far received more requests for mortgage reliefs than for credit cards and revolving balances,” he added.

Insurance companies have also rolled out relief measures for policyholders.

Insurer Tokio Marine has received over 50 applications to defer premium payments, said chief marketing officer Gilbert Pak. “Plus, we are handling numerous enquiries on a daily basis,” he added.

Aviva has received about 100 applications for premium deferment, its spokesman said.

An Etiqa spokesman said that four in 10 of enquiries about deferring premium payments subsequently turned into applications.

He added: “Our applications come mainly from individual policyholders who have suffered loss of job or loss of income from work or business.”

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With stricter Covid-19 restrictions underway in Singapore, 'essential' chipmakers count on less disruption

SAN FRANCISCO (REUTERS) – Computer chip makers are banking on less disruptions to their factories from this week’s strict lockdown in Singapore than the havoc wreaked on their supply chains last month when Malaysia and the Philippines imposed vague restrictions about “essential” operations.

In the United States, chipmakers are considered essential businesses and allowed to operate. But with no uniform global definition of “essential,” industry executives say their delicate supply chains have hit snags as lockdowns played out differently in different countries, with Malaysia and the Philippines both shuttering or reducing work at factories.

Chip firms hope Singapore, where officials explicitly named semiconductors as an essential business, will cause fewer disruptions.

Micron Technology and Applied Materials both told Reuters on Monday (April 6) they believe their factories in Singapore will be allowed to run with protections in place for workers.

Qualcomm, which last year acquired a chip factory in Singapore, declined to comment.

Earlier lockdown confusion affected makers of all sorts of chips, from memory that goes into laptops and internet servers to specialty chips destined for ventilator manufacturers scrambling to combat the coronavirus pandemic.

In Malaysia, for example, where American semiconductor firms have had facilities since the 1970s, officials did not declare semiconductors essential until after issuing initial lockdown orders on March 16.

Micron’s factories in Muar and Penang “were briefly shut down” before officials there declared chip factories essential, chief executive Sanjay Mehrotra told investors on a conference call last month.

He said the factories “have since been able to return to production on a very limited basis, in compliance with local regulations.”

Micron did not elaborate on how the delays affected shipments, if at all.

Texas Instruments which said last month its factories in Malaysia and Singapore will “operate at significantly reduced levels in these two countries through mid-April,” said it was adjusting delivery dates for about 3 per cent of items in its product lineup.

After chipmakers were declared essential in Malaysia, each one needed to get government approval for its employees to come to work, which instantly created a “backlog by the thousands,” said a person who worked with chip companies to help them re-open.

For decades, scores of semiconductor companies have had facilities in Malaysia where chips are packaged and tested.

Intel, for example, opened a facility in Penang in 1977. An Intel spokeswoman said its Malaysian operation “remains operational and compliant with local government requirements,”but declined to comment further on whether production had been reduced.

Intel chief executive Bob Swan said last month that Intel’s factories were operating with on-time delivery rates above 90 per cent.

Cypress Semiconductor makes high-reliability memory chips that go into ventilators, vital machines that have come into short supply in many parts of the world.

When movement restrictions hit on the island of Luzon in the Philippines last month, the orders interrupted operations at a Cypress facility near Manila that packages those chips, said Ms Sonal Chandrasekharan, who heads the company’s RAM chip business unit.

While government officials provided an exemption for businesses that exported products, it was not immediately clear whether that applied to Cypress’s operations. Cypress worked with government officials to get a skeleton crew back to the factory, providing workers lodging nearby.

There was no disruption to the supply of ventilator chips, Ms Chandrasekharan said, because Cypress has alternative locations to package those chips, which are also common enough that ventilator makers would also likely be able to secure them from another vendor if required.

But the confusion and uncertainty around whether the various pieces of the delicate semiconductor supply chain count as essential should serve as a warning to chipmakers, Ms Chandrasekharan said.

“Everyone needs to be worried about disruption in supply chains,” she said.

“It is real.”

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Analysis & Comment

The hope in China's uphill task to reboot its stricken economy

Following his trip to Wuhan last month that signalled a turning point in China’s fight against Covid-19, Chinese President Xi Jinping travelled last week to the coastal province of Zhejiang in another symbolic tour.

As the coronavirus outbreak in China abates and the number of locally transmitted daily cases falls to near zero, it is restarting its economy which came to a near standstill from late January because of drastic measures taken to contain the spread. These included locking down Hubei province – the epicentre of the outbreak with a population of more than 50 million people – and restricting travel and various activities in other parts of the country.

Since the end of the extended Chinese New Year holidays in late February, economic activity has gradually resumed. Apart from Hubei province and in particular its capital Wuhan, where the outbreak began, many factories around the country have reopened and many migrant workers have returned to work from their hometowns.

Last week, Mr Xi made a four-day inspection tour of one of the country’s industrial dynamos, Zhejiang province. If his visit to Wuhan on March 10 was to signal that China had the outbreak under control, the Zhejiang visit was to let the world know that China is back in business again.

Restarting the economy is important as the measures China took to rein in the coronavirus outbreak have been costly economically, with some analysts estimating that gross domestic product (GDP) contraction could be as much as 7 per cent to 10 per cent in the first quarter.

The World Bank forecasts that China’s growth for 2020 will be 2.3 per cent, which if borne out would be its worst performance since the country rolled out reforms and opened up its economy in 1976. The figure would be far below last year’s 6.1 per cent, which was already the lowest in 29 years as the world’s second-largest economy took a hit from the effects of a trade war with the United States.

In this context, Mr Xi’s choice of Zhejiang and the places he visited there have symbolic meaning, economics and trade-wise. (There is a political dimension as well, Zhejiang being a power base for Mr Xi, who served there in leadership roles from 2002-2007.)

Zhejiang is home to both Yiwu and Alibaba – one being the world’s largest small commodities wholesale market and the other a tech titan. The province is an important export base with its industries running the gamut of China’s manufacturing and service sectors, from small and mid-sized firms to high-tech giants. It also boasts the world’s fourth-largest container port.

One of the first places Mr Xi visited, on the first day of his trip on Sunday last week, was the Ningbo-Zhoushan Port, where he said the port’s quick resumption of work was important to the restoration of the country’s logistics chain and the global industrial chain.

China’s factory closures have led to major disruption to the global supply chains, forcing car manufacturers in Japan and South Korea, among other companies, to stop production for lack of components from China.

On the same day in Ningbo, Mr Xi visited an industrial park making car parts and moulds, where he promised help for small and medium-sized enterprises (SMEs) which are more susceptible to cash flow disruptions and have found it more difficult to get back on their feet.

SMEs are a critical part of China’s recovery process as bigger companies cannot resume full operations if they do not get the components that come from the smaller suppliers.

Mr Greg Gilligan, chairman of the American Chamber of Commerce in China, has warned that some SMEs may not survive long enough to avail themselves of government support, particularly the longer-term policy measures. The chamber has asked its members to directly support their SME suppliers and customers.

There are many other challenges to China’s economic recovery but its leaders are likely to take a different tack from the blunderbuss approach during the 2008-2009 global financial crisis. At the time, they unleashed a massive US$600 billion stimulus package, amounting to close to 13 per cent of China’s GDP. It left the country with a huge debt overhang and an industrial overcapacity. This time, if the measures China’s leaders took to cushion the economic impact of the trade war with the US are anything to go by, the stimulus actions should be more targeted and calibrated and less profligate.


Next year marks the 100th anniversary of the founding of the Chinese Communist Party in 1921. China had wanted to celebrate it by making a push to double its GDP this year from 2010 that would signify achievement of the centenary goal of attaining a moderately wealthy society. To do so, the economy would have to grow by 5.6 per cent this year. Analysts don’t think China will aim for it as the cost would be too high. Mr Xi had, on his Zhejiang tour, exhorted the Chinese people to “spare no effort” to achieve this year’s economic and social development goals but also to balance the resumption of economic activity with disease control and prevention.

The message, said Mr Chen Long, a partner at independent research firm Plenum China Research, is “let’s not give up but it is not something we must reach”.


China’s annual March parliamentary sessions, where growth targets are usually set, have been postponed and no new dates have been set for them yet although there is speculation that they could be held late this month or in May.

In the meantime, a debate is on among economists and government advisers over whether a growth target should be set this year.

Some, like Dr Yu Yongding of the Chinese Academy of Social Sciences, believe that there should be a target, even if it is a low one, as it helps companies, especially large corporations, to make their business plans. Others think a target should be dropped altogether as it is unfeasible to set a number given the uncertainty over how the pandemic is going to play out and the headwinds that China is facing.

Mr Julian Evans-Pritchard, senior China economist at research firm Capital Economics, told Chinese magazine Caixin that any target that is politically acceptable, that is, anything that is above 4 per cent, will be very difficult to achieve.

Dr Ma Jun of Tsinghua University, in a speech last week, warned that pursuing an artificially high rate of growth would “kidnap macroeconomic policies” and eventually force the use of an all-out stimulus.

If the government were to set a target, 4.5 per cent would be a reasonable one to keep jobs and maintain socio-economic stability, said Mr Tommy Xie, head of greater China research at OCBC Bank.

But as has been pointed out, it’s a tall order to achieve such growth.

Already, businesses that have resumed operations are facing cancelled orders from overseas. Foreign demand is set to weaken further as the virus ravages economies around the world. This in turn would hit domestic consumption as workers lose their jobs and manufacturing investment falls.

Urban unemployment hit 6.2 per cent in the first two months of this year, from 5.2 per cent in December, representing a loss of 5.5 million jobs. But Plenum in its latest report cautioned that this is just the beginning and estimated that the total job losses could come to 24 million – 15 million from the service sector and nine million from the manufacturing sector.

The government has encouraged domestic consumption to boost the economy, with some local governments giving discount coupons to households to encourage spending, but the outcome may be less than desired. Besides rising unemployment, there are 150 million self-employed people in the urban workforce of 530 million who work mainly in the badly hit service sector and have fewer benefits. They are under economic stress and therefore not likely to increase their spending. Chinese households also have high debts, a total of 55 trillion yuan (S$11.3 trillion), with mortgage interest and credit card debts to pay.

Another dampener on the economy is concern over the possibility of a second wave of infections as economic and social activities are ramped up. The country has seen a rise in imported cases and there are sporadic cases of local transmissions.

To prevent an increase in coronavirus cases, cinemas, after being reopened last month, were shut again and some tourist attractions in Shanghai, such as the Oriental Pearl Tower and Shanghai Ocean Aquarium, were closed not too long after reopening. In Henan province, entertainment venues and Internet cafes were ordered shut late last month after a cleaner in a library tested positive.


Some measures the government has taken to cushion the impact of the outbreak include tax cuts and social security fee cuts worth a total of 1 trillion yuan or 1 per cent of GDP.

It has also cut the amount of cash banks need to hold in reserve three times this year. The most recent move, announced last week for small and mid-sized banks, would release US$56 billion (S$80 billion) in liquidity for loans that would benefit, in particular, struggling small firms. The move follows similar reserve requirement ratio cuts last month that freed up US$79 billion in funds, and in January that increased liquidity by 800 billion yuan.

The government is also set to issue special central government bonds – called for at last month’s meeting of the Politburo, a top decision-making body – and increase the quota of special purpose local government bonds.

The money raised through the government bonds will be spent on infrastructure building, including traditional projects such as roads and railways. But, crucially, new infrastructure projects will also be in the high-tech area, including 5G networks and data centres, as articulated by Mr Xi during his Zhejiang trip.

The International Energy Agency has urged governments to include investment in clean power, battery storage and carbon capture technology in their stimulus efforts.

While Mr Xi did not talk specifically about climate-related projects during his Zhejiang tour, he did flag the need to protect the environment. Interestingly, the government has decided to extend by another two years subsidies for the new energy vehicle market that were scheduled to be largely withdrawn this year. It gives hope that the Chinese government might take this opportunity to boost its green economy.

Another area that some, particularly healthcare experts, would like the government to spend money on is healthcare infrastructure, especially primary care and public health, which had been found wanting during the virus outbreak.

They may find Mr Xi’s exhortations – that the country’s disease prevention and control system and the public health emergency administration system should be improved – something to cheer about if not quite what they hope for.

Analysts don’t expect life in China to get back to normal before the end of the year or even early next year.

And it will be a rough ride towards economic recovery given the range and scale of challenges the country faces.

But if done right, the actions taken to reboot the economy could lead it towards the high-quality growth that the country and its leaders aspire to.

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