Table.Briefing: China

Hendrik Streeck: boosting instead of lockdown + Tech-Crackdown about to end?

  • Interview with Hendrik Streeck: booster with China’s vaccines works
  • Signs of an end to the tech crackdown
  • Hong Kong – new Chief Executive John Lee
  • Setback for vaccine diplomacy
  • Shanghai lockdown continues
  • Adidas sells fewer sneakers
  • Asian Games canceled due to Covid
  • Administration gets rid of Windows
  • Opinion by Michael Spence on US-China ‘good competition’
  • So To Speak: ‘human flesh search’
Dear reader,

Are there alternatives to the hard lockdown? German virologist Hendrik Streeck not just answers this question in the affirmative. Speaking with Frank Sieren, he is even skeptical about whether the Omicron variant can be contained at all in the long term through testing and lockdowns. The virus proves too contagious for this.

Instead, Streeck shares a surprising discovery with us: After the third dose, the Chinese vaccine does actually prove somewhat effective against Omicron. This is surprising for two reasons. On the one hand, it contradicts the narrative of the ineffective China vaccine. On the other hand, it makes it all the more baffling that China does not pull out all the stops and continues its vaccination program. Streeck’s conclusion makes sense here: “China needs to push the vaccination campaign among the elderly.” That is the way out of the lockdown trap.

The harsh regulation of Internet companies, also known as the tech crackdown, might soon end. Our Beijing team sees clear signs of a policy change. Beijing has made it clear to the tech billionaires who holds the power in the country – the Party, not the lords of the algorithms – and can now once again allow more growth in the sector.

Your
Finn Mayer-Kuckuk
Image of Finn  Mayer-Kuckuk

Interview

Hendrik Streeck: ‘Instead of lockdown, boost the eldery’

Virologist Hendrik Streeck

Professor Streeck, what is the Chinese government doing wrong in its handling of Omicron?

We try to monitor the situation in China very closely from here, as far as that is possible. On the one hand, we can learn a lot from it. On the other hand, one would very much like to help considering the depressing pictures we see. China has, for one, the problem that the vaccination rate with a vaccine that basically works well is not yet high enough, especially among older people…

…You are talking about the Chinese vaccine from Sinovac…

…yes. However, it only works well after a third injection. Then again, when it comes to the response to the lacking vaccinations, that is, this lockdown, these really severe restrictions, I’m very, very skeptical.

Why?

When people are forced to be indoors, it cannot be ruled out that the virus is already in the room – even if they have previously tested PCR negative. If they then sit indoors in groups, the pandemic is not contained. The opposite happens: You create an even bigger outbreak.

What would be the alternative? China’s healthcare system is not as robust as the German one. In Germany, we have about 36 beds per 100,000 citizens; in China, only 3.5. The health system cannot cope with an opening with so many insufficiently vaccinated old people.

China needs to advance the vaccination campaign among the elderly. True, the vaccination is not perfect; the virus cannot be contained via vaccination. What has become certain, however, is this: Booster vaccination is effective in preventing severe cases. Admittedly, this does not always work. But for the most part, severe cases can be prevented and thus an overload of the health care system can be avoided. Therefore, my advice – and this is probably also the advice of the WHO to China – would be to focus on a vaccination campaign.

In the meantime, it has been proven that the Chinese vaccine is much weaker than the one from Biontech, for example. Wouldn’t it make sense for the Chinese government to bite the bullet and finally use a Western vaccine?

Yes and no. The Sinovac vaccine, for instance, is not that bad. It does lag behind the Biontech/Pfizer vaccine in efficacy. But a recent study clearly showed: When a third vaccination is administered, the efficacy of Sinovac and Biontech is equally effective in protecting against severe cases. And that is what matters most now in China.

There are also efforts to produce and develop a domestic mRNA vaccine in China.

They also have disadvantages. In this acute situation, I would concentrate on using what is available and especially on bringing the third vaccination forward.

We are talking about well over 100 million elderly people. Even in China, that takes longer. Hasn’t the race against time already been lost?

I don’t know how large Sinovac’s vaccine stocks are. But worldwide, at any rate, there is no shortage of vaccines at the moment. In Germany alone, I think two million vaccine doses will expire before the summer. Many countries experience this. In Latin America, for example, they don’t know what to do with the vaccines either. China could get help from these countries. However, this is the political bullet you were talking about earlier. But they should bite into it now. There is no other way. China cannot sustain the zero-covid strategy. Even if travel to China were to be completely restricted, cats could still cross the border, or mice, or deer. We have evidence of the virus in all of these animals, so it is almost impossible to contain such a virus. However, it is possible to protect vulnerable groups.

Was the zero-covid strategy a mistake from the start?

It worked well before Omicron. The concept had its merits. To close the country, and then you don’t have to worry about infections anymore. But now we see that it is impossible, especially since there is no vaccine that really protects against infections. A strategy change, however, is not easy. That became clear in Hong Kong. Now, Shanghai and China are caught in a difficult situation in which they try to regain control of the infection for now, but at the same time, not enough is being done in terms of vaccinations. But these are actually more important.

Beijing is currently in the test-and-trace phase. Does that still make sense with Omicron?

This is a very old concept for containing infectious diseases and usually works quite well. The problem with this is that the antigen tests are not effective in the first few days of infection. The PCR tests, in turn, have a huge time delay. Also, further studies in the future will most likely confirm what we already know. Test and trace is not an effective concept with such a highly contagious pathogen because it simply is too slow.

But doesn’t it still make sense to identify the infected?

In general, it does help in the containment process if this is attempted. However, you have to be aware of the fact that infections will always occur from time to time that you can’t understand and that you don’t know where they came from. In any case, you can’t keep infections down permanently with this alone.

So other than vaccination, nothing else helps?

That is the most important thing. In addition, there are special hygiene concepts, especially air hygiene, concepts for facilities with vulnerable groups. Of course, large-scale events should be avoided for the time being. And what still works best: The masks that reduce infections. But the Chinese are exemplary in this respect. In fact, it was Asia that taught us how effective masks are.

In Beijing, streets are currently being disinfected. Does that make sense?

This does not do much. The virus does not last long on surfaces. Even less so when exposed to UV radiation or higher temperatures.

What could you tell people who have now been in lockdown for over 30 days? How much longer will it take?

I don’t know that, either. I am also a little speechless myself, as you may already could tell from my words. I think we can only encourage them. I simply hope that the situation will soon improve in terms of infection figures, but also that the political situation will relax, and a more pragmatic approach will be found. In the end, it’s a matter of political will, and no virologist can evaluate that.

Hendrik Streeck, born in 1977, is a Professor of Virology at the University of Bonn. He currently also advises the German government on the Corona Expert Council. His research focus is on HIV.

  • Corona Vaccines
  • Coronavirus
  • Health
  • Society

Feature

Is the tech crackdown about to end?

When it comes to Chinese tech stocks, investors’ nerves remain frayed. Any rumor may trigger panicky price plunges, as was once again made clear last Tuesday: Chinese state media reported that the manager of an IT company, whose last name was Ma, had been arrested in the eastern Chinese metropolis of Hangzhou.

Investors immediately assumed the worst. Alibaba’s share price plunged; the country’s largest Internet retailer is based in Hangzhou and was founded by billionaire Jack Ma. Only after the local police clarified that the arrested person was not the tech billionaire did Alibaba’s stock price recover.

The brief price drop of around ten percent shows how severely damaged the confidence of shareholders has become after the past year and a half of the Chinese tech crackdown. You can’t blame them. The government’s harsh measures resulted in companies like Alibaba, Tencent and Meituan, which were the big stars of China’s Internet economy two years ago, losing up to 70 percent of their value.

Currently, there are increasing signs that the government is rethinking its policy. As early as mid-March, Beijing’s State Council pledged in a statement to keep markets stable. The government would ensure that any regulation with a “significant impact on the capital markets” was coordinated in advance with the financial authorities, said Vice Premier Liu He, who is responsible for economic policy. The State Council Committee on Financial Stability and Development also promised in a brief statement to complete the crackdown on big tech “as soon as possible.”

Dealing with tech companies: government indicates relaxation

Last Friday, the leadership stepped up its game once again. Another statement from the State Council stated that the Internet industry should be allowed “healthy development.” More importantly, as the South China Morning Post and Reuters reported in unison, a high-level meeting is to be held in the coming days. President Xi Jinping and other top political leaders reportedly plan to sit down with tech company bosses.

The key message to tech companies will be that the government wants to see them grow, writes the South China Morning Post, citing a source familiar with the process. Tech firms are also to be involved to help slow the economic downturn in the second-largest economy triggered by the strict Covid measures. For example, companies could help issue consumer vouchers to the population on their platforms.

The fact that Beijing now wants to bring the previously chastised tech companies back into the fold could, according to analysts, also cause their share prices to finally regain their footing after a one-and-a-half-year slide. Some investors seem to bet on exactly that. Since the Chinese State Council sent the first signs of relaxation in mid-March, the NASDAQ Golden Dragon China Index, which tracks Chinese tech stocks, has risen 26 percent, bucking the broad market trend. Still, many investors likely sit on heavy losses. Calculated from its peak in February 2021, the Dragon Index is still down more than 60 percent.

China’s tech stocks are exposed to risks in the US

Even if Beijing were to change its course against the tech giants, not all risks could be eliminated overnight. After all, Alibaba and Co. are still struggling with problems, including in the USA. For some time now, the US Securities and Exchange Commission (SEC) has demanded that the roughly 280 Chinese companies listed in the US comply fully with US auditing regulations.

The SEC wants to impose the same extensive enforcement rights on Chinese companies as it does on US companies. So far, however, this has rarely been the case, which is why the authority has threatened to exclude Chinese companies from US stock exchanges in the worst case.

Although very few observers go as far as US investment bank JPMorgan, which described China’s tech sector as “uninvestable” in March. Nevertheless, investors will have to continue to brace themselves for sharp price fluctuations. Joern Petring/Gregor Koppenburg

  • Alibaba
  • Technology
  • Tencent

News

John Lee new Chief Executive of Hong Kong

John Lee will be the new chief executive of Hong Kong. On Sunday, 1,416 members of the Beijing-affiliated Election Committee voted for the 64-year-old, while eight did not support him. There was no opposing candidate. His predecessor, Carrie Lam, did not run again. The EU criticized the election. It had violated “democratic principles and political pluralism.”

The five-year term of Lee’s predecessor ends on June 30. Carrie Lam’s term in office includes the Covid pandemic and months of pro-democracy rallies. The protests, some of which were violent, prompted the central government to pass an extensive security law granting it far-reaching powers. Lee was Chief of Security in the metropolis during the 2019 anti-government protests and the massive crackdown on the democracy movement (China.Table reported). The US imposed sanctions on Lee as well as Lam in 2020 for “implementing Beijing’s policies of suppression of freedom and democratic processes”.

At the announcement of his candidacy at the beginning of April, Lee had proclaimed that he wants to open a new chapter for the financial metropolis. The priority, he said, was Hong Kong’s loyalty to the Chinese central government in Beijing. Solutions to the chronic housing shortage are also high on the agenda. rtr/nib

  • Civil Society
  • Hongkong
  • Human Rights
  • John Lee
  • National Security Act

Vaccine exports slump

China’s vaccine manufacturers exported 97 percent fewer Covid vaccines in April than they did after peak exports in September 2021, with only 6.8 million vaccine doses exported last month, according to Unicef, Nikkei Asia reports. The reason for this is the lower effectiveness of Chinese vaccines against the Omicron variant. This is a major setback for the People’s Republic’s vaccine diplomacy. By comparison, nearly 56 million doses of the vaccine developed by Biontech and Pfizer were exported in April. While that also represents a 71 percent drop from September 2021, Biontech vaccine doses still outnumbered Chinese exports by more than eight times.

As a result, Chinese vaccines are hardly administered for the third jab in partner countries. In large countries such as Pakistan, Indonesia and Bangladesh, the use of Chinese vaccines for booster immunization declined by more than 90 percent respectively. Brazil and Indonesia have not renewed contracts for Chinese vaccines that expired last year. nib

  • Corona Vaccines
  • Coronavirus
  • Health

Insider: Shanghai tightens Covid restrictions

According to insider reports, the Chinese megacity of Shanghai will tighten its already harsh Covid restrictions. It now wants to have the virus outbreak under control by the end of the month, people familiar with the matter told Reuters. Even though new infections have declined recently, restrictions are expected to remain in place until the end of May to prevent a new outbreak.

Individuals familiar with the matter said restrictions on freedom of movement would be maintained until the end of the month amid fears of a resurgence in the number of cases. Recently, however, the numbers have declined. In some districts, authorities have ordered people back to their homes after allowing them to leave for short walks or quick shopping trips. The prolonged isolation and fear of being sent to quarantine centers, which sometimes lack showers and other basic facilities, have led to widespread frustration and even clashes among Shanghai’s population. rtr/nib

  • Coronavirus
  • Health

Adidas expects lower sales

After a slump in profits at the beginning of the year, the world’s second-largest sporting goods group Adidas has scaled back its forecasts for 2022. The reason for the dwindling optimism is the flagging business in the former growth market China, which suffers from boycott calls against Western brands and the recent Covid lockdowns in major cities. Sales there slumped 35 percent in the first three months, Adidas announced on Friday in Herzogenaurach.

Adidas traditionally generates the highest revenues in China. However, sales there will fall sharply in 2022. Adidas also experiences long shipping times due to the aftermath of the prolonged Covid-related production shutdown in southern Vietnam. Some of the most important factories for shoes and clothing are located there. rtr/fin

  • Adidas
  • Coronavirus
  • Health
  • Industry
  • Trade

Hangzhou Asian Games postponed


In light of rising Covid infection numbers, the organizers have canceled the Asian Games in China for the time being. “The Olympic Council of Asia has announced that the 19th Asian Games, originally scheduled to be held in Hangzhou, China from September 10 to 25, 2022, will be postponed,” a statement from the council said. There was no reason given for the postponement in the official statement. A new date was not initially set either.

Dozens of venues have been built in Hangzhou for the Games. Until recently, the organizers planned to hold the Games using the same concept as the Beijing Winter Olympics with a closed-loop.

The Asian Youth Games, which had been scheduled for December in Shantou, were canceled entirely. These had already been postponed in 2021. The next Youth Games will therefore be held in Uzbekistan in 2025, according to the announcement. ari

  • Coronavirus
  • Health
  • Sports

Authorities phase out Windows PCs

The Chinese government plans to get rid of foreign computer brands. Administrations on all levels are to replace PCs of non-Chinese brands with Chinese equivalents within two years. This regulation also applies to state-owned enterprises, Bloomberg reports. China’s government agencies will have to discard some 50 million computers.

The background to this is the pursuit of greater data security and technical autarky. The directive also states that only domestic operating systems may run on the new PCs – i.e. not Windows from US provider Microsoft. According to Bloomberg, China also wants to reduce its dependence on products from Western rivals. fin

  • Geopolitics
  • Technology
  • USA

Opinion

Good US-China strategic competition

by Michael Spence
Michael Spence schreibt über die Herausforderungen in der Zusammenarbeit mit China.
Michael Spence, Nobel Laureate in Economics and Senior Fellow at the think tank Hoover Institution

It is now widely accepted that the economic and technological relationship between the United States and China will be characterized by some combination of strategic cooperation and strategic competition. Strategic cooperation is largely welcomed, because addressing shared challenges, from climate change and pandemics to the regulation of cutting-edge technologies, demands the engagement of the world’s two largest economies. But strategic competition tends to be viewed as a worrisome, even threatening, prospect. It need not be.

Anxiety about Sino-American competition, particularly in the technological domain, reflects a belief on both sides that a national-security-based, largely zero-sum approach is inevitable. This assumption steers decision-making in an unconstructive, confrontational direction and increases the likelihood of policy mistakes.

In reality, there are good and bad forms of strategic competition. To understand the benefits of good competition – and how to reap them – one need only consider how competition fuels innovation within economies.

In advanced and high-middle-income economies, innovation in products and processes fuels productivity gains – a critical driver of long-term GDP growth. The public sector plays a key role in kick-starting that innovation, through human-capital investment and upstream science and technology research. The private sector then takes over in a dynamic competitive process – what Joseph Schumpeter famously called “creative destruction.”

Schumpeter’s creative destruction

Per Schumpeterian dynamics, the firms that produced successful innovations acquire some transitory market power that provides a return on investment. But, as others continue to innovate, they erode the first-round innovator’s advantages. And the cycle of competition and technological progress continues.

But this process is not self-regulating, and there is a risk that the first-round innovators can use their market power to prevent others from challenging them. For example, they can deny or impede access to markets or acquire potential competitors before they get too big. Governments sometimes aid anti-competitive incumbents by subsidizing them.

To preserve competition – and all its far-reaching benefits for innovation and growth – governments must devise a set of rules that prohibit or discourage anti-competitive behavior. These rules are embedded in antitrust or competition policy, and in systems that define the limits of intellectual-property rights.

The US and China are leaders in advancing many technologies that can drive global growth. But the extent to which they do so depends, above all, on their core objectives.

Like leading innovative firms within an economy, the primary goal might be technological dominance – that is, to establish and maintain a clear and persistent technological lead. To this end, a country would attempt both to accelerate innovation internally and to impede its biggest competitor, such as by denying it access to information, human capital, other key inputs, or external markets.

This scenario is one of bad strategic competition. It undermines technological progress in both countries – and, indeed, in the entire global economy – not least by limiting the size of the total addressable market. Making matters worse, it serves an objective that is probably not achievable in the long run. As several recent studies have shown, China is rapidly catching up to the US in many areas.

By itself, diversification is not an anti-competitive policy stance. China’s Made in China 2025 and dual-circulation strategies include provisions for bolstering China’s technological prowess, while reducing dependence on foreign technology, inputs, and even demand. Likewise, the bipartisan America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength Act of 2022 (America COMPETES Act) seeks to enhance the country’s scientific and technological capabilities and bolster its supply chains, not least by reducing dependence on imports from China. Though the bill has not yet assumed its final form, its provisions can be made largely consistent with good strategic competition.

Good competition in national security and military is impossible

The one area where good competition is impossible is in matters of national security, defense, and military capabilities. While many technologies can be used in conflict, those that are critical and used mainly for military and security purposes will need to be cordoned off from what is otherwise relatively open global technology competition.

The current danger is that too many technologies will be deemed relevant to national security and thus subject to zero-sum rules. This approach would have much the same effect as the misguided quest to achieve and maintain technological dominance, eroding the economic benefits of competition.

Ideally, countries should strive to reach or remain at the frontier of innovation, without trying to prevent others from challenging them. Internationally agreed rules are essential to uphold such a system, which would produce far more technological progress and global growth than a system dominated by a single technological player like the US, or a system with a no-holds-barred version of strategic competition. Given substantial global economic headwinds – including population aging, large sovereign-debt overhangs, rising geopolitical tensions and conflict, and supply-side disruptions – and growing investments to meet environmental and inclusiveness challenges, the world needs the benign form of strategic competition more than ever.

Michael Spence is a Nobel Laureate in economics, Professor of Emeritus at Stanford University, and Senior Fellow at the Hoover Institution.

Copyright: Project Syndicate, 2022.
www.project-syndicate.org

  • Geopolitics
  • Technology
  • USA

Executive Moves

Daniel Weninger has been Chief of Sales and Service Officer at Austrian machine manufacturer Nexus Elastomer Systems in Suzhou, Jiangsu, since the beginning of April. Weninger previously worked for the Austrian machine manufacturer Engel in Minhang.

Sascha Rensen is the new Global Business Development Manager at packaging manufacturer Nefab in Wuxi. Until the end of March, Rensen was Deputy General Manager at Kaiser Construction.

Benjamin Bland starts this week as Director of the Asia-Pacific program at the British think tank Chatham House. Bland previously worked at the Australian think tank Lowy Institute.

So To Speak

‘Human flesh search’

人肉 – rénròu – “human flesh search”

When Chinese friends tell you that China’s Internet users have once again successfully hunted for human flesh (人肉搜索 rénròu sōusuǒ), please take a deep breath first. No, it is not about cannibalism in cyberspace. Even if your dictionary may at first confirm the terrible suspicion. Because quite literally, 人肉搜索 (rénròu sōusuǒ) does indeed mean “human flesh-search” (from 人肉 rénròu “human flesh” and 搜索 sōusuǒ “search” as in, for example, 网络搜索 wǎngluò sōusuǒ “Internet search” or 搜索引擎 sōusuǒ yǐnqíng “search engine”).

But what is meant here is simply the meticulous search for information and identities by human hand or via human contacts. In contrast to machine searches (机器搜索 jīqì sōusuǒ), this method relies on the power of nimble hands of the human masses.

When it comes to research, the Internet community is often anything but gentle. In a kind of witch hunt, the occasional celebrity or ordinary mortal has been “hunted down”. Perhaps that’s why the abbreviated form of the term has caught on.

And the digital scope is now being whipped out more and more frequently. Especially when videos of alleged misconduct or screenshots of outrageous posts go viral. Once the digital hornet’s nest has been stirred, an angry and information-hungry armada of busy research bees immediately swarms out to digitally pin down the wrongdoers. Internet search engines, social media traces and even leaks from the target’s acquaintances are used to unearth the identity, juicy details and all kinds of background information about the people in question, which is then shared and discussed on the web. Privacy goodbye, face gone.

This form of digital vigilantism is also quite controversial in China, of course. On the one hand, it often serves as a kind of grassroots democratic toolkit for uncovering and denouncing injustices, which sometimes leads to positive changes. On the other hand, the online hunt often degenerates into malice, smear campaigns and hate speech, which ultimately doesn’t help anyone.

By the way, die-hard vegetarians have to be very strong when learning Chinese. It is not uncommon for some meaty vocabulary to appear in unexpected places. For example, northern Chinese often refer to troublemakers, good-for-nothings and meddlers as 滚刀肉 gǔndāoròu (literally “knife-rolled meat” – actually a word for tough, low-quality meat that is difficult to cut and process).

“Young fresh meat” (小鲜肉 xiǎoxiānròu), on the other hand, is butter-soft to the tongue. It’s the Chinese buzzword for sexy male newcomers (in boy bands or soap operas, for example). In foreign TV shows and movies, you are sometimes even served “raw meat” (生肉 shēngròu) under the table in China. This is the colloquial name for original productions without Chinese subtitles (the pre-chewed translation is called 熟肉 shóuròu “cooked meat”).

And those who remain utterly stolid, lethargic and apathetic, even with so many crazy expressions, are described by the Chinese as having a “fleshy temperament” (肉脾气 ròu píqi). This is because 肉 ròu is also simply a synonym for the adjective “lethargic” in the vernacular. Here, Chinese once again truly lives up to its wordclass roulette.

Verena Menzel runs the online language school New Chinese in Beijing.

  • Society

China.Table editorial office

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    • Interview with Hendrik Streeck: booster with China’s vaccines works
    • Signs of an end to the tech crackdown
    • Hong Kong – new Chief Executive John Lee
    • Setback for vaccine diplomacy
    • Shanghai lockdown continues
    • Adidas sells fewer sneakers
    • Asian Games canceled due to Covid
    • Administration gets rid of Windows
    • Opinion by Michael Spence on US-China ‘good competition’
    • So To Speak: ‘human flesh search’
    Dear reader,

    Are there alternatives to the hard lockdown? German virologist Hendrik Streeck not just answers this question in the affirmative. Speaking with Frank Sieren, he is even skeptical about whether the Omicron variant can be contained at all in the long term through testing and lockdowns. The virus proves too contagious for this.

    Instead, Streeck shares a surprising discovery with us: After the third dose, the Chinese vaccine does actually prove somewhat effective against Omicron. This is surprising for two reasons. On the one hand, it contradicts the narrative of the ineffective China vaccine. On the other hand, it makes it all the more baffling that China does not pull out all the stops and continues its vaccination program. Streeck’s conclusion makes sense here: “China needs to push the vaccination campaign among the elderly.” That is the way out of the lockdown trap.

    The harsh regulation of Internet companies, also known as the tech crackdown, might soon end. Our Beijing team sees clear signs of a policy change. Beijing has made it clear to the tech billionaires who holds the power in the country – the Party, not the lords of the algorithms – and can now once again allow more growth in the sector.

    Your
    Finn Mayer-Kuckuk
    Image of Finn  Mayer-Kuckuk

    Interview

    Hendrik Streeck: ‘Instead of lockdown, boost the eldery’

    Virologist Hendrik Streeck

    Professor Streeck, what is the Chinese government doing wrong in its handling of Omicron?

    We try to monitor the situation in China very closely from here, as far as that is possible. On the one hand, we can learn a lot from it. On the other hand, one would very much like to help considering the depressing pictures we see. China has, for one, the problem that the vaccination rate with a vaccine that basically works well is not yet high enough, especially among older people…

    …You are talking about the Chinese vaccine from Sinovac…

    …yes. However, it only works well after a third injection. Then again, when it comes to the response to the lacking vaccinations, that is, this lockdown, these really severe restrictions, I’m very, very skeptical.

    Why?

    When people are forced to be indoors, it cannot be ruled out that the virus is already in the room – even if they have previously tested PCR negative. If they then sit indoors in groups, the pandemic is not contained. The opposite happens: You create an even bigger outbreak.

    What would be the alternative? China’s healthcare system is not as robust as the German one. In Germany, we have about 36 beds per 100,000 citizens; in China, only 3.5. The health system cannot cope with an opening with so many insufficiently vaccinated old people.

    China needs to advance the vaccination campaign among the elderly. True, the vaccination is not perfect; the virus cannot be contained via vaccination. What has become certain, however, is this: Booster vaccination is effective in preventing severe cases. Admittedly, this does not always work. But for the most part, severe cases can be prevented and thus an overload of the health care system can be avoided. Therefore, my advice – and this is probably also the advice of the WHO to China – would be to focus on a vaccination campaign.

    In the meantime, it has been proven that the Chinese vaccine is much weaker than the one from Biontech, for example. Wouldn’t it make sense for the Chinese government to bite the bullet and finally use a Western vaccine?

    Yes and no. The Sinovac vaccine, for instance, is not that bad. It does lag behind the Biontech/Pfizer vaccine in efficacy. But a recent study clearly showed: When a third vaccination is administered, the efficacy of Sinovac and Biontech is equally effective in protecting against severe cases. And that is what matters most now in China.

    There are also efforts to produce and develop a domestic mRNA vaccine in China.

    They also have disadvantages. In this acute situation, I would concentrate on using what is available and especially on bringing the third vaccination forward.

    We are talking about well over 100 million elderly people. Even in China, that takes longer. Hasn’t the race against time already been lost?

    I don’t know how large Sinovac’s vaccine stocks are. But worldwide, at any rate, there is no shortage of vaccines at the moment. In Germany alone, I think two million vaccine doses will expire before the summer. Many countries experience this. In Latin America, for example, they don’t know what to do with the vaccines either. China could get help from these countries. However, this is the political bullet you were talking about earlier. But they should bite into it now. There is no other way. China cannot sustain the zero-covid strategy. Even if travel to China were to be completely restricted, cats could still cross the border, or mice, or deer. We have evidence of the virus in all of these animals, so it is almost impossible to contain such a virus. However, it is possible to protect vulnerable groups.

    Was the zero-covid strategy a mistake from the start?

    It worked well before Omicron. The concept had its merits. To close the country, and then you don’t have to worry about infections anymore. But now we see that it is impossible, especially since there is no vaccine that really protects against infections. A strategy change, however, is not easy. That became clear in Hong Kong. Now, Shanghai and China are caught in a difficult situation in which they try to regain control of the infection for now, but at the same time, not enough is being done in terms of vaccinations. But these are actually more important.

    Beijing is currently in the test-and-trace phase. Does that still make sense with Omicron?

    This is a very old concept for containing infectious diseases and usually works quite well. The problem with this is that the antigen tests are not effective in the first few days of infection. The PCR tests, in turn, have a huge time delay. Also, further studies in the future will most likely confirm what we already know. Test and trace is not an effective concept with such a highly contagious pathogen because it simply is too slow.

    But doesn’t it still make sense to identify the infected?

    In general, it does help in the containment process if this is attempted. However, you have to be aware of the fact that infections will always occur from time to time that you can’t understand and that you don’t know where they came from. In any case, you can’t keep infections down permanently with this alone.

    So other than vaccination, nothing else helps?

    That is the most important thing. In addition, there are special hygiene concepts, especially air hygiene, concepts for facilities with vulnerable groups. Of course, large-scale events should be avoided for the time being. And what still works best: The masks that reduce infections. But the Chinese are exemplary in this respect. In fact, it was Asia that taught us how effective masks are.

    In Beijing, streets are currently being disinfected. Does that make sense?

    This does not do much. The virus does not last long on surfaces. Even less so when exposed to UV radiation or higher temperatures.

    What could you tell people who have now been in lockdown for over 30 days? How much longer will it take?

    I don’t know that, either. I am also a little speechless myself, as you may already could tell from my words. I think we can only encourage them. I simply hope that the situation will soon improve in terms of infection figures, but also that the political situation will relax, and a more pragmatic approach will be found. In the end, it’s a matter of political will, and no virologist can evaluate that.

    Hendrik Streeck, born in 1977, is a Professor of Virology at the University of Bonn. He currently also advises the German government on the Corona Expert Council. His research focus is on HIV.

    • Corona Vaccines
    • Coronavirus
    • Health
    • Society

    Feature

    Is the tech crackdown about to end?

    When it comes to Chinese tech stocks, investors’ nerves remain frayed. Any rumor may trigger panicky price plunges, as was once again made clear last Tuesday: Chinese state media reported that the manager of an IT company, whose last name was Ma, had been arrested in the eastern Chinese metropolis of Hangzhou.

    Investors immediately assumed the worst. Alibaba’s share price plunged; the country’s largest Internet retailer is based in Hangzhou and was founded by billionaire Jack Ma. Only after the local police clarified that the arrested person was not the tech billionaire did Alibaba’s stock price recover.

    The brief price drop of around ten percent shows how severely damaged the confidence of shareholders has become after the past year and a half of the Chinese tech crackdown. You can’t blame them. The government’s harsh measures resulted in companies like Alibaba, Tencent and Meituan, which were the big stars of China’s Internet economy two years ago, losing up to 70 percent of their value.

    Currently, there are increasing signs that the government is rethinking its policy. As early as mid-March, Beijing’s State Council pledged in a statement to keep markets stable. The government would ensure that any regulation with a “significant impact on the capital markets” was coordinated in advance with the financial authorities, said Vice Premier Liu He, who is responsible for economic policy. The State Council Committee on Financial Stability and Development also promised in a brief statement to complete the crackdown on big tech “as soon as possible.”

    Dealing with tech companies: government indicates relaxation

    Last Friday, the leadership stepped up its game once again. Another statement from the State Council stated that the Internet industry should be allowed “healthy development.” More importantly, as the South China Morning Post and Reuters reported in unison, a high-level meeting is to be held in the coming days. President Xi Jinping and other top political leaders reportedly plan to sit down with tech company bosses.

    The key message to tech companies will be that the government wants to see them grow, writes the South China Morning Post, citing a source familiar with the process. Tech firms are also to be involved to help slow the economic downturn in the second-largest economy triggered by the strict Covid measures. For example, companies could help issue consumer vouchers to the population on their platforms.

    The fact that Beijing now wants to bring the previously chastised tech companies back into the fold could, according to analysts, also cause their share prices to finally regain their footing after a one-and-a-half-year slide. Some investors seem to bet on exactly that. Since the Chinese State Council sent the first signs of relaxation in mid-March, the NASDAQ Golden Dragon China Index, which tracks Chinese tech stocks, has risen 26 percent, bucking the broad market trend. Still, many investors likely sit on heavy losses. Calculated from its peak in February 2021, the Dragon Index is still down more than 60 percent.

    China’s tech stocks are exposed to risks in the US

    Even if Beijing were to change its course against the tech giants, not all risks could be eliminated overnight. After all, Alibaba and Co. are still struggling with problems, including in the USA. For some time now, the US Securities and Exchange Commission (SEC) has demanded that the roughly 280 Chinese companies listed in the US comply fully with US auditing regulations.

    The SEC wants to impose the same extensive enforcement rights on Chinese companies as it does on US companies. So far, however, this has rarely been the case, which is why the authority has threatened to exclude Chinese companies from US stock exchanges in the worst case.

    Although very few observers go as far as US investment bank JPMorgan, which described China’s tech sector as “uninvestable” in March. Nevertheless, investors will have to continue to brace themselves for sharp price fluctuations. Joern Petring/Gregor Koppenburg

    • Alibaba
    • Technology
    • Tencent

    News

    John Lee new Chief Executive of Hong Kong

    John Lee will be the new chief executive of Hong Kong. On Sunday, 1,416 members of the Beijing-affiliated Election Committee voted for the 64-year-old, while eight did not support him. There was no opposing candidate. His predecessor, Carrie Lam, did not run again. The EU criticized the election. It had violated “democratic principles and political pluralism.”

    The five-year term of Lee’s predecessor ends on June 30. Carrie Lam’s term in office includes the Covid pandemic and months of pro-democracy rallies. The protests, some of which were violent, prompted the central government to pass an extensive security law granting it far-reaching powers. Lee was Chief of Security in the metropolis during the 2019 anti-government protests and the massive crackdown on the democracy movement (China.Table reported). The US imposed sanctions on Lee as well as Lam in 2020 for “implementing Beijing’s policies of suppression of freedom and democratic processes”.

    At the announcement of his candidacy at the beginning of April, Lee had proclaimed that he wants to open a new chapter for the financial metropolis. The priority, he said, was Hong Kong’s loyalty to the Chinese central government in Beijing. Solutions to the chronic housing shortage are also high on the agenda. rtr/nib

    • Civil Society
    • Hongkong
    • Human Rights
    • John Lee
    • National Security Act

    Vaccine exports slump

    China’s vaccine manufacturers exported 97 percent fewer Covid vaccines in April than they did after peak exports in September 2021, with only 6.8 million vaccine doses exported last month, according to Unicef, Nikkei Asia reports. The reason for this is the lower effectiveness of Chinese vaccines against the Omicron variant. This is a major setback for the People’s Republic’s vaccine diplomacy. By comparison, nearly 56 million doses of the vaccine developed by Biontech and Pfizer were exported in April. While that also represents a 71 percent drop from September 2021, Biontech vaccine doses still outnumbered Chinese exports by more than eight times.

    As a result, Chinese vaccines are hardly administered for the third jab in partner countries. In large countries such as Pakistan, Indonesia and Bangladesh, the use of Chinese vaccines for booster immunization declined by more than 90 percent respectively. Brazil and Indonesia have not renewed contracts for Chinese vaccines that expired last year. nib

    • Corona Vaccines
    • Coronavirus
    • Health

    Insider: Shanghai tightens Covid restrictions

    According to insider reports, the Chinese megacity of Shanghai will tighten its already harsh Covid restrictions. It now wants to have the virus outbreak under control by the end of the month, people familiar with the matter told Reuters. Even though new infections have declined recently, restrictions are expected to remain in place until the end of May to prevent a new outbreak.

    Individuals familiar with the matter said restrictions on freedom of movement would be maintained until the end of the month amid fears of a resurgence in the number of cases. Recently, however, the numbers have declined. In some districts, authorities have ordered people back to their homes after allowing them to leave for short walks or quick shopping trips. The prolonged isolation and fear of being sent to quarantine centers, which sometimes lack showers and other basic facilities, have led to widespread frustration and even clashes among Shanghai’s population. rtr/nib

    • Coronavirus
    • Health

    Adidas expects lower sales

    After a slump in profits at the beginning of the year, the world’s second-largest sporting goods group Adidas has scaled back its forecasts for 2022. The reason for the dwindling optimism is the flagging business in the former growth market China, which suffers from boycott calls against Western brands and the recent Covid lockdowns in major cities. Sales there slumped 35 percent in the first three months, Adidas announced on Friday in Herzogenaurach.

    Adidas traditionally generates the highest revenues in China. However, sales there will fall sharply in 2022. Adidas also experiences long shipping times due to the aftermath of the prolonged Covid-related production shutdown in southern Vietnam. Some of the most important factories for shoes and clothing are located there. rtr/fin

    • Adidas
    • Coronavirus
    • Health
    • Industry
    • Trade

    Hangzhou Asian Games postponed


    In light of rising Covid infection numbers, the organizers have canceled the Asian Games in China for the time being. “The Olympic Council of Asia has announced that the 19th Asian Games, originally scheduled to be held in Hangzhou, China from September 10 to 25, 2022, will be postponed,” a statement from the council said. There was no reason given for the postponement in the official statement. A new date was not initially set either.

    Dozens of venues have been built in Hangzhou for the Games. Until recently, the organizers planned to hold the Games using the same concept as the Beijing Winter Olympics with a closed-loop.

    The Asian Youth Games, which had been scheduled for December in Shantou, were canceled entirely. These had already been postponed in 2021. The next Youth Games will therefore be held in Uzbekistan in 2025, according to the announcement. ari

    • Coronavirus
    • Health
    • Sports

    Authorities phase out Windows PCs

    The Chinese government plans to get rid of foreign computer brands. Administrations on all levels are to replace PCs of non-Chinese brands with Chinese equivalents within two years. This regulation also applies to state-owned enterprises, Bloomberg reports. China’s government agencies will have to discard some 50 million computers.

    The background to this is the pursuit of greater data security and technical autarky. The directive also states that only domestic operating systems may run on the new PCs – i.e. not Windows from US provider Microsoft. According to Bloomberg, China also wants to reduce its dependence on products from Western rivals. fin

    • Geopolitics
    • Technology
    • USA

    Opinion

    Good US-China strategic competition

    by Michael Spence
    Michael Spence schreibt über die Herausforderungen in der Zusammenarbeit mit China.
    Michael Spence, Nobel Laureate in Economics and Senior Fellow at the think tank Hoover Institution

    It is now widely accepted that the economic and technological relationship between the United States and China will be characterized by some combination of strategic cooperation and strategic competition. Strategic cooperation is largely welcomed, because addressing shared challenges, from climate change and pandemics to the regulation of cutting-edge technologies, demands the engagement of the world’s two largest economies. But strategic competition tends to be viewed as a worrisome, even threatening, prospect. It need not be.

    Anxiety about Sino-American competition, particularly in the technological domain, reflects a belief on both sides that a national-security-based, largely zero-sum approach is inevitable. This assumption steers decision-making in an unconstructive, confrontational direction and increases the likelihood of policy mistakes.

    In reality, there are good and bad forms of strategic competition. To understand the benefits of good competition – and how to reap them – one need only consider how competition fuels innovation within economies.

    In advanced and high-middle-income economies, innovation in products and processes fuels productivity gains – a critical driver of long-term GDP growth. The public sector plays a key role in kick-starting that innovation, through human-capital investment and upstream science and technology research. The private sector then takes over in a dynamic competitive process – what Joseph Schumpeter famously called “creative destruction.”

    Schumpeter’s creative destruction

    Per Schumpeterian dynamics, the firms that produced successful innovations acquire some transitory market power that provides a return on investment. But, as others continue to innovate, they erode the first-round innovator’s advantages. And the cycle of competition and technological progress continues.

    But this process is not self-regulating, and there is a risk that the first-round innovators can use their market power to prevent others from challenging them. For example, they can deny or impede access to markets or acquire potential competitors before they get too big. Governments sometimes aid anti-competitive incumbents by subsidizing them.

    To preserve competition – and all its far-reaching benefits for innovation and growth – governments must devise a set of rules that prohibit or discourage anti-competitive behavior. These rules are embedded in antitrust or competition policy, and in systems that define the limits of intellectual-property rights.

    The US and China are leaders in advancing many technologies that can drive global growth. But the extent to which they do so depends, above all, on their core objectives.

    Like leading innovative firms within an economy, the primary goal might be technological dominance – that is, to establish and maintain a clear and persistent technological lead. To this end, a country would attempt both to accelerate innovation internally and to impede its biggest competitor, such as by denying it access to information, human capital, other key inputs, or external markets.

    This scenario is one of bad strategic competition. It undermines technological progress in both countries – and, indeed, in the entire global economy – not least by limiting the size of the total addressable market. Making matters worse, it serves an objective that is probably not achievable in the long run. As several recent studies have shown, China is rapidly catching up to the US in many areas.

    By itself, diversification is not an anti-competitive policy stance. China’s Made in China 2025 and dual-circulation strategies include provisions for bolstering China’s technological prowess, while reducing dependence on foreign technology, inputs, and even demand. Likewise, the bipartisan America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength Act of 2022 (America COMPETES Act) seeks to enhance the country’s scientific and technological capabilities and bolster its supply chains, not least by reducing dependence on imports from China. Though the bill has not yet assumed its final form, its provisions can be made largely consistent with good strategic competition.

    Good competition in national security and military is impossible

    The one area where good competition is impossible is in matters of national security, defense, and military capabilities. While many technologies can be used in conflict, those that are critical and used mainly for military and security purposes will need to be cordoned off from what is otherwise relatively open global technology competition.

    The current danger is that too many technologies will be deemed relevant to national security and thus subject to zero-sum rules. This approach would have much the same effect as the misguided quest to achieve and maintain technological dominance, eroding the economic benefits of competition.

    Ideally, countries should strive to reach or remain at the frontier of innovation, without trying to prevent others from challenging them. Internationally agreed rules are essential to uphold such a system, which would produce far more technological progress and global growth than a system dominated by a single technological player like the US, or a system with a no-holds-barred version of strategic competition. Given substantial global economic headwinds – including population aging, large sovereign-debt overhangs, rising geopolitical tensions and conflict, and supply-side disruptions – and growing investments to meet environmental and inclusiveness challenges, the world needs the benign form of strategic competition more than ever.

    Michael Spence is a Nobel Laureate in economics, Professor of Emeritus at Stanford University, and Senior Fellow at the Hoover Institution.

    Copyright: Project Syndicate, 2022.
    www.project-syndicate.org

    • Geopolitics
    • Technology
    • USA

    Executive Moves

    Daniel Weninger has been Chief of Sales and Service Officer at Austrian machine manufacturer Nexus Elastomer Systems in Suzhou, Jiangsu, since the beginning of April. Weninger previously worked for the Austrian machine manufacturer Engel in Minhang.

    Sascha Rensen is the new Global Business Development Manager at packaging manufacturer Nefab in Wuxi. Until the end of March, Rensen was Deputy General Manager at Kaiser Construction.

    Benjamin Bland starts this week as Director of the Asia-Pacific program at the British think tank Chatham House. Bland previously worked at the Australian think tank Lowy Institute.

    So To Speak

    ‘Human flesh search’

    人肉 – rénròu – “human flesh search”

    When Chinese friends tell you that China’s Internet users have once again successfully hunted for human flesh (人肉搜索 rénròu sōusuǒ), please take a deep breath first. No, it is not about cannibalism in cyberspace. Even if your dictionary may at first confirm the terrible suspicion. Because quite literally, 人肉搜索 (rénròu sōusuǒ) does indeed mean “human flesh-search” (from 人肉 rénròu “human flesh” and 搜索 sōusuǒ “search” as in, for example, 网络搜索 wǎngluò sōusuǒ “Internet search” or 搜索引擎 sōusuǒ yǐnqíng “search engine”).

    But what is meant here is simply the meticulous search for information and identities by human hand or via human contacts. In contrast to machine searches (机器搜索 jīqì sōusuǒ), this method relies on the power of nimble hands of the human masses.

    When it comes to research, the Internet community is often anything but gentle. In a kind of witch hunt, the occasional celebrity or ordinary mortal has been “hunted down”. Perhaps that’s why the abbreviated form of the term has caught on.

    And the digital scope is now being whipped out more and more frequently. Especially when videos of alleged misconduct or screenshots of outrageous posts go viral. Once the digital hornet’s nest has been stirred, an angry and information-hungry armada of busy research bees immediately swarms out to digitally pin down the wrongdoers. Internet search engines, social media traces and even leaks from the target’s acquaintances are used to unearth the identity, juicy details and all kinds of background information about the people in question, which is then shared and discussed on the web. Privacy goodbye, face gone.

    This form of digital vigilantism is also quite controversial in China, of course. On the one hand, it often serves as a kind of grassroots democratic toolkit for uncovering and denouncing injustices, which sometimes leads to positive changes. On the other hand, the online hunt often degenerates into malice, smear campaigns and hate speech, which ultimately doesn’t help anyone.

    By the way, die-hard vegetarians have to be very strong when learning Chinese. It is not uncommon for some meaty vocabulary to appear in unexpected places. For example, northern Chinese often refer to troublemakers, good-for-nothings and meddlers as 滚刀肉 gǔndāoròu (literally “knife-rolled meat” – actually a word for tough, low-quality meat that is difficult to cut and process).

    “Young fresh meat” (小鲜肉 xiǎoxiānròu), on the other hand, is butter-soft to the tongue. It’s the Chinese buzzword for sexy male newcomers (in boy bands or soap operas, for example). In foreign TV shows and movies, you are sometimes even served “raw meat” (生肉 shēngròu) under the table in China. This is the colloquial name for original productions without Chinese subtitles (the pre-chewed translation is called 熟肉 shóuròu “cooked meat”).

    And those who remain utterly stolid, lethargic and apathetic, even with so many crazy expressions, are described by the Chinese as having a “fleshy temperament” (肉脾气 ròu píqi). This is because 肉 ròu is also simply a synonym for the adjective “lethargic” in the vernacular. Here, Chinese once again truly lives up to its wordclass roulette.

    Verena Menzel runs the online language school New Chinese in Beijing.

    • Society

    China.Table editorial office

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