Call this a “whatever it takes” moment for China in its struggle to deal with the economic fallout of the coronavirus outbreak: On Friday, the Politburo said it plans to roll out a series of measures, including increasing the fiscal deficit as a share of GDP, issuing special treasury bonds, and ramping up special bonds for local governments. As Caixin notes in its analysis, these special T-bonds were used previously to recapitalize the banks in 1998, and to set up the sovereign wealth fund in 2007, i.e., they were used at times of urgent need.
Now is a time of urgent need, for sure. Not only is there an urgent need for money, however, but an urgent need to learn how to live with the threat of current and future viruses. Social distancing has proved its effectiveness in controlling the coronavirus, but, as unemployment data is making clear, populations cannot be kept at home for longer than a couple of months before their countries’ economic and social fabric starts to tear.
The hard reality that lies ahead for not only China, but the world, is that societies which have grown accustomed to a relatively stable global order for the past 70 years are going to have to learn how to manage health risks better, and how to think more clearly and calmly about the threat to humanity posed by dangerous viruses. Otherwise, what happened last week on the border of Hubei and Jiangxi provinces is what awaits everyone. Those who would laugh at such a statement may not yet have seen reports of planned Mafia attacks in southern Italy. There is also, obviously, more than one reason why New York City has National Guard troops on the streets. Everything that happened in China related to this virus has, so far, played out everywhere else it has moved. No place is immune to its effects, on the health of both citizens and society at large.
This is why President Xi Jinping’s tour of Zhejiang is so crucial. Not only is he getting attention where it needs to be, on restarting production, but he is showing how ordinary citizens can start to think more carefully about when and where to use face masks. In some outdoor situations, he has been photographed without one. This is not thoughtless: No photo of the “People’s Leader” is taken without careful consideration. Every moment of his day, every person he talks to, every face his gaze rests upon (or doesn’t) is choreographed. It is impossible to imagine him shooting from the lip at press conferences the way US President Donald Trump does. His messaging is strategized, and clear.
In Zhejiang, Xi’s message is this: Thoughtful mask-wearing and carefully calibrated social-distancing – in public – need to become part of daily life. Not just now, but forever and ever. Amen.
For readers of this newsletter, it is also import to understand why Xi chose Zhejiang, not Guangdong. Part of the reason may be a purely political calculation. But it was also undoubtedly because Guangdong needs his attention the least. This is not only the richest region of China; it also has its most efficient local governments. That is not to say that unofficial reports of factory bosses disappearing throughout the province should not be believed. It is only to say that, all things being equal, Guangdong is the best caravan a foreign investor could have their wagon hitched to, and it is important to understand what makes it special. Like how Shenzhen’s city government can get all 81 of its lending institutions to agree to defer loan repayments by struggling homeowners and business owners until June 30. Can one imagine such a thing happening in New York? Or, heaven forbid, in neighboring Hong Kong?