Interest and inflation rates, how high is high?

 

CLICK TO ENLARGE

AS we welcome 2023, one of the central themes this year will be how high will interest rates rise after the relentless pursuit taken by global central banks in fighting inflation with persistent and measured rate hikes in 2022.

As can be seen from Chart 1, from the 75 basis points (bps) hike by the Bank of Thailand to the 425 bps hike by the US Federal Reserve (Fed), the year 2022 has certainly been a busy year for central banks.

Central banks had no choice but to raise rates to fend off inflationary pressure that has been persistent throughout the year, although there have been some signs of easing lately.

Not to be left behind, even the Bank of Japan, while not lifting key benchmark rate, allowed its 10-year Japanese government bonds to move 50 bps from its 0% target, instead of 25 bps earlier.

It is a move that is seen recognising that inflation is finally biting the Japanese too.

 

CLICK TO ENLARGE

 Chart 2 shows that based on November 2022 statistics, the depositors are at the losing end as the 12-month deposit rate was 132 bps lower than the monthly inflation print of 4%.

Can inflation be tamed?

Reading inflationary pressures and forecasting where it is going is not an easy task especially when inflation prints itself is a combination of many factors and not just commodity prices and supply chain disruption that has been the core issues among central banks the past year. Although the global economic momentum has eased, global aggregate demand is still rising and much higher than it was before the pandemic.

Hence, there has been not only a persistent rise in consumer demand but one that is not matched by consistent supply provided in the marketplace, resulting in a hike in aggregate prices.

In theory, inflation is tamed by using monetary tightening measures as it is believed that by raising interest rates, consumers and businesses will be impacted by higher borrowing costs, resulting in lower consumption as well as a slower pace of investments, which in turn will reduce aggregate demand.

Nevertheless, rate hikes have also other consequential impacts on the economy in the form of a weaker or a stronger currency, depending on the relative increase in domestic rates vis-à-vis the comparative increase in other corresponding currencies.

For example, for the United States, the relentless increase by the Fed has caused a significant rally in the US Dollar Index, which rose to a high of US$114 (RM501) last year, up almost 20%, before easing to close the year at US$103 (RM454), down 9.3% from its peak, but still higher by more than 8%.

The surge in the dollar made US imports cheaper from the rest of the world, in particular those from China, even cheaper, which allows the US retail prices at the store to be relatively lower than they used to be before the rally in the dollar.

In essence, while the surge in US interest rates has reduced disposable income due to higher borrowing costs, which in turn lowered consumer demand, it has also caused imported end product prices to be relatively cheaper than before, allowing aggregate prices to be lower as well.

This suggests that US consumer products are in for a double-whammy in terms of prices as aggregate demand has been reduced due to lower disposable income and at the same time for products that are imported, prices too have eased due to the strength of the greenback.

For an economist, this is good news as the intended outcome will likely be achieved in taming inflationary pressure due to persistent hikes in interest rates. A look at inflation prints from the peaks in 2022, both the core Consumer Price Index (CPI) and the Personal Consumption Expenditures index (PCE) have eased, falling by 67 bps and 62 bps from the highs and were last seen at 6% and 4.7% respectively.

Are we there yet?

After a 425 bps hike, the Fed’s message in the minutes of the Federal Open Market Committee (FOMC) released this week was an important one as it guided the market to expect higher rates going into 2023 but at the same time also signalled that the war against inflation is far from over and the Fed will continue to raise rates until it can achieve its targeted inflation print.

Compared with its September forecast of 4.6%, the Fed has now raised its median Fed Fund Rate (FFR) for 2023 to 5.1%, an increase of 50 bps while at the same time, the Fed also expects median FFR to drop by 100 bps each in 2024 and 2025 to 4.1% and 3.1% from earlier projected rate of 3.9% and 2.9% respectively.

Core PCE inflation, which is the Fed’s benchmark rate for inflationary pressure, is now expected to hit a median rate of 4.8% in 2022 before easing to 3.5% and 2.5% in 2023 and 2024 respectively.

By all means, the Fed is forecasting that inflation will be tamed in time to come. Hence, in all likelihood, we have seen the peak in inflationary pressure but perhaps we will be in for a higher US rate for longer before we see the Fed’s pivot.

Contrary to market expectations, the FOMC minutes this week revealed that the Fed is not expected to cut rates in 2023.

As for the market, based on Fed Fund Futures the Fed is expected to raise the FFR by 25 bps each over the next three meetings to reach 5.00% and 5.25%, followed by two rate cuts of 25 bps each in the second half of 2023, bringing the FFR back to 4.5% and 4.75% at the end of 2023.

Bank Negara to stand pat?

Compared to many central banks in the region or globally, Bank Negara move to raise the benchmark Overnight Policy Rate (OPR) by 100 bps last year is seen as rather muted.

Based on the year-to-date core CPI of 2.9% up to November 2022, the inflationary pressure experienced by Malaysia remained within Bank Negara’s forecast of between 2% and 3% for the year and going into 2023, core inflation prints will remain elevated at the beginning of the year but may ease later on, especially with the current government’s efforts in reducing the cost of living.

Given that scenario and the likelihood that the Fed and other regional central banks too are almost done raising rates, Bank Negara may stand pat and leave the OPR unchanged for 2023 at 2.75%. After all, a higher rate of between 25 bps to 50 bps as predicted by many broking firms will only result in higher borrowing costs for consumers and businesses, a move that will likely accelerate the pace of economic slowdown in 2023. By leaving the OPR unchanged, Bank Negara is signalling that it is done with raising rates and the current rate remains commodative and supportive of economic growth.

Positive real returns?

One of the arguments for higher interest rates is whether depositors are getting positive real returns, which is the difference between fixed deposit rates and inflation prints.

Chart 2 shows that based on November 2022 statistics, the depositors are at the losing end as the 12-month deposit rate was 132 bps lower than the monthly inflation print of 4%.

However, interestingly, as the market is anticipating rate hikes of 25 bps in the January 2023 Monetary Policy Committee meeting and another hike in March 2023, 12-month fixed deposit rates of many banks have passed the 3% mark and depositors could even easily enjoy rates up to 4% as promotional activities to attract fresh deposits have intensified over the past month. With that, depositors are already getting returns close to the headline monthly inflation prints.

In conclusion, while it makes sense for Bank Negara to stand pat and not raise rates in its first two meetings this year as widely expected, the market has already priced in the scenario that the central bank is ready to raise rates by 50 bps to take the benchmark OPR to 3.25%, the level last seen in March 2019, almost four years ago.

   Pankaj C. Kumar is a long-time investment analyst. The views expressed here are the writer’s own.

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Omicron subvariant XBB.1.5: North Texas doctors closely watching new COVID-19 variant

 

Could the XBB variant fuel another COVID-19 wave?

 

People enjoy leisure time at a business center in Beijing, capital of China, Dec 24, 2022. In recent days, business areas in Beijing have bustled again as the epidemic prevention and control measures have been optimized in line with the evolving epidemic situation. Photo:Xinhua

Chinese experts on Thursday attended an online briefing for the World Health Organization (WHO) members to provide a further update on COVID-19 epidemic information. The WHO said that China has stepped up efforts to share information on the epidemic over the past few weeks, Chinese Foreign Ministry Spokesperson Mao Ning said on Friday.

According to the WHO, China has been uploading genetic sequencing data of the virus and sharing more information about the epidemic over the past few weeks. China is ready to strengthen cooperation with the international community including the WHO to better tackle challenges of the epidemic and protect people's lives and health, said Mao.

Experts from the Chinese Center for Disease Control and Prevention and Southeast University attended the online briefing for member states of the WHO on Thursday, according to the National Health Commission, a latest move by China to carry out close cooperation with the WHO.

At the meeting, the WHO Secretariat briefed member states on the latest situation of the global coronavirus outbreak and vaccination coverage. The Chinese experts introduced China's current measures for COVID-19 prevention and control, variant strains monitoring, vaccination and clinical treatment, and actively exchanged views with member states, according to the health authorities.

Mao said on Thursday that since COVID began, China has shared information and data with the international community including the US in an open and transparent manner, in response to the international community's concerns over China's epidemic situation and requests for more detailed and accurate information.

China has held several technical meetings with the WHO and Mao also briefly revealed the related information at the regular press briefing. Mao confirmed on Thursday that Chinese experts would further inform the WHO of epidemic containment in China in detail and respond to technical issues that are of concern to other parties at the WHO briefing with member states.

Mao noted that facts have proven that China has always maintained close communication with the WHO and shared information and data on the epidemic in a timely, open and transparent manner in accordance with law. 

Mao also stressed that China's COVID situation is under control and called on all countries to take science-based and proportionate COVID response measures in response to some countries' travel restrictions targeting travelers from China 

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 Western news agencies, politicians maintain insistence on their double standards no matter how China changes its anti-virus policies

Passengers wait for trains at the Hankou Railway Station in Wuhan, Central China's Hubei Province, on December 30, 2022, ahead of New Year's Day. Photo: IC 

No matter how China decides to deal with the COVID-19 epidemic, some Western media and some Western politicians will never be satisfied.

Over the last three years, when China adopted a strict virus prevention and control policy and effectively protected the health and safety of its people, some Western pundits relentlessly made unfounded criticism, demanding China to "open the door," otherwise there would be "no freedom and human rights." 

However, at the end of 2022, when China optimized and adjusted its domestic epidemic prevention policy according to the changes in the global situation, some Western politicians and media outlets began to blame China for being a "threat" to other countries' defense in terms of the pandemic.

Analysts pointed out that this is another collective political shows put on by certain countries in the West, and once again they want to blame China for the pandemic in order to contain and isolate China.

With their clumsy political performances, they are trying to create a new round of division and confrontation, which will seriously hinder swift collective global recovery from the haze of the pandemic, analysts said.

White House Press Secretary Karine Jean-Pierre said on Tuesday that the US and other countries are taking health measures targeting people traveling from China to protect their citizens, and China should not take retaliatory measures.

Mao Ning, China's Foreign Ministry spokesperson, responded on Wednesday, stating that "We have noted that, recently, some people in the US have made comments on China's COVID policy adjustment. We also noted that many people have said if the US had not politicized the pandemic, and had treated it responsibly and put people's lives first like the Chinese government did, perhaps the COVID situation in the US and the whole world would not have become what it is today."

"We truly hope the focus will be on tackling the virus rather than politicizing the COVID issue, and countries can step up solidarity and make joint efforts to defeat the global pandemic as soon as possible," she noted.

Never-ending biases

Some Western media outlets have politicized China's efforts to prevent and control COVID while taking the epidemic as a political tool to defame China.

The New York Times, for example, pointed fingers at China in a report on December 27, 2022, claiming that China did little in using three years to bolster its health system and launch vaccination drives targeting millions of vulnerable senior citizens. 

Such a biased tone is rampant in certain Western media coverage that exaggerated the epidemic crisis in China through exaggerating sensationalist stories, extreme tragic cases in hospitals, and horrific images at crematoria across the country.

These narrative and tactics are very familiar to most Chinese people as these rhetoric and tactics have been used in earlier reports that had tarnished China's "dynamic zero-COVID" policy before China optimized its policy and eased its epidemic control measures. 

For example, on November 16, 2022, the New York Times published an article entitled "What videos show about the extremes of China's 'zero-COVID' policy." In an attempt to delegitimize and smear China's epidemic control policies, the article stated that the Chinese government had employed extreme measures such as separating children from their parents and enforcing strict punitive measures for violators. 

In fact, China had used the last three years to learn from the ever-developing global pandemic situation. From 2020 to 2022, China's monthly case fatality rates have seen a drastic decline. 

What's more, vaccination rates increased over the last three years which has effectively slowed severe morbidity. By December 23, 2022, China's 31 provinces have seen 3.47 billion doses of vaccination administered, with the coverage rate of the whole population exceeding 90 percent, according to domestic media reports.

A top official from the National Health Commission (NHC) said in a recent interview that the Chinese government had anticipated increased demand for medical treatment while optimizing epidemic prevention management, and was trying to delay peak infections as much as possible by increasing the availability of fever clinics and related medicines.

By contrast, some Western countries, with much more advanced medical systems and being rich in resources, have scored poorly in preventing and controlling their local epidemics if we look at, for instance, the over 1 million death toll in the US attributable to COVID-19. 

Another risk constantly hyped and exaggerated by Western media is that China's mass infection could create a "potential breeding ground" for new variants to emerge.

"The fact that 1.4 billion people are suddenly exposed to SARS-CoV-2 obviously creates conditions prone to emerging variants," French media France 24 quoted experts as saying. 

Similarly, the Washington Post portrayed China as "a threat to the entire world" because "it's escalating toll of infections could generate new variants that might be more transmissible or cause more severe disease."

But these accusations turned out to be groundless. China has been closely tracking the new strain. Xu Wenbo, an official at the Chinese Center for Disease Control and Prevention, said on December 22, 2022 that hospitals across the country would collect patient samples and upload the sequencing information to a new national database, allowing authorities to monitor possible new strains in real time. 

Scientifically speaking, the strains currently circulating in China are primarily BA.5.2 and BF.7, which are already prevalent around the world. That means that, as the Washington Post put it, "Variants can emerge from anywhere." A particularly aggressive new strain of the Omicron variant, XBB.1.5, is taking hold in New York and the northeast of the US. US CDC models say the XBB variants represent about 40.5 percent of the total infections in the US, according to the Washington Post.

Health experts in many countries have said there is no need to impose entry restrictions on travelers from China. Some analysts point out that this is yet another collective political performance by certain countries, who once again want to blame China for the pandemic in order to contain and isolate China.

People enjoy dinner services at a restaurant in Beijing on December 24, 2022. Photo: Li Hao/GT

Unremitting smearing

In the last three years since the outbreak of the COVID-19 pandemic, China has made every possible effort to protect the lives and health of the Chinese people while fighting and curbing various mutations of the virus. From a global perspective, China's severest disease and death rates are among the lowest. 

Meanwhile, some Western countries buried their heads in the sand early on, unwilling to deal with the reality of COVID-19 when the virus was most ferocious, leading to heavy loss of life. But they tried hard to avoid talking about the heavy price they had paid, and instead repeatedly blame others. 

In the early stage of the pandemic, when the Chinese people were at the forefront of the valiant fight against the rampant spread of COVID-19, media outlets in the West such as the New York Times (NYT), The Economist, and The Guardian failed to portray the real situation when they should have, but were quick to use underhanded tropes to perpetuate double standards against China's efforts.

Some Western media outlets have systematically stigmatized China and created Western political discourse against China. For instance, "isolation" is called "blockade," and anyone who praised China's work was termed as "catering to China."

Let us not forget that some Western media outlets and Western politicians insisted on calling COVID-19 the "Wuhan virus" to stigmatize an innocent city and incite racist sentiment against Chinese people around the world.

In March 2020, two tweets by NYT posted 20 minutes apart showed how Western media have unashamedly engaged in double standards. The two posts described China and Italy's response to the epidemic - in the first tweet, the NYT Twitter account claimed that China's isolation measures came "at great cost of people's livelihood and personal liberties"; whereas 20 minutes later, while talking about Italy's similar actions, the newspaper praised it for risking its own economy to stop the spread of what was Europe's worst epidemic at the time.

"The measures those [Western] countries have taken were just to stage a political stunt," said Shen Yi, a professor at the School of International Relations and Public Affairs of Fudan University. "Since the outbreak of the COVID-19 pandemic in 2020, the performance of these countries was obvious to all. For example, the US, which had advanced medical resources and public health emergency response capacity, scored very poorly in COVID-19 prevention and control," he told the Global Times.

"If these countries could divert just 1 or 2 percentage points of their thoughts from smearing China, would we have reason to believe that the global fight against COVID-19 would see a light at the end of the tunnel sooner?" asked Shen. 

Collusion with US government

In the political logic of some people in Europe and the US, no matter whether China decides to "open the door" or "close the door," it is wrong either way. Some Western media and politicians' opinions change with the wind, analysts said.

Li Haidong, a professor at the Institute of International Relations at the China Foreign Affairs University, noted that some Western media outlets in fact cooperate and collude with the US government. "Some Western media are responsible for smearing and attacking China's epidemic control policy no matter what China does."

These media outlets did not report China's epidemic prevention and control measures based on fact but they tried to use it to smear China's international image and weaken China's governance and influence. 

"Such behavior can be called a tragedy. But this is reality," Li said. 

"The US government enlisted some media to use the COVID-19 pandemic as a political tool. So they smeared China's anti-pandemic contributions in China and other parts of the world. They did this to help US gain advantage in an international competition," he said. 

Shen noted that for other countries and regions, they should avoid using China as a scapegoat, and instead, they should have implemented effective COVID-19 control measures. However, the situation looks less rosy at the moment. The U-turn as characterized by certain countries' words and moves related to China's adjustment of epidemic control measures is an all-out sign of a desire to attack China. 

Meanwhile, China has gained a clear understanding of the post-pandemic situation, as the rest of the world employs electron microscope-level scrutiny as led by American and Western public opinion and anti-China politicians, analysts noted.

"If there is a slight flaw, it will be magnified infinitely. If they cannot find a flaw, they will just create one," Shen said. 

"China's great contributions to the global fight against the pandemic are undeniable. We don't need to listen to those biased and malicious voices," he stressed. "After all, the road is under our own feet." 

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NASA chief’s hawkish remarks another pathetic attempt, exposes US own hegemony and colonial ambitions

Illustration: Liu Rui/GT m Illustration: Liu Rui/GT 

 

Chinese experts battered the latest round of attacks from NASA chief Bill Nelson, saying his smearing remarks against China's space development are yet another ridiculous and pathetic attempt to hype the "China threat" theory to get more funding, which only exposes the US' own hegemonic and colonial ambitions.

In an interview with POLITICO, Nelson said the race to the moon between the US and China is getting tighter and the next two years could determine who gains the upper hand.

He warned that Beijing could try to "dominate" the locations they step foot on the lunar surface or even try to "keep the US out," while citing the Nansha Islands as an "example" to prove his point. 

The remarks angered Chinese researchers and commentators who have repeatedly made clear that China's exploration of the moon is dedicated to the advancement of humanity. 

"Being a former astronaut himself, it is pathetic that he would play the trick of a thief crying 'stop thief,'" Song Zhongping, a space analyst and TV commentator, told the Global Times on Tuesday. 

It is an established fact written into the United Nations Outer Space Treaty and others that the moon does not belong to any country in the world, while the Nansha Islands are indisputably part of China's territory. Comparing these two shows that Nelson does not even understand international law or the Outer Space Treaty, Song noted.

Nelson's attempt in a way reflects the mentality that the US wants to colonize the moon and consolidate its own hegemony in space, analysts said, evident in the new space version of an "Enclosure Movement" of the Artemis program, which gathered "like-minded" partners such as Canada, Japan and Europe but excludes China and Russia. 

Nelson's remarks failed even to convince its own scholars. Victoria Samson, Washington director of the Secure World Foundation, said she is dubious about the "moon brawl," noting that China, like the US, is a party to the Outer Space Treaty, which bars nations from making territorial claims on any celestial body, including the moon, POLITICO reported.

It will be difficult for any nation to maintain a long-term human presence in deep space, she said, which makes the claims more unrealistic.

Nelson's remarks followed US congressional approval to fund NASA with $24.5 billion in fiscal 2023, about half a billion dollars less than US President Joe Biden had requested.

While still expressing "confidence" that the next moon mission could happen as planned to send a crew into the moon's orbit by 2024, he admitted that the agency is "under intense pressure" because it has been forced, as a cost-saving measure, to reuse all the avionics inside the Artemis I capsule for Artemis II.

Huang Zhicheng, a Chinese expert in aerospace science and technology, told the Global Times on Tuesday that NASA, with a lot on its plate including the operation of the International Space Station, the Artemis program and deep-space exploration projects, is hyping the "China threat" theory to get more money, as the just-concluded Space Launch System is already years behind schedule and billions of dollars over budget. 

There is still a huge gap in the budget and many problems to solve for the US' manned moon landing to succeed, Huang said. 

Specifically, Boeing that is undertaking the rocket launch tasks for the Artemis program has a chaotic management and it is hard to get the tasks done on time. For another thing, the moon lander being developed by SpaceX is yet to achieve its designated progress, and if the lander cannot be completed successfully this year, it may further delay the entire project, Huang noted. 

Publicly attacking China's space program has become routine for NASA in the past few months. In December, the NASA chief accused China of being "one of the very few nations" that would not be partners with the US and that it is being "very secretive" in terms of space programs. In September, Nelson accused China of lacking needed transparency over issues. In July, the NASA chief blatantly claimed that China is "trying to occupy the moon." In May, he said that China stole the US' space technology. 

"These accusations fired by NASA are unfounded and unjustified," Song said. "China has always had a cooperative and open attitude in the space sector." 

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China rejects using COVID measures for political purposes, vows to take corresponding measures based on reciprocity principle

 

Beijing Daxing International Airport Photo: Xinhua

 

While EU countries are scheduled to meet on Wednesday on a coordinated response to the epidemic situation in China, about a dozen countries have imposed fresh travel regulations on travelers from China, which are considered as "temporary, unnecessary and lacking scientific basis," some Chinese official and experts said. 

They also believed that the new regulations are "just a waste of time and resources," and some excessive measures are unacceptable, which are political manipulation and discriminatory. 

In response to those moves, Chinese Foreign Ministry said on Tuesday that the country will take corresponding measures in response to varying situations based on the principle of reciprocity.

Health officials from EU countries will hold talks on Wednesday after a similar meeting was held urging the EU countries to test passengers arriving from China on December 29 as China is poised to ease travel restrictions on January 8. 

A spokeswoman for the Swedish presidency of the EU was quoted as saying in a Reuters report that "there's a scheduled Integrated Political Crisis Response meeting on Wednesday, January 4, for an update of the COVID-19 situation in China and to discuss possible EU measures to be taken in a coordinated way." 

Only France, Italy and Spain require tests in the 27-nation bloc, and France also urged the EU on Sunday to follow suit as the country obliges passengers on flights from China to present proof upon boarding of having tested negative for COVID-19 less than 48 hours before takeoff. 

Belgium will test wastewater from planes arriving from China for new COVID variants as part of new steps against the spread of the coronavirus as infections in China surge, Reuters reported, citing the government announcement on Monday.

Some countries outside the EU also imposed similar restrictions, for example, the US Centers for Disease Control and Prevention said recently that from January 5, travelers boarding flights to the US from the Chinese mainland, Hong Kong and Macao would need a negative COVID-19 test or proof they had recovered from a previous infection. 

The requirements also apply to passengers arriving in the US via a third country and to those connecting to other destinations through the US.

However, some countries may see a change in their policies. Passengers from China who arrive in the UK next week will not face compulsory COVID-19 tests on arrival, British media outlet The Independent reported on Monday, after the government is reportedly bringing back travel restrictions for passengers from the Chinese mainland starting from January 5. 

Mao Ning, spokesperson of the Chinese Foreign Ministry, said at a routine press conference on Tuesday that since China released the provisional measures, many countries have responded warmly to them. We appreciate this and will continue to adapt and adjust our COVID response measures in light of the latest COVID situation, better facilitate the safe and orderly cross-border travel of Chinese and foreign nationals and international exchange and cooperation.

Regarding the restrictions targeting travelers arriving from China, my colleague responded to relevant questions last week. I'd like to reiterate China's position. We stand ready to step up communication with the rest of the international community and work together to prevail over COVID, Mao said. 

"Meanwhile, we do not believe the entry restriction measures some countries have taken against China are science-based. Some of these measures are disproportionate and simply unacceptable. We firmly reject using COVID measures for political purposes and will take corresponding measures in response to varying situations based on the principle of reciprocity," Mao said. 

Some major reasons cited by Western media in explaining the new restrictions imposed by some countries on travelers from China include growing worries over a lack of information from China on variants and concerns about resurgence of infections. However, some health professionals doubt that whether the rules are necessary and feasible. 

"I think that requiring a PCR test for every traveler is unnecessary. As the world is now mainly preventing more virulent and more transmissible variants, it's more important to conduct on-site sampling to track variants through genomic sequencing," Chen Xi, an assistant professor of public health at Yale University, told the Global Times on Tuesday. 

Many countries are now fully largely vaccinated in order to prevent a large outbreak of mutated variants while still worrying about new subtypes of Omicron, which probably makes the genomic sequencing more effective than PCR tests, Chen said. 

"I believe those countries' travel ban is only temporary, as China just relaxed its COVID-19 response and cases began to increase. Yet I believe their measures of detecting samples from arrivals from China, as well as requiring test results from those passengers, are just a waste of time and resources," an expert close to Chinese CDC told the Global Times on Tuesday on the condition of anonymity. 

The COVID-19 cases are ballooning all around the world and it is possible that new variants could be appearing in any country, he said. "The most important thing is that disease control departments all around the globe keep monitoring new variants and keep the public informed," the expert noted. 

"Maybe politicians like to hype such a threat, and show their people that the government is doing something to protect its people from danger, but from a virology perspective, I think those restrictive measures are unnecessary," he said. 

Health experts from many countries have said that the main variant now spreading in China has previously been found elsewhere already, and that a new variant can emerge anywhere on the planet, which means entry restrictions targeting China are unnecessary, Mao said. 

"China always believes that for all countries, COVID response measures need to be science-based and proportionate. They should not be used for political manipulation, there should not be discriminatory measures against certain countries, and measures should not affect normal travel and people-to-people exchange and cooperation," Mao stressed.  

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     Illustration: Liu Rui/GT   People’s fear toward Omicron eases quickly   Making a reasonable argument is not a term in Washington'.

 

West’s attempts to deny China’s three-year effort against COVID by criticizing a short period of imperfection will end up in vain; by criticizing China’s COVID policies, West is getting its retaliation in first

 

 

West’s attempts to deny China’s three-year effort against COVID by criticizing a short period of imperfection will end up in vain; by criticizing China’s COVID policies, West is getting its retaliation in first

 

Children skate at a business center in Beijing, capital of China, Dec 24, 2022. Photo: Xinhua

 

After easing epidemic restrictions, China is facing a new wave of COVID infections. And Western media is wasting no time promoting the narrative that China's three-year fight against the virus is ending in failure. Take a CNN article published on Wednesday. It suggests that zero-COVID was supposed to prove China's supremacy, but it went so wrong. 

CNN compared the start of 2022 - "when Beijing showcased the success of its COVID containment measures by keeping the coronavirus largely at bay from the Winter Olympics" - with the "chaos and disarray" by the end of the year. 

It's not hard to find that those who once smeared China as "authoritarian" because of strict COVID containment measures are the same group of forces who are now accusing China of walking into "chaos and disarray" after its COVID policy is optimized. This time, they have a vicious goal - to deny China's whole efforts over the past three years, to discredit China's national governance fundamentally. 

China's 2022 journey started from the Winter Olympic Games, the first global comprehensive sports event that has been successfully held as scheduled since the outbreak of the pandemic. Later, some cities and regions, represented by Shanghai, went through a rebound of COVID cases. At the end of the year, China gradually adjusts its policies, initiating a transition mode toward returning to normalcy. 

Unlike the previous two years, the major virus that confronts China in 2022 is Omicron. Soon after the virus was spotted in China by the end of 2021, it is realized that Omicron spreads fast and outpaces other variants of coronavirus where community transmission occurs. China's epidemic prevention and control measures in 2022 can be argued as a process of constant adjustment and optimization in the face of the changing situation of the epidemic. As it turned out, Omicron can hardly be blocked, but is less virulent than earlier strains like Alpha and Delta. Against this backdrop, China has decided to open up. The result now does prove that it is more transmissible, but the percentage of cases causing severe illness is low.

However, one can feel the barely contained glee in Western journalists' reporting when touching upon this round of infections. After all, China's previous response made the policies of quite a few Western countries look inept by comparison and, because of the same reason, made their elites anxious. 

Yet those Westerners' attempts to deny China's three-year effort against COVID by criticizing a short period of imperfection will end up in vain. In terms of China's fight against the epidemic, one cannot separate 2022 from the two previous years. To grade China's handling of the public health crisis, one should examine it based on the big picture. 

First, whether people's lives and health are well protected is beyond all doubt the top criterion. China not only avoided the high mortality rates like those in the US and European countries, but also witnessed a steady growth in life expectancy. By contrast, US life expectancy has dropped to the lowest level since 1996. 

Second, China's economic development was not so much disturbed. China is the only major economy in the world with positive GDP growth in 2020. As grocery store shelves across the US were wiped clean and have stayed empty for quite a long time, there is no such situation in China. Nor has China ever faced severe inflation like in developed countries. China's domestic market supply is basically operating in full motion. Against the backdrop of this winter, this can be described as a miracle, Lü Xiang, a research fellow at the Chinese Academy of Social Sciences, told the Global Times. 

Neither is there social turmoil in China, expected by the West. Some people have complaints, but most trust the government. Because the achievements made over the past three years are solid, thanks to China's institutional advantages. Take two examples. China has always put the people and their lives first when dealing with the epidemic; China is capable of pooling resources and mobilizing forces from all quarters to confront major challenges. Quite a few Western countries have failed that test. 

Omicron did cause a shocking wave in China. Yet as Liang Wannian, head of China's COVID-19 response expert panel under the National Health Commission, said, some Chinese cities have passed or are passing the first wave of peak infections without frightening widespread levels of death. This is because we have postponed the easing of restriction, kept away from the time when the virus was the most savage.

By the end of 2022, there are problems and imperfections. But China has done relatively the best in battling the virus. There is no major panic during the latest COVID wave, because people know that the principle "nothing is more precious than people's lives'' still prevails. And the Chinese society will never head toward a point where the natural selection of the human species is becoming a reality, or in other words, Social Darwinism, like what has been going on in the West. 

Western media outlets and elites are only accusing China to make themselves feel better. The truth is, there will be pains in China's transition period, but the day the West wants to see - when China is trapped in a worse quagmire of the epidemic than the West - will not come. 

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 By criticizing China’s COVID policies, West is getting its retaliation in first

llustration: Chen Xia/GT

 

For almost three years, China's dynamic zero-COVID policy was phenomenally successful, particularly when compared to other countries like the UK and the US which appeared to place their economies above the health of their citizens.

Those countries in the West poured scorn on China, alleging its behavior was damaging to its economy and therefore - because so much of the world is mutually connected to China's economy - impacting negatively the West's wealth. These criticisms came because those countries, when striking a balance between safeguarding their people's wellbeing and protecting their economies, found a different center of balance than China. They were prepared to take greater risks than China, and for this China was castigated.

Today, those other countries are continuing to pour scorn on China, but this time the criticism is because China has changed direction. But their motivations are the same: they are concerned about the impact not on public health, but on their economies.

In the media, reports are mostly heavily negative. Their tone exposed in language, often at odds with what might be expected to be dispassionate, objective reportage. Terms like a "tsunami" of infections, the state "rushing" to respond, an "abrupt" or "screeching U-turn" in policy are used to suggest that the new measures are unplanned or panic-stricken. There has been frequent, and pointed, mention of China's system, as if this alone was costing people's lives. Correspondents, some of them not even in China, have been relying on what they themselves acknowledge to be unverified anecdotal stories and supposed leaks of information which have not been confirmed.

In their eyes, it seems, China cannot win: it is damned, whatever it does.

China's zero-COVID policy was not perfect, but it is undeniable that it saved many lives. In the US, about 1.1 million deaths have been registered as resulting from COVID. In the UK - where the government knowingly sent thousands of infected elderly hospital patients into care homes where they passed on the sickness to other residents and staff: condemning them to their deaths - about 213,000 have died.

Even allowing for different counting and classifying methodologies and other factors, the differences are stark, and the conclusion is clear: Dynamic zero-COVID worked.

China walked the tightrope to keep its people alive. The US and UK lost their balance and fell. When the protests in China began, they were almost gleefully reported in the West as proof that a policy which saved millions from death or disability was no good. And still the criticism comes. How can countries which sacrifice their own citizens for the sake of their economies then feel able to criticize others? No politicians in the West have earned that right.

Now, we are seeing the media outside China reporting "concerns" that China may lose control and possibly enable new COVID variants to escape into the world. Whether it is the London-based international news agency Reuters, or Germany's state-owned broadcaster Deutsche Welle, or America's state-funded National Public Radio, stories are repeated, calling for the West to brace itself for a surge in COVID; that China is "losing its grip" on the virus. Those stories regularly suggest that it is the Chinese system to blame. Conveniently, there is no suggestion that Western capitalist "democratic" system is at fault.

Why are they so smug? Perhaps they are getting their retaliation in first. This is a saying which describes the behavior of a cynical individual who knows they are in the wrong, but who hopes that a distraction technique of blaming someone else even before a catastrophe has occurred will lessen the chance of the cynical individual being held responsible.

By Mark Blacklock - The author is a journalist and lecturer living in Britain. 

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TIGHTENING THE SCREW ON BIG TECH

The European union’s big battle to keep technology behemoths in check rages on.

 

THE European Union is on a mission to get US tech giants to stop avoiding tax, stifling competition, profiting from news content without paying and serving as platforms for disinformation and hate.

Last month, the European Commission announced that online retail giant amazon had agreed to make changes to its software to end two EU inquiries into its treatment of third-party sellers on its online marketplace.

the EU also warned Elon musk that twitter could be subject to sanctions under a future media law after the “worrying” suspension of several journalists from the messaging platform.

Here is a summary of the tussles between Silicon Valley and Brussels.

Stifling competition

The digital giants are regularly criticised for dominating markets by elbowing out rivals.

Last July, the European Parliament adopted the Digital markets act to curb the market dominance of Big tech, with violations punishable with fines of up to 10% of a company’s annual global sales.

Brussels has slapped over Us$8bil (rm37.7bil) in fines on Google alone for abusing its dominant market position.

In 2018, the company was fined Us$4.3bil (rm20.2bil) – the biggest ever antitrust penalty imposed by the EU – for abusing the dominant position of its android mobile operating system to promote Google’s search engine.

Google lost its appeal against that decision in September 2022, though the fine was reduced to Us$4.1bil (rm19.3bil).

the firm is also challenging a Us$2.4bil (rm11.3bil) fine from 2017 for abusing its power in online shopping and a separate Us$1.5bil (rm7.1bil) fine from 2019 for “abusive practices” in online advertising.

the EU has also gone after apple, accusing it of blocking rivals from its contactless iphone payment system, and fined microsoft Us$561mil in 2013 for imposing its browser, Internet Explorer, on users of Windows 7.

The European Commission is also looking into whether Facebook’s parent company, meta, broke antitrust laws by linking its personal social network to its classified ads service, Facebook marketplace.

Turning to taxation

The EU has had less success in getting US tech companies to pay more taxes in Europe, where they are accused of funnelling profits into low-tax countries like Ireland and Luxembourg.

In one of the most notorious cases, the European Commission found in 2016 that Ireland granted illegal tax benefits to apple and ordered the company to pay Us$13bil (rm61.2bil) in back taxes.

But the EU’S General Court later overturned the ruling, saying there was no evidence the company broke the rules.

The European Commission also lost a similar case involving amazon, which it had ordered to repay Us$250mil (rm1.2bil) in back taxes to Luxembourg.

In October 2021, following extensive lobbying by European countries, the G20 group of nations agreed on a minimum 15% corporate tax rate.

Personal information

Tech giants are regularly criticised over how they gather and use personal data.

The EU has led the charge to rein them in with its 2018 General Data Protection regulation, which has since become an international reference.

Companies must now ask for consent when they collect personal information and may no longer use data collected from several sources to profile users against their will.

Amazon was fined Us$746mil (rm3.5bil) by Luxembourg in 2021 for flouting the rules.

Meanwhile, Irish authorities have gone after meta twice this year.

Last September, they fined Instagram, a meta subsidiary, Us$405mil (rm1.9bil) for breaching regulations on the handling of children’s data.

and in November, they fined Facebook Us$265mil (rm1.2bil) over a massive data leak involving the details of more than half a billion users.

Fake news and hate speech

Social networks, particularly Facebook and twitter, are often accused of failing to tackle disinformation and hate speech.

In July, the European Parliament approved a Digital Services act that forces big online companies to combat hate speech, disinformation and piracy or face fines of up to 6% of their global turnover.

It comes into effect in 2023.

Paying for news

Google and other online platforms are also accused of making billions from news without sharing the revenue with those who gather it.

To tackle this, an EU law in 2019 created a form of copyright called “neighbouring rights” allowing print media to demand compensation for use of their content.

France was the first country to implement the directive.

After initial resistance, Google and Facebook agreed to pay French media, including AFP, for articles shown in web searches.

That did not stop the company from being fined Us$500mil (rm2.4bil) by France’s competition authority in July 2021 for failing to negotiate “in good faith”, a ruling Google has appealed.

Facebook has also agreed to pay for some French content.-AFP/The Star Malaysia 2 Jan 2023