4 ★ FINANCIAL TIMES Monday23 March 2020
S U N Y U —BEIJING
Chinese banks have lowered rates and
boosted the amounts they will lend to
consumers, even though there has been
a surge in defaults,as Beijing turns to
credit to help boost domestic consump-
tion hit by the coronavirus.
More than a dozen state-owned end-l
ers have started offering promotions,
such as halving borrowing costs and
doubling the amount consumers are
allowed to borrow, since the bank regu-
latorrelaxed redit controls last month.c
An official at the risk management
department of a large bank saidlenders
were participating even if they knew
that some loans were unlikely to be
repaid. “We have to take part in the
operation because the government
wants to support the real economy with
cheap credit,” said the official, adding:
“These loans may go under if the econ-
omy continues to weaken.”
Official data show that retail sales —
an important growth engine for the
economy — fell a record 21 per cent in
the first two months of this year from a
year earlier. Meanwhile, multiple local
banks told the FT their overdue per-
sonal loan ratio had surged by as muchas 60 per cent from January, when the
disease broke out.
Although Beijing is hoping the move
will help get the economy back on track,
analysts warnedthe state-led consumer
credit boom as more likelyw to drive up
the number of bad loansbecause sub-
prime borrowers wouldflood in.
“How could demand for consumer
loans hold up when cars sales collapse
and tourism spending plummets,” said
Ji Shaofeng, a former banking regulator.
“The main reason for people to borrow
right now is to pay off debt and those
borrowers are likely to default in an eco-
nomic downturn.”
Chinese consumers trimmed short-
term borrowing by a record Rmb450bn($63bn) in February, according to the
People’s Bank of China — the measures
to boost consumer borrowing came into
effect only towards the end of February.
Despite analysts’ doubts, Beijingsees
personal loans as a solution to economic
woes. Ye Yanfei, an official at the China
Banking and Insurance Regulatory
Commission, said the government
would “count on” consumer credit to
help consumption recover.
The new stance marks a sharp con-
trast from a few months ago, when the
regulator put consumer loans under
tighter scrutiny to reduce credit risks.
Lenders have been quick to pick up
the signalled change in policy. Industry
leaders such as the Industrial and Com-mercial Bank of China have cut con-
sumer loan rates to as low as 4.4 per cent
from more than 6 per cent at the end of
last year nd increased the amount thata
clients can borrow by up to a third.
The smaller Shanghai Rural Commer-
cial Bank has reduced its lending rate to
3.6 per cent a year for a consumer loan
product, compared with the benchmark
one-year lending rate of 4.35 per cent.
“Credit demand has vanished follow-
ing the outbreak of the coronavirus,”
said an official at SRCB. “The best way to
bring it back is by offering better terms.”
The lending campaign, however, has
raised concerns about credit risks
because defaults have also taken off.
Additional reporting by Xinning LiuDAV I D P I L L I N G— LONDON
J O S E P H C OT T E R I L L —JOHANNESBURG
N E I L M U N S H I— LAGOS
Much of Africa is taking earlier action
than Europe to suppress coronavirus in
an effort to stamp out a disease that may
be impossible to control if it takes hold
in countries with crowded informal set-
tlements and fragile health systems.
In a strategy thatborrows morefrom
Asia thanEurope,African governments,
including Ghana, Kenya and Rwanda,
have sought to get ahead of the disease
by announcing school closures, bans on
social gatherings and travel restrictions,
despite having recorded relatively few
cases. Despite the efforts, an accelera-
tion of cases in recent days has led some
to believe that large parts of Africa may
be on a similar trajectory to Europe.
In South Africa, which now has more
than 200 confirmed cases, the govern-
ment has declared a national disaster.
Lagos, Africa’s biggest city with 21m peo-
ple, as closed schools and banned massh
gatherings, including religious services.
In Kenya,Safaricom, which is part gov-
ernment owned, has waived transaction
fees for electronic money transfers below
$10 to limit the handling of cash. Tanza-
nia has joined other countries in ban-
ning handshakes and hugging.
The unfolding strategy comes after
the number of African states with con-
firmed casessuddenly spiked to nearly
40 — three-quarters of all countries in a
continent of 1.2bn people. Angola and
Zimbabwe are among the latest to
report their first cases.
The continenthad more than 1,
confirmed cases byyesterday, with 39
deaths, according todata ollated fromc
the World HealthOrganization and
national governments.Although that is
relatively low by European and Asian
standards, it has been rising quickly and
a lack of test kits means thenumber
could be far higher. Sudan’s first case
was reported posthumously.
“The window is narrowing,” said
Michel Yao, head of emergency response
at the WHO’s regional headquarters in
the Republic of Congo. “We still have a
chance to avoid the worst,” he said, add-
ing that Africa had some advantages
including a younger population and
warmer weather, which some predict
might slow the spread of the disease. “If
we miss it, it could be a very serious
issue. The health system cannot absorb
a big number of people falling sick.”
South Africa, which isgoing into win-
ter, hasabout 1,000 intensive care unit
beds inpublic and private hospitals for a
population of 57m. Nigeria, with 200m
people, is thought to have far fewer.
Health experts say conditions in
Africa are different from those in
Europe and Asia. Africa’s median age of
19.4 may reduce fatalities, but transmis-
sion could be harder to prevent in
crowded, poorly sanitised cities, they
say. In the countryside, where popula-
tion densities are lower, problems from
malnutrition to weak immune systems
owing to the high prevalence of HIV-
Aids in some communities, could also
make people more vulnerable.
Experts warned of what would happen
when the virus reached South Africa’s
townships and informal settlements
where most of the black population live.
“There’s overcrowding and a lack of san-
itation. In these areas, once it gets in, we
will have widespread infection,” said
Atiya Mosam, a doctor and publichealth specialist in Johannesburg. She
said measures to stop transmission were
difficult to implement given shortages
of piped water and other services.
Jan Egeland, secretary-general of the
Norwegian Refugee Council,said the sit-
uation was even more dire in refugee
camps, such as those in the Sahel where
up to 1m people have been displaced by
intercommunal violence and a growing
jihadist threat. “How can you do social
distancing when thousands of people
are crowded together in a tiny camp or
refugee settlement?” he said.
Gyude Moore, a government minister
in Liberia during the 2014 Ebola out-
break that killed more than 11,000 peo-
ple in west Africa, said conditions were
more difficultin Africa because of wide-
spread poverty. It was no good asking
people to stayhome when they needed
to work every day to survive, he said.
Christian Happi, a Cameroonian sci-
entist and director of the African Center
of Excellence for Genomics of Infectious
Diseases in Nigeria, said African health
systems had gained experience of deal-
ing with mass infections during Ebola
and other outbreaks. “In terms ofcom-bating outbreaks with limited resources,
Africa is much better prepared because
they have been for years dealing with
these diseases: Ebola, yellow fever, lassa
fever, monkey pox,” he said.
Mr Happi —one of the continent’s
leading scientists —has sequenced the
genomes of the Ebola virus, yellow fever
and, most recently, the coronavirus that
an Italian businessman brought to
Nigeria in late February in sub-Saharan
Africa’s first case. Byyesterday, Nigeria
had 25 confirmed cases.
One irony of the coronavirus spread
in Africa, saidDr Yao, was that it came
mostly from Europe rather than from
China, as had been expected. That was
because China, with the exception of
Wuhan, had been more successful in
containing the virus than Europe, from
where flightshad continued, he said.
Mr Moore warned that if the virus
took hold, traditional donors would be
of little assistance.“In the past, you
could look to the west to help. But they
are battling the same thing, so it’s not
clear any help is coming at all.”
Additional reporting by Donald Magomere
in NairobiL AU R A N O O N A N A N D JA M E S
F O N TA N E L L A- K H A N— NEW YORK
JA M E S P O L I T I A N D B R E N DA N G R E E L E Y
WASHINGTONUS banks are seeking assurances from
the Federal Reserve that they will
not be penalised if they temporarily
breach liquidity rules because of emer-
gency lending to clients stricken by
thecrisis.
Lenders are pressing the central bank to
flesh out its promise not to sanction
thosethat run down their liquidity buff-
ers to aid the economy, and are also
exploring other ways the Fed and banks
can work together to boost lending with-
out banks taking on too much risk.
The news follows statements from the
Fed designed to get banks lending,
including publicly encouraging them to
reduce their capital and liquidity buff-
ers to minimum levels and take funding
from a crisis-era liquidity facility known
as the discount window.
“There’s been a lot of dialogue and it’s
been very constructive,” said a senior
executive at one large bank. Peers con-
firmed that talks between the Fed and
banks over boosting lending had been
going on for several weeks, resulting in
public announcements setting the tone
for banks to do more lending.
“Our message to everybody is we need
to keep the funds flowing to get the
economy going. That is job one,” said
Patrick Harker, president of the Phila-
delphia Fed. “The shock that’s hit our
society and our economy is severe. So
we need to do whatever it takes, all of us,
not just theFed, but everybody, to get
the money to where it’s needed now.”
The Fed wants banks to step up lend-
ing to companies whose businesses will
be starved of cash because of enforced
shutdowns during thepandemic. Work-
ers face lay-offs or reduced hours as nor-
mal life is suspended across entire cities
for an indefinite period of time. Severe
turbulence in financial markets means
that bigger companies are also demand-
ing more support from banks, including
drawing down emergency funding lines
and asking for new facilities.
A Fed statement last week allowing
banks to run down their capital and
liquidity buffers was intended to do just
that, butexecutives say it fell short of
the mark, prompting further discus-
sions. Thebuffers efer to the highly liq-r
uid assets such as cash and T-bills banks
hold above their regulatory obligation
to carry high-quality liquid assets equal
to at least 100 per cent of net cash out-
flows overa 30-day period of stressed
conditions. Therules were put in place
after the inancial crisis to ensuref banks
could survive another meltdown.
One senior executive said that regula-
tors had given “clear” guidance allowing
the banks to dip further into their capi-
tal buffers without having to halt divi-
dend payments or bonuses.
The first senior executive said there
was still some work to be done to con-
vince banks to get their liquidity levels
down to those minimum levels instead
of the 120 o 140 per cent of 30-day out-t
flows they traditionally maintain.
“There could be days when you would
fall below that based on how the market
moves.. we want to make sure if we’re.
below that some days, we don’t get
penalised because we’re doing what
we’re being asked to do,” he added.
Sheila Bairpage 17C L I V E C O O KS O N— LONDON
The most detailed scientific study yet
of a coronavirus patient has produced
encouraging findings about the
immune system’s ability to fight the
virus and help the body recover.
Researchers at the Peter Doherty
Institute for Infection and Immunity in
Australia analysed blood samples from
a previously healthy 47-year-old
woman who contracted Covid-19 and
found that her recovery was due to an
unexpectedly strong immune response.
The woman, whose blood was tested
at four different points during the
course of the disease, had travelled to
Melbourne from Wuhan in China where
the virus originated.
She was admitted to hospital with typ-
ical symptoms of moderateCovid-19,
which had begun four days earlier: leth-
argy, sore throat, dry cough, chest pain,
shortness of breath and fever.
“We showed that even though
Covid-19 is caused by a new virus, in an
otherwise healthy person a robust
immune response across different cell
types was associated with clinical recov-
ery, similar to what we see in influenza,”
saidKatherine Kedzierska of the
Doherty Institute.
The patient’s chest was clear 10 days
after she was admitted to hospital, she
was discharged on day 11, and all symp-
toms disappeared by day 13. Antibodies
against the virus that causes Covid-continued to increase until the study
ended on day 20. A scientific paper on
the case was published inNature Medi-
cine. Oanh Nguyen, another member of
the team, said it was the first report of
broad immune responses to Covid-19.
The numberwho have died as a result
of the virusis more than 13,000 globally.
The most important scientific uncer-
tainty about Covid-19 is the strength
and longevity of the human immune
response — and in particular whether it
is sufficient to build up lasting immu-nity in people who have been infected,
or those who receive as yet undeveloped
vaccines against the virus. This study
shows a powerful initial response, but
no Covid-19 patients have ecovered forr
long enough to judge its longevity.
“We looked at the whole breadth of
the immune response in this patient
using the knowledge we have built over
many years of looking at immune
responses in patients hospitalised with
influenza,” Dr Nguyen said. “Three days
after the patient was admitted, we saw
large populations of several immune
cells, which are often a tell-tale sign of
recovery during seasonal influenza
infection, so we predicted that the
patient would recover in three days,
which is what happened.”
The unnamed woman received intra-
venous fluids to keep her hydrated but
no antibiotics, steroids or antiviral
drugs, and she did not need oxygenation
on a ventilator. “People can use our
methods to understand the immune
responses in larger Covid-19 cohorts,
and also understand what’s lacking in
those who have fatal outcomes,” said
Prof Kedzierska.Finance
China pumps money into consumer loans
Beijingusescreditto boost
the economy but there are
concerns over repayments
Business lending
US banks ask
Fed to rule out
sanctions for
breaches of
liquidity rules
Containment. trategyS
Africa moves swiftly to head off outbreak
Fears over fragile health
systems prompt states to take
early preventive measures
Taking
precautions:
a man walks
through
a market in
Accra, Ghana
Christian Thompson /EPA‘How can
you dosocial
distancingwhen
thousandsof people
are crowdedtogether in
a tiny campor refugee
settlement?’Australia study
Strong immune system can see off Covid-
ST E P H A N I E F I N D L AY
A N D A M Y K A Z M I N— NEW DELHIIndia is locking down large swaths of
the country until at least the end of the
month, as it seeks to control the spread
of the deadly coronavirus following a
surge in cases over the past two days.The curbs will prohibit all but essential
services from operating and will take
effectthis morning. All inter-city and
long-distance trains — which normally
carry 23m people a day — havebeen sus-
pended, as have the local trains in Mum-
bai and Kolkata. The Delhi Metro and
other public transport etworks are alson
being halted.
The restrictions and closures — which
will vary slightly from state to state but
will affect most major cities — were
announcedyesterday evening, as the
number of cases in India surged tomore
than 350, with seven deaths.
India was already in a de facto shut-
downyesterday, as the country of
1.37bn people observed a voluntary
one-day “people’s curfew” at the
request of Prime Minister Narendra
Modi, who appealed for them to stayhome for “just one day”. Many had
speculated that the one-day curfew —
which Mr Modi announced on Thursday
— was intended to prepare people psy-
chologically for longer, stricter meas-
ures, which willnow beimposed by law
enforcement agencies.
“India is moving much more rapidlythan it was before,” said global health
researcher Anant Bhan, speaking from
Gurgaon. “We will have to see if this
makes a major impact.”
Mr Bhan said the next week was criti-
cal for India to assess the severity of the
crisis by ramping up testing and ready-
ing hospitals for a surge in patients.
“There is a possibility of a sudden flood
in cases,” he said. “As it is, India is
stretched to capacity and existing venti-
lators are occupied.”
India’s health authorities maintainthat the country is still in stage two of
the outbreak with all confirmed cases
either imported by travellers or trans-
mitted by returned passengers to direct
contacts such as family, friends and col-
leagues.
But the emergence of at least three
patients with no known link to travel-
lers has fanned fearsIndia has entered
stage three — community transmission
— where the virus is circulating freely.
The discovery of 12 confirmed cases
in Bhilwara, a town in the state of Rajas-
than with a population of 00,000, has 4
underlined how the pathogen has
spread to the country’s vast hinterland,
whereweak medical infrastructure
could quickly be overwhelmed.
Experts fear that India has underesti-
mated the rate of infection by limiting
diagnostic testing. The world’s second-
largest country by population has tested
fewer than 20,000 people as ofyester-
day, far below the 160,000 thatGer-
many s testing weekly.i
South Korea, which is conducting
15,000 tests daily, has been held up as an
example of a country that has managed
to get the outbreak under control.Disease control
India faces widespread closures as cases climb
A hospital patient
with Covid-19 was
discharged on day
11 while antibodies
continued to
increase at day 20‘As it is, India is stretched
to capacity and existing
ventilators are occupied’Anant Bhan, health researcherCORONAVIRUS
MARCH 23 2020 Section:World Time: 22/3/2020- 18:22 User:david.owen Page Name:WORLD3 USA, Part,Page,Edition:USA, 4, 1