4 ★ FINANCIAL TIMES Monday 6 April 2020
CO R O N AV I R U S
F
or Xi Jinping, the good news is that China’s econ-
omy appears to have performed slightly better in
March than in February. The bad news is, that is
about as far as the good news goes for now. If the
world’s second-largest economy is not perform-
ing markedly better by the end of June, China’s powerful
president could face unprecedented economic and politi-
cal challenges, ranging from a double-digit unemployment
to the country’s first official recession since 1976.
“The real unemployment rate in China is likely to go
higher than 10 per cent for sure,” said Diana Choyleva,
chief economist at Enodo Economics in London. “Q2 [eco-
nomic activity] is shaping up to be very weak as disrup-
tions to production in China linger and, more importantly,
demand from the rest of the world evaporates.”
On Tuesday, markets were briefly cheered by the release
of the official purchasing managers’ index of the National
Bureau of Statistics. This showed that, relative to February,
more manufacturers than not were now experiencing a
modest expansion in business activity.
Considering that China’s economy was brought to an
almost total halt in the first half of February by the corona-
virus pandemic, one survey saying things are slightly bet-
ter is hardly reassuring — a point the NBS’s chief statisti-
cian drove home. The world will have to wait for two more
weeks before a fuller picture is available, with the release
of full first-quarter data ranging from exports to GDP.
That data is unlikely to be much better than the raft of
record-low indicators recently released for January and
February. Last week, a team of ANZ economists led by
Betty Wang projected
that China’s first-quarter
GDP would fall 9.4 per
cent year on year, with
another annual decline of
up to 2.1 per cent possible
in the second quarter.
For March, Ms Wang is
anticipating double-digit
year-on-year falls in
industrial production (-11.7 per cent), fixed asset invest-
ment (-18 per cent) and property investment (-12.0 per
cent). This would at least be better than the January-
February period, when fixed asset investment was down
almost 25 per cent year on year, but would also indicate the
Chinese economy has yet to reach bottom.
For China’s leaders, such headline numbers are, for now,
mere surface noise. As premier Li Keqiang recently put it,
economic growth “does not matter that much” as long as
the government’s employment targets — typically 10m or
more new urban jobs a year — are met.
Over the first two months of the coronavirus crisis, Mr
Xi’s administration has instead focused on staunching the
bleeding. According to a count by Sarah Tong and Yao Li at
the National University of Singapore’s East Asian Institute,
since January 24 various ministries have issued more than
20 policy directives, almost all of them directed at helping
companies stabilise their operations and avoid lay-offs.
Despite this focus, the government’s official unemploy-
ment rate came in at a record high 6.2 per cent in February.
Unfortunately for Mr Xi, China’s state-owned banks
have a patchy record when it comes to extending credit to
small and medium-sized employers, even when they are
ordered to. State banks’ incentive systems, which tend to
hold loan officers responsible when money is not repaid,
are stronger than directives from on high to lend to riskier
private-sector borrowers.
This trickle-down approach to credit allocation is even
less effective when it comes to directing credit to the mil-
lions of mom-and-pop restaurants, hair salons and other
street-level businesses who typically have few if any assets
of their own to offer up as collateral.
“Banks’ [lending] decisions are still commercially
driven,” said Ms Wang at ANZ. “If they see rising risks,
I don’t think they will lend more to SMEs that are suffer-
ing.” If so, just when it seemed to be peaking, Mr Xi’s
coronavirus crisis may be entering an even more danger-
ous phase.[email protected]GLOBAL INSIGHT
ASIA
Tom
Mitchell
China’s economy has
yet to feel full effects
of unemployment
State-owned banks
have a patchy
record when itcomes to extending
credit to SMEsST E P H A N I E F I N D L AY
US President Donald Trump called on
India to release orders of hydroxychlo-
roquine, an antimalarial drug that has
been identified as a potential treatment
for coronavirus, as New Delhi tightened
export restrictions to combat rising
infections.
Mr Trump said that during a phone
call with Indian prime minister Naren-
dra Modi on Saturday he requested
more of the drug because the country
made it in “large amounts”.
“I said I’d appreciate it if they would
release the amounts that we ordered
and they are giving it serious considera-
tion,” said Mr Trump during a White
House briefing over the weekend. He
repeated his claim that hydroxychloro-
quine was a “game-changer” despite a
lack of concrete evidence about its effec-
tiveness.
Mr Trump said the US government
was working to make the drug available
for coronavirus patients, even though it
had yet to be approved by the US Food
and Drug Administration. “We’re going
to be distributing it through the strate-
gic national stockpile,” said Mr Trump.
“We’re also getting it from various loca-
tions and other countries.”
While there is no proof that it works
against coronavirus, India has priori-
tised the supply of the drug for its own
use as it counts a growing number of
cases that threatens to overwhelm its
underfunded healthcare system. The
world’s second most populous country
of 1.37bn people has reported almost
3,600 coronavirus infections with 99
deaths as of yesterday — triple its
caseload from last week, according to
Johns Hopkins University.
The discovery of superspreaderevents — including at the headquarters
of Islamic missionary movement
Tablighi Jamaat in New Delhi — has
raised fears that its swift action to put
the country under lockdown may not be
enough to flatten the curve.
The Indian Council of Medical
Research has recommended the anti-
malarial, which is also used to treat
lupus and rheumatoid arthritis, can be
used as a preventive medication for
Covid-19 high-risk individuals such as
healthcare workers.
On March 25, India limited exports
with some exceptions, including fororders with full advance payment and
on humanitarian grounds. But on Satur-
day the commerce and industry minis-
try issued a circular prohibiting all
exports of “hydroxychloroquine and
formulations made from hydroxychlo-
roquine... without any exception”. In a
separate notice on the same day, it also
put restrictions on the export of diag-
nostic kits. The ministry did not
respond to a request for comment.
Sudarshan Jain, of the Indian Phar-
maceutical Alliance in Mumbai, said the
full ban was put in place to stop specula-
tive buying as companies rushed to
place orders.
“There was a new demand as a Cov-
id-19 product and all of a sudden there
was speculative demand from all over
the world,” said Mr Jain. “The govern-
ment is trying to take stock of the situa-
tion and come up with a policy.”
Pharma companies are in a “dialogue”
with the government over the next
steps, added Mr Jain.Antimalarial
Trump calls on India to release drug
New Delhi tightens export
restrictions on potential
‘game-changer’ treatment
‘I said I’d
appreciate
it if theywould
release theamounts
that weordered’
US President
Donald TrumpH A N N A H KU C H L E R— N E W YO R K
In New York, hospital beds are being set
up in Central Park, inside a vast confer-
ence centre, and on a military vessel
moored off Manhattan. Across the
US, carmakers are producing ventila-
tors, distilleries are making hand sani-
tiser and tailors are sewing face masks.
But another shortage is proving
harder to address: the dearth of medical
workers to treat coronavirus patients.
Demand for doctors and nurses with
experience in emergency departments
and intensive care units has soared in
recent weeks. “There is not enough of
anything,” said William Jaquis, presi-
dent of the American College of Emer-
gency Physicians.
As an acute shortage of medical staff
begins to take its toll in New York, cen-
tre of the outbreak in the US, mayor Bill
de Blasio on Friday proposed a draft of
healthcare workers. Speaking on
MSNBC, he called for a “national effort
to enlist doctors, nurses, hospital work-
ers of all kinds and get them where they
are needed most”.
He added: “I don’t see, honestly, how
we’re going to have the professionals we
need to get through this crisis.” An
emergency alert later flashed up on the
phone of every New Yorker asking
healthcare workers to volunteer.
The US has fewer physicians per cap-
ita than hard-hit countries such as Italy
and Spain, with 2.6 per thousand people
compared with 4 and 3.9, respectively,
though it has more nurses, says the Kai-
ser Family Foundation think-tank.
To address the problem, hospitals in
the hardest-hit states are scrambling to
recruit clinicians from those with fewer
coronavirus cases, and retraining staff
who work in other fields of medicine.
About 80,000 retirees have volunteered
to return to work in New York, on top of
more than 1,000 military med-
ics. Requests for critical-care nurses
have risen 250 per cent in a month and
vacancies for respiratory therapists
have soared 400 per cent, according to
staffing provider Vizient. There has also
been a surge in demand for cleaners and
nursing assistants.
How many more staff may be needed
will depend on how much of the country
coronavirus devastates — and how
many healthcare workers become
infected and have to stay at home.
Steven Corwin, chief executive of New
York Presbyterian, the city’s largest
healthcare system, said staffing was the
“nub of the problem right now”.
He said there were 600 coronavirus
patients in intensive care at New York
Presbyterian, where everyone from
radiologists to surgeons were being
diverted to treat them. The problems
were compounded by 400 of his clini-
cians being exposed or infected with the
virus and having to stay home. “We’ve
tried to hire extra people. We’ve had a
little amount of success, not a huge
amount of success,” Mr Corwin said.The White House — criticised as slow
to procure supplies — has not put in
place a plan to channel staff to the
worst-affected states. The federal gov-
ernment has waived licensing require-
ments, allowing doctors to practise in
other states, but only some have taken
steps to accept other states’ licences.
Ashish Jha, director of the Harvard
Global Health Institute, described the
situation as “haphazard”. “What would
be ideal would be an office out of the
White House, coordinating medical
staff and working with states to relax
rules about licensure,” he said.
The Pentagon said on Friday it was
“well prepared” to help with logistics if
there was a mass volunteering of doc-
tors. This could involve flying volun-
teers to hotspots, starting with New
York. For now, staffing agencies are
seeking to entice workers with higher
pay, free hotel rooms and other benefits.
Nursefly, a marketplace for tempo-rary healthcare work, said more than
1,200 nurses signed up to work in New
York in just a week. Pay for a temporary
registered nurse was up 73 per cent in
March, compared with January.
But the surge in “hazard pay” is likely
to prove challenging for some hospitals,
which are already financially stretched
because more profitable elective proce-
dures have been cancelled. The $2.2tn
federal coronavirus relief bill allotted
$100bn for hospitals, but it is unclear
how it will be distributed or when.
Without a countrywide response
plan, the decision to support hard-hit
areas has been left to individuals. Amit
Phull, a clinician and vice-president of
Doximity, a social network for doctors,
said he was torn between flying to New
York to help and preparing for what is to
come at his hospital in Chicago.
He said: “There’s a pull in myself to
stay at my institution and help when the
problem gets there.”Emergency response. Staff deficit
US faces acute shortage of medics
Alarm spreads at lack of
national plan to get doctors
and nurses to disease hotspots
Doctors testing
for coronavirus
in New York.
The city is at the
centre of the US
outbreak
Misha Friedman/Getty ImagesGI D E O N LO N G— B O G OTA
KAT R I N A M A N S O N— WA S H I N GTO N
It started with a routine police search
onaroadinnorthernColombia.
Within days the government of Vene-
zuela was claiming it was proof of a
foiled plot to “liberate” the country
from its socialist rule, with echoes of
past failed efforts to overthrow Latin
American regimes.
The details of the alleged plot are
murky. Officials in Washington deny it
even happened. But it comes at a time of
heightened tensions between the US
and Venezuela, as the Trump adminis-
tration steps up efforts to force Presi-
dent Nicolás Maduro to relinquish
power.
The story began in Colombia on
March 23, when police stopped a van on
the Caribbean coast heading towards
Venezuela. In the back, according to the
Colombian public prosecutors’ office,
were 26 US-made semi-automatic rifles,
helmets, night-vision goggles and flak
jackets.
Three days later, a former Venezuelan
general, Cliver Alcalá, said he was
responsible for the cache. In a rambling
and contradictory radio interview he
said he and his supporters, “all commit-
ted to the liberation of Venezuela”, had
planned “a military operation against
the Maduro dictatorship”.
Mr Alcalá, who lives in Colombia,
having fallen out with the government
in Caracas, said US advisers, who he
described as contractors working for
companies, knew about the plot. So, he
added, did Venezuela’s opposition
leader Juan Guaidó. They, along with
Colombian politicians, all signed a con-
tract authorising it, he alleged, without
producing the document.
In Venezuela, the government
jumped on his statements as proof of
what it had long claimed: that Mr
Guaidó, the US and Colombia are work-
ing together to overthrow the regime.“It’s a campaign started in Miami, in
Washington, in Colombia, to justify the
coup d’état... the military, terrorist
attacks they were preparing against
Venezuela,” Mr Maduro said. “The US
government is behind this. [Colombian
president] Iván Duque is behind this.”
Venezuela’s attorney-general ordered
Mr Guaidó to testify. The opposition
leader, who has been trying to oust Mr
Maduro for more than a year with the
backing of the US, the EU and most of
Latin America, denied all knowledge of
the plot and refused — a decision that
could lead to his arrest.
“They are dangerous lies because
they may be used as a pretext to arrest
or harm interim president Juan
Guaidó,” a US state department official
told the Financial Times, adding that
close advisers and relatives of Mr
Guaidó had been targeted by “violent
repression” in past weeks.
Elliott Abrams, the US special repre-
sentative for Venezuela, said claims that
Mr Guaidó had contracted Mr Alcalá to
dispose of Mr Maduro were clearly a lie,
describing them as “despicable andquite dangerous”. Mr Alcalá’s claim
came just hours after the US Depart-
ment of Justice charged him, Mr
Maduro and a dozen other Venezuelans
in connection with “narco-terrorism”
and other crimes. The DoJ offered $15m
for information leading to Mr Maduro’s
arrest and $10m for Mr Alcalá.
The former general said he had noth-
ing to hide and handed himself over toUS authorities. He was whisked out of
Colombia within hours, even though
prosecutors in the country said there
was no warrant for his arrest and no
request for his extradition. He is being
questioned by the DoJ in the US.
Caracas and Washington have offered
starkly differing accounts of what is
going on. The Venezuelans say that once
the plot fell apart, the Americans had to
extract their “agent”, Mr Alcalá, so they
charged him with narco-terrorism and
hauled him back to Washington before
he could reveal more secrets.
Washington’s version is that Mr Alcalá
was acting on the orders of Caracas
when he made his “wild allegation”
against Mr Guaidó.
“Clearly, he was put up to making
those terrible charges by the regime,
and then realised he’d better get out of
Colombia and get to a place where at
least he was physically safe, which was
the United States,” said Mr Abrams.
The episode comes at a jittery time in
Venezuela. Last Monday, one of its naval
vessels sank in the Caribbean after col-
liding with a Portuguese-flagged cruiseliner. Each captain blamed the other.
The cruise ship’s owner said “gun shots
were fired”. Mr Maduro said the cruiser
might have been transporting merce-
naries, without offering evidence.
The following day, the US said Mr
Maduro should cede power to a transi-
tional government in exchange for sanc-
tions relief and humanitarian aid to help
the country deal with coronavirus.
On Wednesday, US president Donald
Trump said he was sending war-
ships closer to the Venezuelan coast to
stop “cartels, criminals, terrorists and
other malign actors” exploiting the pan-
demic to smuggle drugs to the US.
“Donald Trump has become crazy,”
Mr Maduro responded, anticipating
possible US action to topple him. “If he
enters Venezuela, he will be defeated.”
Mauricio Claver-Carone, Mr Trump’s
top adviser on Latin America, warned in
an interview with a Miami TV channel:
“Historically, no one who’s confronted
the US justice system has come out
well.” He added: “Whether it’s Noriega,
Pablo Escobar or ‘El Chapo’ Guzmán, it
never ends well.”Latin America.‘Narco-terrorism’ claims
Mystery surrounds foiled ‘plot’ to liberate Venezuela from Maduro’s rule
Incident comes at a time of
heightened tensions between
Washington and Caracas
Retired Venezuelan general Cliver
Alcalá is being questioned by the USIndia’s Covid-19 cases are risingAPRIL 6 2020 Section:World Time: 5/4/2020 - 18: 15 User: andrea.crisp Page Name: WORLD3 USA, Part,Page,Edition: USA, 4, 1