Financial Times Europe - 26.03.2020

4 ★ FINANCIAL TIMES Thursday 26 March 2020

F T R E P O RT E R S
Li Kun liberated his family from Hubei
province yesterday but it was a close-
runthing.
The marketing manager lives and
works in Hangzhou, a technology hub
near Shanghai, and had returned to his
hometownofHuanggangcityinJanuary
for Chinese new year when coronavirus
struck.MrLi,hiswifeanddaughtersud-
denly found themselves caught in what
wasthenperhapsthebiggestmassquar-
antine in human history, with almost all
ofHubei’s60mresidentsinlockdown.

As the Chinese epidemic became a

global pandemic, entire countries

would follow Hubei’s lead, including

ItalyandIndia.

Mr Li’s nightmare ended on Tuesday,

when the Hubei Health Commission

said it would relax travel restrictions

imposed two months ago for all areas

outside the provincial capital, Wuhan,

whichwillbeliberatedonApril8.

“I decided to go back to Hangzhou the

momentIheardthetrafficbanhadbeen

lifted,” he told the Financial Times. “My

wife works in Hangzhou too and our

employers had been pressing us to

returnassoonaspossible.”

The Li family’s 10-hour drive back to

Hangzhou, the capital of Zhejiang prov-

ince, was t ense. At one checkpoint in

Hubei, Mr Li had to produce proof that

he was employed in Hangzhou and his

employer had reopened for business, as

well as a letter from officials in the city

confirming that he would be allowed

backhome.

When Mr Li entered Zhejiang prov-

ince, his mobile phone started to ring.

Zhejiang’s telecom network had

detected his Hubei-registered mobile

and alerted provincial, municipal and

districtpolice,allofwhomrangtocheck

on his travel plans. “There is no privacy,

butweareusedtothat,”hesaid.

Other Hubei residents are relieved

the travel ban has been lifted, but are

happy to stay put for now. Wang Haoze,

now at home in Xiangyang, Hubei’s

second-largest city, attends university

in Beijing. But h is college is still shut so

he is hanging out at home, taking online

classes and preparing for examinations

forthepostgraduatecoursestowhichhe

isapplying.

“Forus,therelaxationgivesusasense

that we can finally move freely,” said Mr

Wang, who frets that people might let

down their guard and give rise to a “sec-

ondwave”ofinfections.

“I am still worried because, after all,

the risk has not been completely

removed. A few passers-by have

stoppedwearingmasks.”

As in the US, where governors and

mayors have issued stay-at-home

orders—somemorestrictthanothers—

Hubei’s seemingly uniform lockdown

was actually a patchwork that varied by

city. Municipal governments are also

taking different approaches to the

relaxation.

In terms of economic output, Xian-

ning is one of Hubei’s 10 largest cities

andhasrecoveredquicklyfromthepan-

demic. It has been more than a month

since local authorities there reported a

newinfection.Yetthecityof3misrelax-

ing its travel ban cautiously, even

though about 500,000 of its residents

aremigrantworkerseagertoleave.

Anyone wanting to leave the city

has to take a test proving they are

coronavirus-free. The government will

pay half the test cost of Rmb150 ($21),

but Xianning Central Hospital can only

conduct 300 a day. Bookings there and

at other hospitals are now difficult to

get,accordingtohospitalstaff.

“I don’t know how long I need to wait

beforeIcangetatest,”oneXianningres-

ident complained on Weibo, China’s

equivalent of Twitter, adding that he

had all the certificates required to allow

him to return to work in the southern

city of Guangzhou. Other cities across

Hubei have been allowing people to

comeandgofordays,ifnotweeks.

Now safely back in Hangzhou, Mr Li

and his wife are glad to be resuming

their normal lives. Their daughter is

attending her kindergarten again. But

theirneighboursarewary.

“There is still some hostility towards

people from Hubei,” Mr Li said. “My

neighbours keep their distance as they

suspect I might be a virus carrier. I don’t

blamethem.”

Sun Yu and Xinning Liu in Beijing, Xueqiao

Wang in Shanghai, Qianer Liu in Shenzhen,

Robin Yu and Selena Li in Hong Kong and

Tom Mitchell in Singapore

Out of lockdown.Rules relaxed

Chinese at centre of outbreak welcome liberation

JA M E S P O L I T I A N D L AU R E N F E D O R
WASHINGTON

“In effect, this is a wartime level of
investmentintoournation”.Thatishow
Mitch McConnell, the Senate majority
leader and Kentucky Republican law-
maker, described the $2tn stimulus
package agreed early yesterday in the
upperchamberofCongress.
At a time of major partisan divisions
in Washington, US politicians were able
to reach a compromise within just a few
tensedaysonalargeinjectionofgovern-
ment money into the economy, to limit
the damage from the coronavirus out-
break.
Although the text of the legislation
has yet to be released, it was expected to
be approved by the Senate last night,
and then by the House of Representa-
tives, which is controlled by Democrats.
The success of the package will depend
on how quickly it can be implemented,
and there are doubts about whether it
will be sufficient, despite its massive
size.
Some lawmakers and administration
officialshavesuggestedadditionalfund-
ing from Congress may be necessary
depending on the pandemic’s economic
impact.

Income support

White House officials had earlier this
month dismissed the need for direct
transfers of funds to US households, but
quickly pivoted towards “helicopter
money” as it became clear that many
families would need income support as
theeconomygroundtoahalt.
The payments to American families

from the US Treasury will be worth
$1,200 per adult, or $2,400 per couple,
with additional payments for children.
The payments will be phased out start-
ing at annual incomes of $75,000 per
person, or $150,000 per couple, so the
wealthiest families would not see any
benefit.

Business bailouts

The legislation sets aside $500bn for
loans to businesses affected by corona-
virus,including$25bnforpassengerair-
lines, $4bn for cargo airlines and $17bn
for companies that are “critical to main-
tainingnationalsecurity”.
The remaining $454bn would be dis-
bursed through government loans and
loan guarantees, including through
lending facilities set up by the Federal
Reserve.
The$500bnplanwasamongthemost
controversial in the package, with Dem-
ocrats labelling it a corporate bailout
withlimitedaccountability.
In the end, the agreement calls for
additional oversight of the fund by an
inspector-general, along the lines of the
$700bn Wall Street Troubled Asset

Relief Program (Tarp) bailout fund set

up during the 2008 financial crisis.

Democrats also stripped provisions

allowing companies to delay disclosure

oftheirparticipationintheprogramme,

and got assurances that businesses tied

to Donald Trump and his family, as well

as members of Congress and heads of

executive agencies, would not receive

governmenthelp.

Unemployment insurance

With some economists estimating the

unemployment rolls will quickly sky-

rocket to include millions of additional

Americans, Congress and the White

House decided to increase unemploy-

ment benefits by $600 a week for four

months, which will come in addition to

unemployment payments from the

claimant’s state, according to Chuck

Schumer, the top Senate Democrat.

Payments vary by state, averaging

roughly $385 a week. But Republican

senators raised red flags over the meas-

ure yesterday, questioning whether it

would result in workers in many states

earning more through unemployment

insurancethantheydidinwages.

The US jobless benefit scheme itself

was expanded to apply to the self-

employed and workers in temporary

jobs within the “gig economy”. The orig-

inal legislation had applied the increase

for three months, but Democrats were

able to secure one more month in the

US injects $2tn to help people and

business in ‘wartime investment’

Success to depend on speed of implementation while doubts remain over size of stimulus

finalstretchoftalks.

Funding for hospitals

Mr Schumer called this part of the pack-

age a “Marshall plan” for the American

medical system. It includes $150bn in

funding for hospitals, personal and pro-

tective equipment for healthcare work-

ers, testing supplies, increased work-

force and training, and new construc-

tion to house patients, according to Mr

Schumer’sdescriptionoftheplan.

Much of the money will be funnelled

through state and local governments,

which are on the front lines of America’s

battleagainstthecoronavirus.

Small business help

The legislation provides for $367bn in

loans and grants to small businesses,

with fewer than 500 employees, which

are bearing the brunt of the impact as

Americans practise social distancing

measures and many local authorities

force non-essential businesses to close

temporarily.

Marco Rubio, the Florida Republican

and chairman of the Senate small busi-

ness committee, said on Fox Business

that small businesses would be able to

secure loans worth 250 per cent of their

monthlypayrollfromapprovedlenders.

“This is money that needs to get into

these hands very quickly, before these

doors continue to close and people keep

gettinglaidoffeveryday,”hesaid.

US secretary of state Mike Pompeo said

G7 countries were all “deeply aware” of

what he described as a coronavirus

disinformation campaign run by the

Chinese Communist party.

America’s top diplomat accused

Beijing of seeking to deflect attention

from its role in covering up the origins

of the virus, which he said was

decimating the world’s economies.

“China is now making small sales of

product around the world and claiming

they are now the white hat in what has

taken place,” Mr Pompeo said after

hosting a virtual meeting of G7 foreign

ministers, referring to Chinese exports

of masks and other medical supplies to

European and Asian nations struggling

to combat the spread of coronavirus.

Mr Pompeo said senior members of

the CCP had spread “crazy talk” that the

US had deliberately brought the disease

to China and said Beijing repeatedly

delayed sharing information in the early

stages of its spread. “Every member of

the G7 today saw that this is a

disinformation campaign,” he said,

adding the disease demonstrated that

the CCP posed “a substantial threat to

our health and way of life”.

The US and China have co-ordinated

responses to past disease outbreaks but

are at odds over Covid-19, which Mr

Pompeo refers to as “Wuhan virus”.

Katrina Manson in Washington

Pompeo

rebukes

China for

‘crazy talk’

$500bn business plan

among the most

controversial

in the package

The ‘Marshall

plan’ for the US

medical system

includes $150bn

for hospitals,

personal and

protective

equipment for

healthcare

workers and

testing supplies

Carlo Allegri/Reuters

Degree of normality returns to

Hubei as travel restrictions are

gradually eased by authorities

D O N W E I N L A N D— BEIJING

TO M M I TC H E L L— SINGAPORE

China’s central bank is in discussions

to cut the interest rate banks pay on

deposits for the first time since 2015, in

a bid to help banks eke out higher prof-

its as they are enlisted to help spur an

economic recovery following the coro-

navirusoutbreak.

The economy has been brought to a

standstill since the p andemic started in

January.ButthePeople’sBankofChina’s

responsetothecrisishasbeenrelatively

muted compared with the US and

Europe, where billions of dollars are

being deployed by central banks to fight

aglobalrecession.

Chinese banks have been recruited,

however, to help boost the economy.

They have been told to extend loans to

struggling companies, to lend at lower

rates and increase their tolerance for

baddebtcreatedduringthecrisis.

While such measures could help com-

panies survive over the next few

months, they are also expected to hurt

bankprofitabilityin2020.

Adepositratecutcouldbeannounced

in the coming days, according to two

people familiar with the discussions at

the PBoC. Lowering the deposit rate

would provide more breathing space by

wideningthespreadbetweenhowmuch

banks pay out to depositors and how

muchtheychargeforloans.

The PBoC has been pushing

throughinterestratereformsforseveral

years in which it has sought to move

awayfromsettingtheratesforloansand

deposits. But banks still use deposit

rates set by the central bank to deter-

minehowmuchtheypaydepositors.

The PBoC last cut the demand deposit

rate, or the rate it pays on ordinary

deposits, in 2012. Term deposit rates for

deposits held for a set amount of time

werelastcutin2015.

A cut in the benchmark savings rate

would be primarily aimed at shoring up

the banking sector rather than spurring

consumption, according to people

familiarwiththePBoC’sdeliberations.

“The main reason is to encourage

banks to lend without squeezing their

margins,” one of the people said. “It’s

mainlyaboutprotectingthebanks.”

The people added that the measure

would probably be paired with more

cuts in the central bank’s medium-term

lending facility, which influences the

benchmark loan prime rate announced

bybanksonthe20thofeachmonth.

Analysts have been expecting a cut to

thedepositrateforweeks.“Thechances

are quite decent,” said Harry Hu, a

director at S&P Global. “They need the

bankstocontinuetomakeaprofit.”

China

Central bank opens talks

to cut rates paid for deposits

Achild eats an ice

cream in Xianning

where a cautious

easing of rules

has allowed people

to travel more

HA N N A H KU C H L E R— NEW YORK

ST E P H A N I E F I N D L AY— NEW DELHI

M I C H A E L P E E L— BRUSSELS

India is prioritising for its own people

the supply of an antimalarial drug with

the potential to combat coronavirus by

banning exports, as other countries,

hospitals and even individual doctors

seek out an unproven treatment hailed

byDonaldTrumpasagame-changer.

As the world’s largest exporter of

generic drugs, India’s government has

recommended that its healthcare work-

ers and high-risk individuals use the

antimalarial drug hydroxychloroquine

totrytopreventCovid-19infections.

There has been a surge in global

demand for both hydroxychloroquine

and chloroquine, a similar drug with

greater side effects, despite a lack of

solid scientific evidence that they work

againstcoronavirus.

India is one of the largest producers of

hydroxychloroquine, with drugmakers

Zydus Cadila and IPCA Laboratories

among the biggest manufacturers. The

country has also banned exports of the

active pharmaceutical ingredient in the

drug.

“We are at the moment ramping up

our production of hydroxychloroquine

tomeettherequirementstoabout150m

to 200m pills a month,” Zydus Cadila

said.

An early study from France last week

suggested chloroquine could be helpful,

but it was carried out on small numbers

of patients and without the rigour of a

randomisedcontroltrial.

Another small trial from China, pub-

lished on Tuesday, showed the drug had

noimpact.

Larger trials — including one in New

York and a multinational programme

runbytheWorldHealthOrganization—

arejuststarting.

But Mr Trump has touted the drugs

frequently from the White House

podium and in tweets, sparking a surge

in US hospitals stockpiling the drugs for

Covid-19 patients and individual doc-

tors procuring supplies for themselves

andtheirfriendsandfamilies.

IntheUS,severalstatesarenowlimit-

ing prescriptions to the tens of thou-

sands who already take the drug, con-

cerned that patients, with conditions

such as lupus and rheumatoid arthritis

who need it, may struggle to get their

prescriptions filled, while others stock-

piledrugsforanunapproveduse.

Patrice A Harris, president of the

American Medical Association, admon-

ished doctors for panic prescribing.

“The AMA is calling for a stop to any

inappropriate prescribing and ordering

of medications, including chloroquine

or hydroxychloroquine, and appealing

to physicians and all healthcare profes-

sionals to follow the highest standards

ofprofessionalismandethics,”shesaid.

There has also been a jump in media

reports of overdoses of chloroquine,

which can cause acute poisoning, by

people confused by misinformation

around the drug’s effectiveness for

Covid-19, including in the US, Nigeria

andVietnam.

Demand surge

India bans

exports of

drug touted

by Trump

C O R O N AV I R U S

G

Legal Notices

MARCH 26 2020 Section:World Time: 25/3/2020 - 18:53 User: keith.allen Page Name: WORLD3 USA, Part,Page,Edition: USA, 4 , 1