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China’s Xi unwilling to accept vaccines despite threat from protests — US intel

REUTERS

WASHINGTON — Chinese leader Xi Jinping is unwilling to accept Western vaccines despite the challenges China is facing with COVID-19, and while recent protests there are not a threat to Communist Party rule, they could affect his personal standing, US Director of National Intelligence Avril Haines said on Saturday.

Although China’s daily COVID cases are near all-time highs, some cities are taking steps to loosen testing and quarantine rules after Mr. Xi’s zero-COVID policy triggered a sharp economic slowdown and public unrest.

Ms. Haines, speaking at the annual Reagan National Defense Forum in California, said that despite the social and economic impact of the virus, Mr.  Xi “is unwilling to take a better vaccine from the West, and is instead relying on a vaccine in China that’s just not nearly as effective against Omicron.”

“Seeing protests and the response to it is countering the narrative that he likes to put forward, which is that China is so much more effective at government,” Ms. Haines said.

“It’s, again, not something we see as being a threat to stability at this moment, or regime change or anything like that,” she said, while adding: “How it develops will be important to Xi’s standing.”

China has not approved any foreign COVID vaccines, opting for those produced domestically, which some studies have suggested are not as effective as some foreign ones. That means easing virus prevention measures could come with big risks, according to experts.

The White House said earlier in the week that China had not asked the United States for vaccines.

One US official told Reuters there was “no expectation at present” that China would approve western vaccines.

“It seems fairly far-fetched that China would greenlight Western vaccines at this point. It’s a matter of national pride, and they’d have to swallow quite a bit of it if they went this route,” the official said.

Ms. Haines also said North Korea recognized that China was less likely to hold it accountable for what she said was Pyongyang’s “extraordinary” number of weapons tests this year.

Amid a record year for missile tests, North Korean leader Kim Jong Un said last week his country intends to have the world’s most powerful nuclear force.

Speaking on a later panel, Admiral John Aquilino, the commander of the US Indo-Pacific Command, said China had no motivation to restrain any country, including North Korea, that was generating problems for the United States.

“I’d argue quite differently that it’s in their strategy to drive those problems,” Mr. Aquilino said of China.

He said China had considerable leverage to press North Korea over its weapons tests, but that he was not optimistic about Beijing “doing anything helpful to stabilize the region.” — Reuters

Putin insincere about peace talks — diplomat

RUSSIAN PRESIDENT VLADIMIR PUTIN — KREMLIN.RU-COMMONS.WIKIMEDIA.ORG

KYIV — Russian President Vladimir Putin is not sincere about peace talks with Ukraine while he is taking the war to a new level of “barbarism” by trying to turn off the lights of civilians, a top US diplomat said on Saturday.

US Under Secretary for Political Affairs Victoria Nuland met President Volodymyr Zelensky and other senior Ukrainian officials in Kyiv to show support at a time when Russia is trying to destroy the country’s energy infrastructure.

“Diplomacy is obviously everyone’s objective but you have to have a willing partner,” she told reporters. “And it’s very clear, whether it’s the energy attacks, whether it’s the rhetoric out of the Kremlin and the general attitude, that Putin is not sincere or ready for that.”

US President Joseph R. Biden said on Thursday he was prepared to speak to Mr. Putin if the Russian leader was interested in ending the war. But the idea died quickly when the Kremlin said the West must recognize Moscow’s declared annexation of four Ukrainian regions.

This reaction from Russia, Ms. Nuland said, showed “how not serious they are”.

Russia has been carrying out huge attacks on Ukraine’s electricity transmission and heating infrastructure roughly weekly since October, in what Kyiv and its allies say is a deliberate campaign to harm civilians, a war crime.

“Putin has taken this war to a new level of barbarism, taking it into every single Ukrainian home as he tries to turn off the lights and the water and achieve what he couldn’t on the battlefield,” Ms. Nuland said.

Russian Foreign Ministry spokeswoman Maria Zakharova was quick to respond.

“It is not for Nuland to teach the world — only the United States and NATO combined destroyed more energy networks than the United States destroyed by itself,” Ms. Zakharova said on the Telegram channel, pointing to the 1999 attacks on Serbia. During the attacks in Serbia, warplanes shut off power to more than 70% of the area, according to NATO.

Ms. Nuland also met Andriy Yermak, the head of Zelensky’s office, who expressed thanks for the billions of dollars worth of aid Washington has committed to Ukraine.

“Ukraine’s victory, which we are sure of, will be our joint victory,” Zelensky’s office quoted him as telling Ms. Nuland. — Reuters

Italy’s Catholic Church reintroduces handshakes for the ‘sign of peace’

THE VATICAN Christmas tree is seen lit during a ceremony in St. Peter’s Square at the Vatican, Dec. 11, 2020. — REUTERS

ROME — Italy’s Catholic Church is reintroducing handshakes for the “sign of peace” during Mass as part of a wider relaxation of anti-COVID-19 measures.

“It will be possible to restore the usual form of exchanging the sign of peace,” the Italian Bishops’ Conference (CEI) said in a letter to bishops.

The letter, publicized by RAI public broadcaster and other Italian media on Saturday, was originally posted on CEI’s website on Friday.

The “sign of peace” comes after the Lord’s prayer and before the sacrament of the Holy Communion as a way for the faithful to express to each other their common faith.

At the height of the pandemic the gesture was abolished, while last year the CEI said it could resume but only through a look in the eyes or a bow of the head.

In its latest advice to bishops, the CEI called for continued precautions, such as inviting the faithful to sanitize their hands upon entering a church.

Italy is one the countries worst-hit by coronavirus, but restrictions have been eased recently. Face masks have not been compulsory on public transport since Oct. 1. — Reuters

Germans spending less as soaring power, food costs gnaw finances

The Hauptbahnhof, Berlin’s main train station is pictured in Berlin, Germany, Jan. 21, 2016. — REUTERS

BERLIN — For 25 years, Theo Jost served the German Christmas dish of goose in his restaurant near the Black Forest. The birds were fresh, reared by farmers in northern Germany. But this year he took the dish off the menu because rising costs all along the supply chain would have doubled its price compared to last year.

“I said to my son: ‘We can’t expect our guests to pay 60-70 euros ($62-75) for a serving of goose,’” Mr. Jost told Reuters.

That would be beyond the budgets of Germans looking to cut back on non-essentials amid a cost-of-living crisis fueled by rising energy prices. They surged as the world emerged from pandemic lockdowns in 2021 and have been pushed yet higher in the stand-off between gas-rich Russia and the West.

Germans interviewed by Reuters said they were putting off spending decisions as inflation bit into their income, while a broad range of economic data suggest the picture will not improve for months into 2023.

Heavily dependent on Russian gas, Germany saw inflation at 11.3% in November according to the official European Union-wide harmonized measure — higher than the 10% average among countries that use the euro and well above the 7.1% of neighbor France.

It is set to become the biggest Group of Seven economy to fall into recession next year. The International Monetary Fund (IMF) sees output shrinking 0.3% compared to albeit modest average growth of 1.1% across its benchmark of advanced economies.

As Europe’s largest economy, high inflation and weak growth in Germany matter for the region: on the one hand, it could help prompt the European Central Bank (ECB) owards tighter policy; on the other, it drags on overall activity.

While its dependence on Russian energy is already stoking fears of long-term damage to Germany’s industrial might, the 43.5 percent annual increase it has seen in energy prices is also hitting consumers hard, fueling wider price increases and biting into their disposable income.

“This is not just your regular recession,” says Ulrike Malmendier, an economics professor at the University of California, Berkeley who is a member of Germany’s SVR council of economic experts that advises the government on policy.

“We are dealing with the fact that we will have long term, significantly higher energy prices,” Ms. Malmendier told Reuters, adding that this could have a similarly long-term impact on consumer spending, which policy-makers would need to address.

DELAYED FUEL BILL SHOCK
Already, the SVR sees weak private consumption scraping 0.3 percentage points off total German growth in 2023, contributing to the recession that the IMF and others now predict.

As in other European countries, German wages adjusted for inflation were lower in mid-2022 than at the end of 2019, according to SVR figures.

But recent wage deals suggest they have more to fall: an agreement struck by the IG Metall trade union in southwest Germany that will set a trend for other deals fell short of inflation with a cumulative 8.5% increase spread over two years.

While some economists see inflation in Germany peaking by early next year, a number of domestic factors mean its impact on consumers will resonate for months to come in a country with a deep-seated cultural aversion to price rises.

Tobias Rademacher, a software developer from Leipzig, just received his new power bills for the upcoming year. He says he will have to set aside twice as much of his income to cover the bills in 2023, compared to this year.

But, in common with many in the local rental sector, his biggest fear is what comes later that year. German tenants pay monthly heating bills to their landlords — priced depending on the usage in the previous year. At some point in 2023, he and hundreds of thousands of others will receive a bill for his 2022 heating to recover additional costs from rising prices.

“For now, I’ve decided against planning a major vacation next year, because you simply don’t know what you’re up against,” the 42-year-old told Reuters, adding that even with what he calls a comfortable salary, he was also putting a new bicycle on hold.

Mr. Rademacher is not alone. Travel bookings are down 15% on last year, German travel agency ta.ts says, while OpenTable data point to a trend downwards in restaurant reservations.

The HDE retail association has warned its sector faces the biggest slump in Christmas sales this year since 2007. Discount retailer Primark said in November it was looking to reduce its presence in Germany as it grappled with weak sales and rising costs.

There is no easy fix to Germany’s energy problem, with research group Prognos predicting wholesale power prices rising to twice their pre-Ukraine war levels by the end of 2023.

Joerg Angelé, senior economist at asset manager Bantleon, says he expects consumers to keep saving on non-essentials.

“You can’t save on power or gas, and those are going to be more expensive next year,” Angelé said. “I fear that housing rents are going to increase more over the next years, and you cannot save on groceries.”

TOO LATE WITH STATE SUPPORT?
This bleak consumer sentiment is mirrored in polls conducted by the GfK research group. Latest figures showed a slight uptick in consumer sentiment compared to October. But the sentiment remains at some of the lowest levels of the past two decades.

The low morale readings were further underlined in a recent cross-country study by EY consultancy which showed that 23% of Germans fear for their finances compared to just 16% in France.

That may come as no surprise. Not just energy costs but also food prices have increased more in Germany than in France: 18.9% in Germany in October compared to 12.9% in France, according to a harmonized index.

This is all the more of a shock in the land of low-cost retail forerunners like Aldi and Lidl because Germans for years could rely on relatively cheap groceries.

Hitting all food-importing nations, the war in Ukraine stifled supply of sunflower oil and raised prices for fertilizer, feed, and energy, necessary for the heating of barns, running production facilities, and transportation.

Local food industry officials also point to a recent move to increase Germany’s minimum wage to 12 euros per hour, adding more costs to production.

National policy has been a factor too. Some point to Germany’s late move to cap energy prices and contrast it with the much earlier move by France to support consumers with subsidies at petrol pumps and elsewhere.

Jeromin Zettelmeyer, director of the Brussels-based Bruegel think tank, said France may have acted faster because of “the higher sensitivity” to social unrest after the gilets jaunes (yellow vest) protests launched in 2018 against a government attempt to hike energy taxes.

All these factors are combining to make Germans more worried about inflation going forward: Five-year inflation expectations of German households stood at 6 percent in September, according to the OECD. The ECB reports three-year inflation expectations of European consumers as a whole at 3 percent.

Referring to ECB projections of returning to target inflation rates soon, Ms. Malmendier said: “I’m a little worried that they’re too optimistic.” — Reuters

UK crime agency arrests ‘wealthy Russian’ over money laundering

LONDON — Britain’s National Crime Agency (NCA) said on Saturday it had arrested a “wealthy Russian businessman” on suspicion of money laundering and other offenses as part of a crackdown on corrupt oligarchs.

The NCA said the 58-year-old was among three men arrested by officers from the Combatting Kleptocracy Cell (CKC) on Thursday at a “multi-million-pound residence” in London.

The Russian embassy in London has demanded information from Britain’s Foreign Office on the reasons and circumstances of the detention of the unidentified businessman and the conditions in which he was being held, Russian news agencies said.

The man was detained on suspicion of money laundering, conspiracy to defraud the Home Office (interior ministry) and conspiracy to commit perjury, the NCA said.

A 35-year-old man was arrested at the premises after he was seen leaving with a bag which contained thousands of pounds in cash. A former boyfriend, 39, of the businessman’s partner was also arrested at the property, police said. All three have been released on police bail.

NCA Director General Graeme Biggar said the CKC, which was set up earlier this year to tackle attempts to evade sanctions and to disrupt corrupt elites, was having a significant impact on oligarchs’ criminal activity, the professional service providers that supported them and those linked to the Russian government.

“We will continue to use all the powers and tactics available to us to disrupt this threat,” Biggar said in a statement.

The NCA said it had so far secured nearly 100 “disruptions” — described as actions that demonstrably removed or reduced a criminal threat — against elites linked to President Vladimir Putin and their enablers.

These included a number of asset freezing orders on accounts held by people linked to sanctioned Russians.

Britain has so far sanctioned more than 1,200 individuals and over 120 entities following the Russian invasion of Ukraine. — Reuters

Some leadership gaps and uncertainties

MARKUS SPISKE-UNSPLASH

I am pleased to share with readers the political section of our latest quarterly outlook report for Globalsource Partners (globalsourcepartners.com), a subscriber-based network of independent analysts in emerging market countries, with headquarters in New York. Christine Tang and I are their Philippine Advisers.

President Ferdinand Marcos, Jr. gave himself a pat in the back for picking the “best and the brightest,” when asked about accomplishments in his first 100 days. Those in business circles would readily agree that he made inspired choices, not only in the core economic departments but also in key line agencies critical to unlocking the economy’s post-pandemic growth potential. Nevertheless, the general sentiment is that his cabinet is a mixed bag and many would be quick to add the hope that he will be able to find a suitable health secretary soon and a replacement for himself in the Agriculture department.

By now, political observers have come to the realization that the President is contented to give free rein to his cabinet in overseeing their respective portfolios. For departments led by any one of the “best and brightest,” this may well be something welcomed. Indeed, one could see the positive outcomes in, for example, financial markets’ buy-in of the fiscal consolidation program, the private sector’s backing of the revised PPP rules, the re-centering of foreign policy after the past two administration’s excessive pro-US then pro-China stances, and the swift actions on the energy front to encourage investments in oil exploration and power generation for energy security.

But while good results go with good leadership, the reverse appears true as well. Regrettably, soaring food prices has put the limelight on the President’s turf, the Agriculture department. Early hopes that he would use his abundant political capital to hold sway over competing entrenched interests in the sector and exert a positive influence on bureaucratic inertia have faded away. Food prices have gone up by nearly 1% per month between the time he took office in July and October, and the price of sugar, the subject of an importation order he called illegal, increased 44% during the four-month period. Even now, we are told that decision makers in the agriculture sector are bickering unendingly over the size of import volumes for specific crops that are in short supply.

In the meantime, over at the Health department where the President has bafflingly said he would appoint a secretary after the health crisis is over, the vaccination drive appears to have lost momentum and it is unclear what the roadmap is for the highly under resourced sector. Currently, both the Health department and PhilHealth, government’s struggling health insurance corporate vehicle, are headed by caretakers who are not empowered to take strategic policy reform decisions.

Given the mixed performance of the administration, dependent as it is on the leadership of individual cabinet members, the question of how President Marcos’ cabinet will evolve in six to 12 months’ time arises. The question has come up not only because the agriculture and health sectors feel rudderless at the moment but also because of two forthcoming developments. One, by mid-year, those who ran and lost in the May elections, who are not allowed by the Constitution to be appointed to government positions within a 12-month period, will become eligible. This will give the President an expanded pool of, possibly, electoral teammates to choose from, and, obversely, open the floodgates to hard lobbying by more political, less qualified office seekers. Two, crucial in a time of financial turbulence, BSP (Bangko Sentral ng Pilipinas) Governor Felipe Medalla, who has won the acclaim of the financial and broad business sector, is merely serving out the remaining term of his predecessor which expires end of June next year. Hopes have been pinned on his appointment to a full term to continue the excellent navigation during this time of global financial turbulence.

Adding to the uncertainty in the business environment is a widely publicized rumor suggesting that the economic team, especially the finance secretary, has lost the confidence of the President. The rumor, possibly orchestrated, followed the sudden appointment of a new chief in the powerful internal revenue bureau, Romeo Lumagui, Jr., a close family associate of the President. Mr. Lumagui replaced Secretary Diokno’s choice, Lilia Guillermo, after less than five months on the job. Ms. Guillermo is a 30-year veteran of the tax bureau, whose last post was as assistant governor in the BSP after serving as undersecretary in the Budget department, both under Secretary Diokno.

The rumor was put to rest after the heads of the leading business organizations, the Makati Business Club, the Management Association of the Philippines, and the Philippine Chamber of Commerce and Industry, expressed full confidence in Secretary Diokno and the entire economic team, and the President subsequently dismissed it as fake news.

Nonetheless, speculations about changes in the composition of the economic team continue. It has not been lost on financial market players that the most prominently mentioned rumored replacement for Secretary Diokno is a close associate of former president, now congresswoman, Gloria Macapagal-Arroyo and the vice-president and daughter of the former president, Sara Duterte.

*****

And we also made a cautionary observation on a bill being rushed now in Congress.

The hotly debated congressional bill to create a sovereign wealth fund through the pooling of resources of government financial institutions will add to Philippine financial and fiscal risks. The proposal is poorly timed, with external balances under stress and government debt and borrowings elevated, and it raises the specter of Malaysia’s 1MDB scandal, traced ultimately to poor governance.

 

Romeo L. Bernardo was finance undersecretary from 1990-1996. He is a trustee/director of the Foundation for Economic Freedom, the Management Association of the Philippines, and the FINEX Foundation. He also serves as a board director in leading companies in banking and financial services, telecommunication, energy, food and beverage, education, real estate, and others.

romeo.lopez.bernardo@gmail.com

The Maharlika Wealth Fund

ANGIE REYES-PEXELS

The bill establishing the Maharlika Wealth Fund (MWF), described as a Sovereign Wealth Fund (SWF), has taken a severe beating. It has been attacked on all fronts.

Representative Joey Salceda laments that critics are “nagpuputak” (cackling). He may have a point if critics had not read the bill. Yet, many of the criticisms, published or broadcast, are based on a thorough reading of the bill. The critics cut across the Philippine social and political spectrum. Ordinary citizens who pay taxes or make contributions to the Social Security System (SSS) and Government Service Insurance System (GSIS). Investors, bankers, economists, and technocrats. Former senior government officials as well as current high-level government officials who understandably cannot express their position loudly. The Governor of the Bangko Sentral ng Pilipinas (BSP). Academics and public intellectuals. Civil society organizations representing different strands of political and economic thinking, from the Left-oriented Ibon Foundation to the economic liberal Foundation for Economic Freedom. The media, as exemplified by the editorial of a pro-establishment The Manila Times. And politicians, even those closely associated with the Marcos administration and family. Senator Imee Marcos’ expression says it all: Diyos ko!

Some criticisms are comprehensive. Other criticisms are pinpoint and highlight a specific matter. Among the issues: the actuarial deficiency of the pension system and adverse effect on members of the SSS and GSIS; financial recklessness, loose risk management, weak prudential standards and lack of oversight and accountability; opacity, moral hazard and conflict of interest, corruption and cronyism, diversion of scarce government resources, erosion of independence of the BSP.

To be sure, some criticisms spring from lack of trust, given the dismal historical record of many government-owned corporations. But precisely because of the MWF’s muddled concept and bad design (which this essay will delve into), getting the trust of stakeholders is next to impossible.

In terms of metaphor, a critic using a shotgun will hit many targets since the MWF bill has so many objects to hit. Those who prefer using a sniper rifle can effortlessly hit the bullseye because it is so glaring as not to miss. More, even a cross-eyed shooter will find his mark.

Given the breadth of issues, which requires a voluminous exposition, I focus on the fundamental reasons why the bill must be scrapped. Yes, discarding the bill is the best option, for even amendments will not solve the problem.

The basic problem is that the very concept of the MWF bill is confused. It has been conceptualized as a SWF. But upon closer scrutiny, the bill is far from being the SWF it purports to be. The MWF is a bastardization of the SWF.

Based on the experience of other countries with SWFs, Norway being the leading example, the SWF works when a sovereign has a huge surplus. This huge surplus is then preserved and enhanced for the inter-generational transfer of wealth, structural transformation, and macroeconomic stabilization. In Norway’s case, the surplus coming from its extractive industries has been accumulated over the long term. Other countries, especially those from East Asia, have created SWFs sourced from their big trade surpluses. These countries, through industrial policy, were able to seize the opportunities from global trade and transformed themselves into export-oriented booming economies.

The Philippines does not have the surplus generated from our extractive industries nor from our (underperforming) exports.

We do have at present a comfortable level of foreign exchange reserves, but they still pale in comparison with the reserves of the economies that have had booming trade surpluses like China, Japan, Hong Kong, Taiwan, Singapore, and South Korea. Further, at this time of extreme volatility, uncertainty, increasing interest rates, and debt defaults all over the world, we must be prudent and conservative in using those reserves. The first version of the MWF intended to use the foreign exchange reserves, but fortunately, this was removed from the bill’s latest version.

So, how can the Philippines have the SWF (or MWF) when it does not even have a sufficient surplus? What the bill intends to do is transfer resources from other public institutions to the MWF. Thus, the SSS, GSIS, LANDBANK, other government financial institutions (GFIs) or corporations, and even the BSP dividends and the general appropriations, including public borrowing, will be used to finance the MWF. This is not wealth creation; this is transferring resources from one pocket to another. This means costly trade-offs, huge opportunity costs, and gross inefficiencies.

Another basic problem is that the proposed MWF strays from the core principles behind the SWF, namely enabling inter-generational transfer of wealth, structural transformation, and macroeconomic stabilization. The bill as worded limits its concern to having “consistent and stable investment returns” and “pooling the investible funds from the GFIs and channeling them to diversified financial assets and development projects.”

But these functions can be done even without creating the MWF. In effect, the bill is not establishing the SWF but a new government corporation, named the Maharlika Wealth Fund Corp. (MWFC). But this government corporation is a redundancy. Worse, the creation of this new government corporation will undermine if not destroy the other GFIs.

Related to this, the MWF, based, too, on the pronouncements of its champions, is going to be used for present projects, particularly infrastructure. It is reported that the President wants to finance dams and the national grid. The policy debate on what is good infrastructure can be set aside. But infrastructure and ordinary development spending can be funded through the National Government budget. Further, present infrastructure spending in itself is not about what SWF stands for: inter-generational wealth transfer, macroeconomic stabilization, or structural transformation.

What makes matters worse is that using the MWF — which involves the funds from the pension system — to finance present development projects is detrimental to the people’s welfare. The funds from the SSS and GSIS are the assets of their members. The SSS and GSIS are fiduciaries and hence must ensure that the resources they manage will be protected and optimized. But using SSS and GSIS resources for investment in public goods will not lead to a higher return for private individuals — the SSS and GSIS members. Sure, infrastructure can lead to high social returns, that is, the benefits are for the whole of society. That is different from the role of SSS and GSIS, which is to protect and boost the benefits of individual members.

The MWF will likewise destroy the credibility and effectiveness of other financial institutions, especially the BSP. Involving the BSP in the MWF will lead to potential conflict of interest, with BSP being part owner of the financial assets and being a regulator. It will likewise weaken the BSP’s independence.

We reiterate some fundamentals discussed above. The creation of a corporation for the MWF, as demonstrated, is redundant. The entity itself is far from being a SWF. The bill’s concept of the SWF is muddled.

And the last fundamental issue: The entity being set up violates the cardinal rules of good governance, risk management, and prudential care. Consider the following (based on the bill’s draft as of Dec. 1, 2022):

Section 4: “The regulatory restrictions on GFIs with respect to the asset class, type, term, and allocation of their investments shall not apply to funds invested in the MWF.”

Section 16: “The President of the Philippines shall sit as the Chairperson.”

Section 28: “MWFC and MWF shall be exempt from local and national taxes, direct and indirect, that may be imposed under the Local Government Code of 1991, and the National Internal Revenue Code of 1997.”

Section 29: “[T]he MWF Investments’ transactions, as well as the necessary connected or related transactions, shall be exempt from the provisions of Republic Act No. 9184, otherwise known as the ‘Government Procurement Reform Act,’ and Republic Act No. 10667, otherwise known as the ‘Philippine Competition Act,’ and their respective IRRs [Implementing Rules and Regulations].

“The MWFC shall be exempt from Republic Act No. 7656, otherwise known as the ‘Dividends Law of 1994.’ The Board shall determine the dividend policy of the MWFC.

“Contracts or agreements to be entered into by the MWFC shall be exempt from the laws, rules, or regulations requiring review by the Office of the Government Corporate Counsel.

“Access to the records shall be upon approval of the Board of Directors or by express provision of the law.”

All these sections make the MWF and MWFC most vulnerable to abetting recklessness, politicization, corruption, rent-seeking, and cronyism. The elimination of basic safeguards will likely lead to a Pharmally redux.

Whatever lofty intention the bill has can be done under existing institutions and mechanisms. What government must do improve is development spending by making the current budget less wasteful and less discretionary and more efficient and productive. Similarly, government can enhance the fiscal space by increasing revenues through a combination of new taxes that are efficient policy and tax administration.

Thus, scrap the bill.

 

Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.

www.aer.ph

Are China’s glory days coming to an end?

PEXELS-LARA JAMESON

China’s rise as an economic powerhouse is arguably the most spectacular story of the early 21st century. But are China’s glory days coming to an end?

China faces a demographic crisis that threatens its economic and military supremacy. The culprit? Low birth rates and an ageing population — a two edge sword that carry dire consequences.

These consequences include an insufficient workforce to sustain its manufacturing sector, a sector that constitutes 38% of its economy. A diminishing base of customers to sustain consumer demand. And, in defense, a scarcity of young able people to sustain the fighting power of its armed forces.

China’s demographic crisis can be traced to the One-Child Policy imposed in 1980 by Chairman Deng Xiaoping. The policy was imposed following the tremendous baby boom which saw China’s population grow from 540 million in 1949 to 969 million in 1980. Back then China was an agricultural economy whose output was not enough to support its rapidly growing dependents. Without population control, a hunger, housing, and healthcare crisis was sure to occur.

China’s Communist Party restricted couples to a single offspring and imposed steep fines for violators. And should parents fail to pay the fine, the second child would not be registered in the national household system. This meant the child would not legally exist and would be denied access to social services like healthcare and education. Civil servants and employees of government-affiliated organizations risked losing their jobs if they were found to have more than one child. The policy pushed women who were accidentally impregnated to get an abortion.

The One China Policy succeeded in retarding population growth. In fact, it is largely credited for China’s meteoric rise in per capita income in the decades that followed. But it created a culture among young Chinese of having small families, a culture that persists today.

For those who are unaware, there need to be at least 2.1 births per woman in order to maintain a population at constant levels. Since the enforcement of the One-Child Policy, birthrates in China have steadily declined, bottoming out at 1.3 per woman in 2020. In other words, the Chinese population is not being replaced and is on the path to decline. Meanwhile, the segment of those of retirement age is expanding exponentially.

Alarmed, Chinese policy makers officially ended the One Child on Jan. 1, 2016 and replaced it with a law allowing married couples to have a second child. Mysteriously, the words “family planning” disappeared from government’s lexicon.

China’s 2020 census confirmed that Chinese mothers gave birth to just 12 million babies in 2020, down from 14.65 million in 2019. With that, Beijing announced in May 2021 that it would allow couples to have three children.

But the ethos of having small families had already been deeply ingrained in Chinese culture. A survey conducted by China’s National Bureau of Statistics revealed that Chinese women, in general, were only willing to have 1.8 children during their lifetime. A lack of affordable childcare, rising living costs, and grueling work hours has been cited as some of the reasons making many young Chinese think twice about having any children, let alone more than one.

As of the end of 2021, China’s population stood at 1.41 billion people. The Shanghai Academy of Social Sciences predicts an annual average decline of 1.1% after 2021. This will pull China’s population down to 587 million by the end of this century, less than half of what it is today. The assumptions behind this prediction is that China’s fertility rate will slip from 1.15 to 1.1 between now and 2030, and remain there until 2100.

Exacerbating matters is gender imbalance. The One-Child Policy led to gender-selective abortions or infanticide targeting girls. This was due to a centuries-old social preference for boys. As a result, there are 37 million more men than women as of last year. Among the menfolk are millions of “bare branches” or unpartnered men without children who belong to the marginalized sector. Studies show that an inordinate number of bare branches in a community leads criminality, gambling, and prostitution. All these contribute to the collapse of Chinese culture and traditions.

The silver generation, or those above 60 years old, have become China’s fastest growing demographic. As of 2019, the elderly comprised 18.1% of the population. This number is seen to increase to 25% by 2030 and 35% by 2050.

A country’s Demographic Dependence Ratio measures the relationship between those aged zero to 14 and over 65 against the population aged 15 to 64, or those of working age. This indicator reveals the proportion of people of working age against those who are dependents. As of 2021, China had a dependence ratio of 42.87%. This amount is forecast to increase to well over 90% by 2050. In other words, for every 10 Chinese who are too young or too old to work and contribute to the economy, there will only be one person in the workforce working to sustain them.

One can imagine the social burden on government, what with pension and healthcare costs to contend. As it stands, China’s 7 trillion yuan pension fund is seen to be depleted by 2035. There will be a deficit in the pension system after that since benefits (disbursements) outpace contributions.

How can China overcome its demographic crisis? It can lean on technology to wean itself from dependence on manual labor. But this can only go so far and could never replace the might of a strong and plentiful workforce. It can also open its borders to immigration. But with a repressive communist government, China will be hard-pressed to attract young talent who prefer free, democratic countries to live in.

The only other way China can circumvent its demographic crisis is through annexation. This is another reason why the invasion of Taiwan is important to Beijing. But this is a topic for another piece. Suffice it to say that if China is unable to replace its workforce, its demise as an economic and military power is imminent.

 

Andrew J. Masigan is an economist

andrew_rs6@yahoo.com

Facebook@AndrewJ.Masigan

Twitter@aj_masigan

The tragedy of avoidable COVID deaths

PEXELS-ANNA SHVETS

WHOSE pandemic strategy really saved lives? Which states or countries lost the most people to the virus? Or to the unintended consequences of mitigation efforts? Now there’s finally some clear, objective data emerging from the fog.

The most telling statistic turns out to be the simplest: all-cause mortality. Tallies of who died, when and where can be used to calculate “excess mortality” — how many more people died in a given place and time period than would be expected. By contrast, official COVID-19 death statistics are clouded by differences in testing and a level of subjectivity doctors say is required to give a cause of death for people who had multiple health problems.

As early as the fall of 2020, statisticians were looking at all-cause mortality to try to figure out whether official COVID-19 deaths were overcounted or undercounted. But today, the death data are more complete, and cover enough time to make revealing comparisons between different periods and regions. While researchers are still figuring out which factors swayed these death statistics, a few conclusions are becoming clear: First, that COVID has been a global tragedy, causing millions of deaths. Second, that vaccines have saved countless lives. And third, that during the omicron and delta waves, the value of any non-pharmaceutical mitigation measures — masking, distancing, closing businesses and schools — was probably not nothing, but vaccination rates mattered far, far more.

One recently released analysis, not yet peer reviewed, concluded that in the US there were 1.17 million excess deaths from March 1, 2020 to Feb. 28, 2022 — a death rate that’s about 20% above the normal number of deaths (5,817,974) for that period. That’s higher than the official COVID death count. Excess mortality “is the most agnostic metric because it doesn’t ask you to make decisions,” said Jeremy Faust, an emergency medicine doctor at Brigham and Women’s hospital and co-author of the analysis. “It just asks you to say, are these deaths normal?”

Looking at excess death data has allowed Faust and his collaborators to examine deaths by time period, region, gender, age, and race, all broken down into the five or six waves of the pandemic. “We were really looking to say not just how big is this problem, but where is this problem?” he said, “And what does that tell us about our society and how we are responding?”

For example, comparisons made by Faust’s team across different counties in Massachusetts showed excess deaths clustered in areas with low vaccination rates. In their nationwide analysis, they found the South had the most excess deaths and the lowest vaccine uptake. (Whether you’re comparing counties, states, or countries, excess deaths shouldn’t depend on factors such as population age or overall health because the statistic compares the actual number of deaths in each region with the typical number of deaths in that same region, said Yale cardiologist Harlan Krumholz, co-author of the preprint.)

Faust and his team was also able to show that Native Americans, Black, and Hispanic Americans died in disproportionate numbers, and that men showed more excess deaths than women. And, in a surprising twist, while many more elderly people died by sheer numbers, the rate of excess death was higher among people under 50. That is, the death rate among those under 50 was more abnormal than the deaths of those over 65.

Comparing countries can be even more revealing. Another study, published this month in the Journal of the American Medical Association, showed much more excess mortality in the US than was seen in a number of other wealthy countries during the delta and omicron waves.

That study tracked the period after June 2021, when vaccines were widely available in these countries. The US had the most excess deaths, at 145.5 excess deaths per 100,000 people. The next-worst country was Finland with 82.2. The best two were Sweden, with 32.4, and New Zealand, with only 5.1 excess deaths per 100,000. The 10 most-vaccinated US states appeared comparable to much of Europe at 65.1, while the least-vaccinated states had an excess death rate of 193.3. Numbers like these should help puncture the myth, persistent in some communities, that the vaccines themselves caused a significant number of deaths — that’s simply not true.

Some of these rankings and statistics could seed new studies. There’s more work to be done to understand why Sweden had fewer excess deaths than any European country studied, and Finland had more. Putting it into context, though, lead author Alyssa Bilinski of Brown University sent me statistics for the pre-vaccine period, where Finland suffered fewer excess deaths than Sweden, which had more lax restrictions than its neighbors. That might mean the restrictions imposed in Finland, but not Sweden, helped before the vaccines, but not afterwards, and might suggest Sweden did a better job of quickly getting the vaccines to the most vulnerable.

Vaccination rates were comparable across most European countries, but big differences in excess deaths might hinge on how efficiently these countries got those vaccines into the arms of the most vulnerable, and how well boosters were rolled out during the delta and omicron waves.

The US fared far worse than any of the other countries studied, and New Zealand fared better. New Zealand had the lowest excess death rate before the vaccine rollout as well, and the US came in second worst, next to Italy. Some of those differences may have to do with how badly hospitals were overwhelmed and whether countries were able to do anything to protect nursing home residents, as well as bad luck in getting hit early in 2020.

Bilinski’s team also calculated how many US lives would have been saved if we’d done as well as the other countries. There could be 465,747 more Americans alive today if we’d done as well as New Zealand and 375,159 alive if we’d done as well as Sweden.

Of course, there are variables that are hard to control, including the timing of waves — how they coincided with seasonal patterns and waning immunity.

But the parts we can control should become clearer as more scientists study these overall death rates. Right away, it was apparent that the most vaccinated parts of the US had fewer excess deaths.

It would have been impossible for any country to get through the pandemic unscathed, but excess death statistics can show how much better the situation could have been. “This gives you a plausible counter-factual” said Bilinski. She said comparisons can also help focus on successes — whose actions weakened what would have been a category 5 hurricane to hit as a category 3. Those lessons could save lives in future waves of COVID, or the next pandemic.

BLOOMBERG OPINION

Palanca winners recognized after two-year hiatus

Dr. Nicanor G. Tiongson

Filipino writers, poets, and playwrights play an important role in countering and correcting falsehoods running rampant in an extremely polarized public sphere, said Dr. Nicanor G. Tiongson, guest of honor at the 70th Carlos Palanca Memorial Awards for Literature awarding ceremony. 

“Tiyakin natin na ang ating isinasalaysay, bagaman fiction, ay hango sa maingat at malalim na pananaliksik at laging ginagabayan ng kamalayang Pilipino na makatao (Let’s make sure that what we narrate, although fiction, is based on careful and deep research and always guided by Philippine human consciousness),” said Mr. Tiongson in his speech at the Marquis Events Place in Bonifacio Global City on Wednesday night. 

A professor emeritus of the University of the Philippines (UP) Film Institute and former dean of the UP Diliman College of Mass Communication, Mr. Tiongson said Darryl Yap’s 2022 film Maid in Malacañang is a prime example of what writers must fight against. 

With a story that manipulates people’s emotions, the controversial film about the Marcoses should be fact-checked and received with a critical mind, he said. 

HIATUS
After a two-year hiatus, the Palanca Awards resumed its annual ceremony recognizing Filipinos who exhibit the gold standard in writing excellence. Its committee received 1,455 entries but awarded only 59 writers, of which 28 are first-time awardees. 

The total number of writing categories awarded was 22, as the Novel and Nobela categories were open this year. These categories are open only every two years.  

Lawyer-educator Atty. Raymundo T. Pandan, Jr., was awarded the Novel category grand prize for Bittersweetland, described as “a novel for Negros, for its people, for the crop which sustains us and which we must sustain to endure, also to endure our bittersweet life.” 

Meanwhile, filmmaker-musician Khavn dela Cruz emerged as grand prize winner in the Nobela category for ANTIMARCOS, which is “a base for the comprehensive exploration of the limits of the Filipino language, employing a myriad of tones and styles towards a destructive synthesis of genres, formulas, and taboos,” based on the novel’s synopsis. 

In the Kabataan Division, the youngest winners are twelve-year-old twin sisters Glorious Zavannah Exylin C. Alesna and Glorious Zahara Exylin C. Alesna, who took home the first prizes for the Filipino and English essay categories respectively. 

“In the 70th year of this tradition, may our so-called tribe or community of exemplary writers continue to provide lessons and vigorous examples of nation-building,” said Criselda Cecilio-Palanca, in a speech representing the family behind the award. 

Established in 1950 in memory of Don Carlos Palanca Sr., the Palanca Awards aims to develop Philippine literature by providing incentives for writers, serve as a treasury of Philippine literary gems, and assist in their dissemination. — Brontë H. Lacsamana

Here is the complete list of winners at the 70th Palanca Awards: 

FILIPINO DIVISION 

  • NOBELA 
    • Grand Prize — ANTIMARCOS by Khavn 
    • Special Prize — Teorya ng Unang Panahon by Edgar Calabia Samar 
  • MAIKLING KUWENTO
    • 1st prize — “Ang Value ng X Kapag Choppy si Mam” by Charmaine M. Lasar 
    • 2nd Prize — “Barangay Alitaptap” by Abegail E. Pariente 
    • 3rd Prize — “Kung sa Bawat Pagtawag ay Pagtawid sa Dagat” by Alec Joshua B. Paradeza 
  • MAIKLING KUWENTONG PAMBATA
    • 1st prize — “Si VeRaptor1 Laban kay Trolakuz” by Mark Norman S. Boquiren
    • 2nd Prize — “Balong Batsit, ang Bidang Bulilit at Bayaning Bulinggit” by Wilfredo Farrales Sarangaya
    • 3rd Prize — “Mirasol para kay Lola Sol” by Benedick N. Damaso
  • SANAYSAY
    • 1st prize — “Kung Magkapalad Ka’t Mangmang” by Venice Kayla Dacanay Delica
    • 2nd Prize — “Tatlong Pancit Canton” by Jhon Lester P. Sandigan
    • 3rd Prize — “Isang Dekadang Kontrata sa Piling ng mga Mikrobyo” by Nathaniel R. Alcantara
  • TULA
    • 1st prize — “Uyayi ng mga Patay na Buwan” by Ralph Lorenz G. Fonte, M.D.
    • 2nd Prize — “Pintula” by Enrique S. Villasis
    • 3rd Prize — “Mga Anino sa Guho at iba pang mga tula” by Sonny C. Sendon
  • TULA PARA SA MGA BATA
    • 1st prize — “Tula, Tula, Paano ka Ginawa?” by Christian R. Vallez 
    • 2nd Prize — “Ale Bangbang” by Rebecca T. Anonuevo 
    • 3rd Prize — “Mga Pahina sa Alaala ng Nanay” by Ninia H. dela Cruz
  • DULANG MAY ISANG YUGTO
    • 1st prize — Punks Not Dead by Andrew Bonifacio L. Clete 
    • 2nd Prize — Dance of the Foolies by Layeta P. Bucoy 
    • 3rd Prize — Huling Haraya nina Ischia at Emeteria by Ryan Machado
  • DULANG GANAP ANG HABA
    • 1st prize — Mga Silid ng Unos: Tomo Uno by Joshua Lim So 
    • 2nd Prize — Anak Datu by Rodolfo C. Vera 
    • 3rd Prize — Badung by Steven Prince C. Fernandez
  • DULANG PAMPELIKULA
    • 1st prize — Amoy Pulbos by Avelino Mark C. Balmes, Jr. 
    • 2nd Prize — DOS by Noreen Besmar Capili 
    • 3rd Prize — Ang Pananalangin sa Getsemani by Ehdison M. Dimen 

ENGLISH DIVISION 

  • NOVEL 
    • Grand Prize — Bittersweetland by Raymundo T. Pandan, Jr. 
    • Special Prize — 1762 by Alvin Dela Serna Lopez 
  • SHORT STORY 
    • 1st prize — “Ceferina in Apartment 2G” by Ian Rosales Casocot 
    • 2nd Prize — “Ardor” by Exie Abola 
    • 3rd Prize — “The Money Changer” by Hammed Bolotaolo 
  • SHORT STORY FOR CHILDREN: 
    • 1st prize — NO WINNER 
    • 2nd Prize — “Cloud Keeper” by Elyrah L. Salanga-Torralba
    • 3rd Prize — “My Grandma who lives in Half a House” by Heather Ann Ferrer Pulido 
  • ESSAY
    • 1st prize — “Letter from Tawi-Tawi” by Atom Araullo 
    • 2nd Prize — “Filipino Millennial Monomyth” by Michaela Sarah De Leon 
    • 3rd Prize — “The Helmsman’s Daughter” by Alexandra Francesca A. Bichara
  • POETRY
    • 1st prize — “Bol-anon Prodigal” by Ramil Digal Gulle 
    • 2nd Prize — “A Few Dawns from now, A Sunfish” by Soleil David 
    • 3rd Prize — “The Blueline by Lawrence” Anthony R. Bernabe 
  • POETRY WRITTEN FOR CHILDREN
    • 1st prize — “An Empty Chair in the Corner” by Elyrah L. Salanga-Torralba 
    • 2nd Prize — “Picnic, Symphony and other concepts a 4th Grader needs to know” by Peter Solis Nery 
    • 3rd Prize — NO WINNER
  • ONE-ACT PLAY
    • 1st prize — The Cave Dwellers by Ronald S. Covar 
    • 2nd Prize — Salvaged Eman by Bonifacio P. Ilagan 
    • 3rd Prize — Agencia Feliz by Maria Kristine B. Roxas-Miller
  • FULL-LENGTH PLAY
    • 1st prize — Orgullo Compound by Layeta P. Bucoy 
    • 2nd Prize — Black Bordello by Jay Mariano Crisostomo IV 
    • 3rd Prize — The Lost Filipino Patriots of America by Dustin Edward D. Celestino 

REGIONAL DIVISION 

  • SHORT STORY-CEBUANO
    • 1st prize — “Barang” by Noel P. Tuazon 
    • 2nd Prize — “Ikigai” by Manu Avenido 
    • 3rd Prize — “John Wayne ug ang Goldfish kong Inahan” by Januar E. Yap 
  • SHORT STORY-HILIGAYNON: 
    • 1st prize — “Ang Macatol Kag Ang ‘Queen of Relief’” by Peter Solis Nery 
    • 2nd Prize — “Malipayon nga Katapusan” by Early Sol A. Gadong 
    • 3rd Prize — “Esperanza” by Ritchie D. Pagunsan
  • SHORT STORY-ILOKANO
    • 1st prize — “Ti Kimat Ken Ti Silag” by Oswald Ancheta Valente 
    • 2nd Prize — “Ti Ubing” by Remedios S. Tabelisma-Aguillon 
    • 3rd Prize — “Karton” by Rodolfo D. Agatep Jr. 

KABATAAN DIVISION 

  • SANAYSAY 
    • 1st prize — “Pamimintana” by Glorious Zavannah Exylin C. Alesna 
    • 2nd Prize — “Ang Larong Naipanalo Ko” by Hansly Kendrich C. Saw 
    • 3rd Prize — “Mga Bantas ang Nagsilbi kong Guro” by John Clarence D. Espedido 
  • ESSAY 
    • 1st prize — “Home is a Bowl of Warm Soup” by Glorious Zahara Exylin C. Alesna 
    • 2nd Prize — “Covid-19 is My Alter Ego” by Jenine A. Santos 
    • 3rd Prize — “The Social Pandemic” by Gavin Micah T. Herrera 

 

World Bank chief says poorest countries owe $62B on bilateral debt

WASHINGTON — The world’s poorest countries now owe $62 billion in annual debt service to official bilateral creditors, an increase of 35% over the past year, World Bank President David Malpass said on Thursday, warning that the increased burden is increasing the risk of defaults.

Mr. Malpass told the Reuters NEXT conference in New York that two thirds of this debt burden is now owed to China, providing some details of the development lender’s annual debt statistics report due next week. 

“I’m worried about a disorderly default process where there’s not a system to really address” debts for poorer countries, Mr. Malpass said. 

Mr. Malpass also said he was concerned about a buildup of debt in advanced economies such as the United States, because this is drawing more capital away from developing countries. 

“And so as the interest rates go up, the debt service goes up for the advanced economies, and that requires a big amount of capital from the world.” 

CHINA MEETING 

Mr. Malpass said that he would join a meeting in China next week with heads of other international institutions and Chinese authorities to discuss the country’s approach to debt relief for poorer countries, coronavirus disease 2019 (COVID-19) policies, property sector turmoil, and other economic issues. 

“China’s one of the big creditors, so … it’s very important that China engage on this issue and think about where it sees the world going and be responsive to work with what needs to be done to achieve sustainability for the countries.” 

International Monetary Fund chief Kristalina Georgieva also will participate in the meeting, which will focus heavily on debt treatments. Among the participants will be officials from China Development Bank and the Export-Import Bank of China, two of the country’s major bilateral lenders. 

Ms. Georgieva separately told Reuters Next that changes to the G20 Common Framework on debt restructuring were needed to speed up debt treatments, freeze debt service payments once a country requested help, and open the process to middle-income countries like Sri Lanka. 

“We are concerned that there is a risk for confidence in debt resolution to be eroded at a time when the level of debt is very high,” Ms. Georgieva said. 

“We don’t see at this point … a risk of a systemic debt crisis,” she said, adding that countries in debt distress were not large enough to trigger a crisis that would threaten financial stability. — Reuters

 

As economy stutters, China’s youth seek safety of civil service

REUTERS

BEIJING — As a physics student at the elite Peking University in Beijing, Lynn Lau was expecting big Chinese private sector companies to scour the campus this summer for upcoming talent.

But with the world’s second-largest economy growing at its slowest rate in decades, many recruiters stayed away this year.

The wishes of Ms. Lau’s parents that she had a “safe” civil service career suddenly made more sense.

“Last year, I feel my older classmates by this point had already got offers from big companies but then these same companies this year have just been in wait-and-see mode,” Ms. Lau said.

Ms. Lau is among more than 2.6 million people state media said have signed up for the nationwide civil service exam, competing for a record 37,000 central government jobs and tens of thousands of other provincial and city government posts.

Those jobs are drawing record interest this year even as cash-strapped administrations in some cities cut wages, in a sign that economic weakness in zero-COVID China is becoming endemic. State news agency Xinhua said some posts had as many as 6,000 candidates fighting for them, while the average was around 70 to one.

Private firms in tech, finance or tutoring are shedding tens of thousands of jobs and youth unemployment this year hit a record 20%.

An unprecedented 11.6 million students, equal to the entire population of Belgium, are expected to graduate next year.

Finding them jobs will be one of the biggest challenges for the Communist Party, which points to the staggering prosperity China has seen over the past four decades to justify its monopoly on power.

Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis, says the preference for civil servant jobs has surged.

“The reasons are obvious: the negative sentiment, the fear of the future,” she said.

Those in the private sector are finding conditions more demanding in an economy battered by COVID-19 lockdowns, a property market downturn and soft demand for exports, with long hours and lots of stress.

On social media, young Chinese refer to the civil service as “the end of the universe,” meaning the safest place around in such an environment.

However, the exam was due on Dec. 3–4 but has since been postponed due to coronavirus disease 2019 (COVID-19) outbreaks and no new date has been announced, adding to the stress.

In WeChat groups, students share tips on how to improve their scores and offer each other emotional support as they await word and try to prepare.

Shangshang, a 21-year-old college senior in the Yunnan province who declined to give her full name, said a government role would lower the risk of “implosion” — a term young Chinese often use to describe overwhelming pressure at work.

“Being a civil servant gives you a lot of stability,” she said.

 

TIGHT BUDGETS

Civil servant jobs in China have been in high demand for thousands of years as a sure way for those with high scores at the five-hour, multidisciplinary exam to move up the social ladder.

To this day, families take pride in their children joining the 55 million people state enterprise sector, or the civil service, which according to the latest data in 2015 was more than 7 million strong and is likely much bigger now.

Those jobs on average pay more than 100,000 yuan ($14,000) a year, but can be 3–4 times that in big coastal cities. That’s often much more than what similar private sector roles pay, and tend to come with housing subsidies and other perks.

That has helped them remain popular despite city governments in several provinces, including Guangdong, Jiangsu, Zheijiang, and Fujian, cutting pay by up to a third this year, according to at least six civil servants and some local media articles.

It is unclear how widely spread the state sector pay cuts are across China, but provincial governments — hit by the property downturn and COVID costs — are grappling with a $1 trillion budget shortfall this year.

City clerks go home with less money “by no fault of their own, but simply because of severe fiscal challenges,” one Guangzhou government official told Reuters on condition of anonymity.

“This year may be the worst of the past 10 years but it could be the best of the coming 10,” the official said.

 

SAFER INSIDE 

Jane Kang, who works in a county-level prosecutor office in the Fujian province, says her 110,000–120,000 yuan a year salary will be 10-15% lower in 2022. That makes her unhappy, but she sees limited options to improve her condition.

“If I can’t leave the country, then I will remain in the system,” Ms. Kang said. “If you work in the system, you have more job security than ordinary people working outside of it.”

The work environment has deteriorated as well, some government employees say.

One government employee in Guangzhou said her bosses demand she only commutes between home and the office to minimize COVID risks, even during times when the rest of the city’s population can move more freely.

“I want to go to a park, want to eat in restaurant, and to have a haircut,” she said.

Ms. Chen, a 25-year-old law student in Guangzhou, is aware of the pay cuts and restrictions but insists a state job is her best option and studies six to eight hours a day for the exam.

“The present state of the job market has definitely increased my desire to become a civil servant,” she said. — Reuters

 

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