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Nationwide round-up (03/30/21)

DoT lobbies for inclusion of more tourism workers in vaccine priority list

THE DEPARTMENT of Tourism (DoT) has asked the national task force handling the coronavirus response to expand the list of the industry’s workers who are included in the priority group for vaccination. “We have asked Secretary Carlito Galvez, Jr., the chief implementor of the country’s COVID-19 vaccination program, to widen the vaccination priority list for frontline workers of the tourism industry to include tour guides, operators and other accredited workers and service providers,” the department said in a statement on Tuesday. “The frontline nature of the jobs of these workers requires face-to-face interaction with individuals and groups as we prepare for the recovery of the industry,” it said. The DoT noted that before the pandemic, the tourism sector contributed almost 13% to the country’s 12.7 percent of the country’s economic output. “Not only will vaccination protect these workers from the COVID-19 virus as we prepare to welcome foreign and domestic tourists; it also serves as a firewall of sorts that will restrict the spread of the virus in our tourist destinations,” DoT said. Under the current priority list, first in line for vaccination are medical workers, followed by senior citizens, persons with comorbidities, and frontline personnel in other sectors, including tourism but limited to those assigned at airports and hotels accredited as quarantine facilities. “The lifting of travel restrictions and the quick recovery of the tourism industry — and the national economy as a whole — hinge heavily on the health and safety of our tourism workers,” DoT said.

Lawmaker wants building workers prioritized for coronavirus vaccines

CONSTRUCTION Workers Solidarity (CWS) Party-List Rep. Romeo S. Momo is calling on the government to add construction workers in the priority list for coronavirus disease 2019 (COVID-19) vaccination, citing their crucial role in economic recovery through the administration’s infrastructure program. In a statement on Tuesday, Mr. Momo said the industry’s workers are indispensable in ensuring that projects under the Build, Build, Build program continue unhampered. “Our very productive construction workers are our economic frontliners as well, they are one of those who will bring about the very much needed economic recovery and growth of our country, that is why they must also be given protection against the virus,” he said. — Gillian M. Cortez

Duterte appoints new head of toll board

PRESIDENT Rodrigo R. Duterte has appointed Alvin A. Carullo, a lawyer, as executive director of the Toll Regulatory Board (TRB). In a joint statement on Tuesday, the TRB and Department of Transportation (DoTr) said Mr. Carullo’s appointment took effect March 15. Transport Assistant Secretary Goddes Hope O. Libiran told reporters via Viber that Abraham P. Sales, the former TRB executive director, resigned in Jan. Prior to Mr. Sales’ resignation, the TRB was facing issues regarding the implementation of the non-contact Radio Frequency Identification payment scheme. Mr. Duterte, in a speech in December, threatened to fire officials involved in the matter that was deemed important in helping mitigate coronavirus transmissions. “If you cannot perform what is expected of you, then the best that you can do is resign and do not wait to be fired,” the President said. Mr. Carullo on Tuesday vowed to improve the TRB’s performance. “I intend to inculcate the culture of competence, integrity, and good public service in the TRB,” he said. The DoTr and the TRB said Mr. Carullo would be taking a look at pending applications of tollroad operators for rate increases. “Toll rates should not be too low as to be confiscatory nor so high as to be oppressive,” Mr. Carullo said. — Arjay L. Balinbin

Top gov’t lawyer defends military officer’s social media posts vs anti-terror law petitioners

THE Office of the Solicitor General (OSG) defended Lt. General Antonio G. Parlade, Jr.’s social media posts against petitioners questioning the anti-terror law, saying these were made in a personal capacity and so do not violate the Bill of Rights. Mr. Parlade, an active military officer, is the spokesperson of the government’s task force against communist rebels. “There can be no violation of the Bill of Rights when committed by a private individual,” the OSG said in its official response to the Supreme Court on March 19. The Supreme Court is currently hearing more than 30 petitions against the Anti-Terrorism Act passed last year. Before the oral arguments started in Feb., the petitioners filed before the high court a manifestation and motion for “possible intimidation” pertaining to the post of Mr. Parlade. The military officer’s cited posts on his Facebook page include describing the petitioners as “the noisy and belligerent minority” who are members of the Communist Party of the Philippines–New People’s Army-National Democratic Front, and who act “as if they represent the Filipino people.” — Bianca Angelica D. Añago

Regional Updates (03/30/21)

Davao City business chamber exploring agri trade with South Africa

THE Davao City Chamber of Commerce and Industry, Inc. and the South African Embassy in the Philippines have started discussions on potential trade in agricultural products. “It’s going to be more of (Davao) agricultural products going there (South Africa),” Davao City Chamber President Maria Lourdes G. Monteverde said during the business group’s membership meeting last week. She said they had a virtual meeting with South African Ambassador Bartinah Ntombizodwa Radebe-Netshitenzhe on March 17 for initial ideas on trade links. “They really like our agricultural products, so they look forward to our products as part of the export possibilities or opportunities. But we are still looking into the logistics sector,” Ms. Monteverde said. “South Africa has been here for the past 10 years already and they have a lot of infrastructure projects that they would want to connect with us. They would want to invest here also,” she added. — Maya M. Padillo

ILO, Japanese government deliver water system in Wao, Lanao del Sur

SIX villages in the town of Wao now have a water supply system, considered the biggest connected network in Lanao del Sur province, through the Water and Sanitation Project of the International Labor Organization (ILO) and the Japanese government. In a statement on Tuesday, the ILO said the system benefits about 10,000 people in underserved communities that had limited water resources for two decades. “Water has become more valuable during COVID-19 especially for areas facing multiple burdens such as extreme poverty, conflict, and climate change,” said Khalid Hassan, Director of the ILO Country Office for the Philippines. “We are grateful to the Government of Japan for giving us the opportunity to take part in Mindanao’s development through this water project that creates decent work, provides safe water and promotes peace,” Mr. Hassan said. The P17-million water system is also seen to boost productivity in the areas where people depend on agriculture for livelihood. — Gillian M. Cortez

P914-M irrigation projects completed in Bohol

FOUR irrigation projects worth P913.7 million were recently completed in Bohol, the National Irrigation Administration (NIA) said on Tuesday. The projects are: Benliw Small Reservoir Irrigation project in Ubay; Catigbian Small Water Impounding project in Buenavista; the Oghob Small Irrigation project in Batuan; and the Kagawasan Communal Irrigation project in San Miguel. Of the four, the P645-million Benliw project is the biggest with storage capacity of 2.86-million cubic meters of water. It is expected to benefit 400 hectares of farmland and 600 farmers in Ubay. “Aside from irrigation, the project is also expected to provide other incidental benefits, such as flood control, watershed management, aquaculture as a supplementary food source to the residents in the area, and soil conservation since it prevents the soil from eroding or reducing fertility caused by overusage,” NIA said in a statement. NIA Administrator Ricardo R. Visaya said the Ubay infrastructure is also a potential destination for agricultural tourism with its scenic views. The Catigbian irrigation project, worth P260 million, can store 322,000 cubic meters and cover 60 hectares of agricultural land. The P4.5-million Oghob project will provide irrigation water supply to 44 hectares of farms while the P4.2-million Kagawasan project, a part of the Comprehensive Agrarian Reform Program, will serve at least 25 hectares. — Revin Mikhael D. Ochave 

Statistics agency updating livestock, poultry data in Laguna, Bukidnon

THE Philippine Statistics Authority (PSA) is currently updating the list of livestock and poultry establishments in the provinces of Laguna and Bukidnon as part of initiatives to improve the quality of available data that guide policy decisions. “This updating activity covers a total of 1,145 barangays in the provinces of Laguna and Bukidnon,” the PSA said in a statement. The information gathering activities cover establishments already in the database and new ones. PSA appealed to business owners and managers to take part in the initiative and give the necessary and true information. “The success of this undertaking is very important for the delivery of a reliable and updated statistics as a basis for government planning and policy formulation,” the PSA said. “The initiative is a special activity being conducted as part of the pilot survey in relation to the redesigning of the commercial livestock and poultry survey (CLPS). The CLPS is being redesigned to improve the survey estimates for livestock and poultry statistics,” it said. — Revin Mikhael D. Ochave

End of Suez snarl marks start of new stress on global trade

NOW REMOVED from the Suez Canal’s main channel, the Ever Given leaves in its wake several weeks or months of disruptions across a world economy where the pandemic revealed both the sturdy backbone of global trade and an Achilles’ heel.

“It’s not a cork-out-of-a-bottle moment,” said Peter Aylott, director of policy at the UK Chamber of Shipping. “We could still be days away from the canal being completely free.”

The reopening kicks off a new wave of stress on supply chains -— the intertwined network of ships, ports, trucks, trains and warehouses that shuttle products from a factory on one side of the planet to a retail shelf or production line on the other. A surge in e-commerce means even greater consumer demand for speed, putting added strain on transportation and boosting freight rates to record highs.

Even a temporary clog in a major artery like the Suez is problematic because the world’s nearly 6,000 container ships run on schedules, with a finite number of steel boxes to go around. They can’t be repositioned to where demand pops up or quickly shifted away from regions where economic activity is slow. Capacity can be tweaked by adjusting the speed of vessels but also with a blunter tool: canceling sailings that aren’t possible anymore or aren’t economically viable. The Suez incident may unleash plenty of those.

That leaves the owners of cargo — and all the logistics industries handling imports and exports — at the mercy of the container carriers.

TOPPLING DOMINOES
“The metaphorical dominoes have already been toppled,” said Lars Jensen of SeaIntelligence Consulting. “We will continue to see the unfolding of congestion issues in Europe as the cargo arrives, blank sailings resulting from the severe delay of many vessels, as well as a deterioration of the equipment situation.”

In the near term, ports from Europe to Asia are bracing to be inundated with goods held up near Egypt for almost a week.

The Port of Rotterdam, Europe’s largest seaport, late last week counted 59 container ships ensnared in the Suez congestion that were headed its way, though it wasn’t possible to estimate when they’d arrive. In Spain, ports in Algeciras, Barcelona and Valencia were reviewing revisions to arrival schedules and preparing contingency plans for more working hours to handle the unpredictable flow of ships.

The disruption spreads well beyond container shipping: scores of oil, gasoline, natural gas and other tankers and vessels were halted by the blockage, stunting normal supply and delivery routines across the energy and chemical sectors. Before the Ever Given ran aground, about 2 million barrels of crude and petroleum products transited the canal every 24 hours.

In the near term, the traffic jam may hamper efforts by European gas buyers to restock inventories eroded by winter demand. That may present US gas exporters with an opportunity to grab market share, said Andy Weissman, chief executive of EBW Analytics.

Freight rates for bulk ships used to haul grains and metal may also remain elevated. The Baltic Dry index recently hit an 18-month high amid strong Chinese corn and soybean buying, and growing metal demand.

Meanwhile, a Chinese logistics executive warned that the impact on global trade could linger as backlogs in Europe worsen.

ONE 748
Ports are already struggling to handle normal shipping volumes because of the pandemic, and now they’ll need to cope with many delayed vessels all arriving at once or in quick succession, said Max Wei, general manager of international business at Speedaf Logistics Ltd.

Under the best-case scenario, it will take a month or more to work through the congestion, he said.

With ocean freight maxed out, importers are looking for other modes even if they are more expensive.

Vivian Lau, a Hong Kong-based logistics executive, said the surge in demand for air freight is set to continue even after the Suez logjam clears. Online shopping and the scarcity of available containers are among reasons why sellers and buyers will continue to scramble.

“Over the weekend I was up trying to find a few 747s,” said Ms. Lau, vice chair and group chief executive officer of Pacific Air Holdings. “I was able to find one, I wasn’t able to find a few.”

In a sign of that demand, Abu Dhabi’s Etihad Airways will temporarily convert a fifth Boeing Co. 777-300ER jetliner to cargo duty.

While the squeeze on air freight was already happening without the Suez blockage, Ms. Lau sees another legacy from the past week’s events: more debate on reshaping supply lines.

“You can’t just sit in one part of the world assuming that things are going to be running like clockwork and you don’t need to keep any inventory because they will arrive ‘just in time’,” she said. “The Suez Canal blockage is just another reminder.”

Sigrid Nikutta, a DB Cargo management board member, said rail offers another option when barriers arise.

“During COVID, we have seen that trains can go through borders where roads were closed and we see this at the moment, when the seaway is closed trains can go on,” she said Monday in an interview with Bloomberg Television.

The Suez-related turmoil may ripple beyond Europe and Asia.

Charlotte, North Carolina-based Premier Inc. helps more than 4,000 hospitals manage purchasing and supplies. Last year, huge increases in demand caused shortages for items like gloves, gowns and masks. While crisis-level shortages have abated, it left U.S. hospitals and suppliers with less inventory on hand and more sensitive to fresh hiccups in the supply chain.

“For many, many, many products, there is no safety stock in the channel,” said David Hargraves, Premier’s senior vice president of supply chain.

The Suez backlogs are just the latest in a series of cascading events that will delay a key input to plastic medical gear: resins. The company has warned member hospitals to prepare for “a higher number of shorter duration or sporadic shortages,” Hargraves said. —  Bloomberg

Pfizer, Moderna COVID-19 vaccines highly effective after first shot — US study

COVID-19 vaccines developed by Pfizer, Inc. with BioNTech SE and Moderna, Inc. reduced risk of infection by 80% two weeks or more after the first of two shots, according to data from a real-world US study released on Monday.

The risk of infection fell 90% by two weeks after the second shot, the study of nearly 4,000 US healthcare personnel and first responders found.

The results validate earlier studies that had indicated the vaccines begin to work soon after a first dose, and confirm that they also prevent asymptomatic infections.

Some countries dealing with limited vaccine supplies have pushed back schedules for second doses with the hope of getting some protection to more people. US public health officials, however, continue to recommend two doses be given on the schedule authorized by regulators based on clinical trials.

The study by the US Centers for Disease Control and Prevention (CDC) evaluated the vaccines’ ability to protect against infection, including infections that did not cause symptoms. Previous clinical trials by the companies evaluated their vaccine’s efficacy in preventing illness from coronavirus disease 2019 (COVID-19), but those studies would have missed asymptomatic infections.

The findings of the real-world use of these messenger RNA (mRNA) vaccines also confirm the efficacy demonstrated in the large controlled clinical trials conducted before they received emergency use authorizations from the US Food and Drug Administration.

The study looked at the effectiveness of the mRNA vaccines among 3,950 participants in six states over a 13-week period from Dec. 14, 2020 to March 13, 2021. About 74% had at least one shot, and tests were conducted weekly to catch any infections without symptoms.

“The authorized mRNA COVID-19 vaccines provided early, substantial real-world protection against infection for our nation’s healthcare personnel, first responders, and other frontline essential workers,” CDC Director Rochelle Walensky said in a statement.

The new mRNA technology is a synthetic form of a natural chemical messenger being used to instruct cells to make proteins that mirror part of the novel coronavirus. That teaches the immune system to recognize and attack the actual virus.

The CDC study comes weeks after real-world data from Israel suggested that the Pfizer/BioNTech vaccine was 94% effective in preventing asymptomatic infections.

Britain and Canada were among the countries that have allowed extended gaps between doses of up to three or four months. UK authorities said in Jan. that data supported its decision for a 12-week gap between doses.

Pfizer and its German partner have warned that they had no evidence to prove that. In their pivotal trials, there was a three-week gap between Pfizer shots and four weeks for the Moderna vaccine.

The CDC said the study results on Monday provide reassurance that people start to develop protection from the vaccine two weeks after their first dose, although the agency reiterated that the greatest protection was seen among those who had received both recommended doses of the vaccines. — Reuters

Economists weigh in on the merits of net-zero climate goals – survey

A GROWING NUMBER of climate economists say the world should take “immediate and drastic action” to tackle climate change, according to a survey published Tuesday.

Failing to do so could cost the world some $1.7 trillion a year by the middle of this decade, escalating to about $30 trillion a year by 2075, according to estimations by the 738 economists from around the world surveyed by New York University’s Institute for Policy Integrity.

“People joke about how economists can’t agree on most things,” said Derek Sylvan, the institute’s strategy director and one of the authors of the survey. “But we seem to find a pretty strong level of consensus” on the economic importance of climate action.

Three-quarters of respondents strongly agreed that drastic action should be taken immediately, compared with just half of economists polled by the same institute in 2015.

For another question on reaching net-zero emissions by 2050, two-thirds said the costs of investing toward that global goal would be outweighed by the economic benefits, which would include preventing natural disasters, preserving coastal infrastructure and assets and protecting food supplies.

To avoid catastrophic climate change, scientists say the world needs to reach net-zero emission by 2050 — meaning people are adding no more emissions to the atmosphere than they are removing.

Sylvan said he was surprised that so many saw net-zero action as “economically desirable, even on the pretty short timeline that we’re talking about.”

Most of the international climate economists questioned for the survey in February said they had become more concerned about climate change over the last five years. The most common reason they gave was the escalation in recent extreme weather events, which have included climate-linked wildfires and heat waves.

The world saw more than 7,300 major natural disasters between 2000 and 2019, which killed some 1.2 million and cost $3 trillion in damages, according to the U.N. Office on Disaster Risk Reduction. That compares with about 4,200 disasters, leading to 1.19 million killed and $1.6 trillion in losses during the 20 years previous, the data show.

“Some places are more exposed, and current levels of income matter a great deal,” said Michael Greenstone, an economist at the University of Chicago and the director of the Energy Policy Institute at Chicago.

The fallout from climate change will impact people and nations

Economic disparities make it hard to apply simple cost-benefit analyses, he said. For example, a poor family will feel economic losses more acutely than a wealthy family.

“How do we think about a dollar of climate damage to (billionaires) Bill Gates or Jeff Bezos versus a family of four living below the poverty line? I think as a society we have to make a judgment about that.” — Reuters

You can’t fight a pandemic without reliable power

Reliable electricity is one aspect of our day-to-day that we often take for granted. And, until something happens to remind us just how necessary it is, we never seem to fully appreciate the fundamental role it plays in our daily lives.

Usually, this reminder comes as we approach the summer months of March, April, and May. It is generally during this time of year that the National Grid Corporation of the Philippines forecasts looming power shortages, and terms such as “yellow” and “red” alerts pop-up in the news, and tips on how to conserve energy show up on our social media feeds.

This year, however, is different.

Previous long-term power generation forecasts indicated possible shortages in the summer of 2021, but because of the lockdowns and the country’s ineffective COVID-19 response measures, entire industries, such as manufacturing plants and even malls, have had to either scale back or halt operations entirely. This, in turn, has reduced demand on the grid.

While the reduced risk of power shortages in the country might be considered the silver-lining of the country’s otherwise dire situation, the pandemic has caused other sorts of shifts as well. In particular, it has changed how we use electricity and increased the importance of reliable electricity, not only for our economy but also for our public health response.

Since the global pandemic crisis began early last year, the Philippines has been under lockdown — now the world’s longest, mind you. Nevertheless, over this time, our economy and society have still been able to function, with education, work, commerce, and social interaction still finding ways to continue. However, these activities, normally done physically on school campuses, in office buildings, malls, and restaurants, are now done digitally and remotely from our own homes. This shift has meant that our homes’ electric bills may have been slightly higher than what we were used to before the pandemic.

Also, with the Holy Week break now upon us and a vacation-less summer break just around the corner, we have no choice but to stay at home and perhaps crank-up the AC a bit longer than usual in an attempt to beat the summer heat. So, while factories and malls aren’t putting their typical demand on the grid, household consumption is definitely up compared to pre-pandemic figures. Best to keep an eye on the monthly electricity consumption chart in your electric bill to see how our consumption this summer compares to non-summer months and to adjust our expectations and behavior accordingly.

By powering our modern comforts, remote learning, working from home, and e-commerce, reliable electricity plays a crucial role in our economic and social well-being. At the same time, however, reliable electricity is also essential for effective COVID-19 responses. Ventilators, oxygen masks, and many diagnostic tests require electricity to work.

Furthermore, as vaccines slowly arrive and inoculation rolls out, an unbroken cold chain — an uninterrupted series of refrigerated production, storage, and distribution activities, along with associated equipment and logistics — is essential for keeping vaccines from spoiling during transportation.

Given the vital role that reliable electricity plays in maintaining this cold chain, the Department of Energy (DoE) recently issued a circular directing that private companies that make up the power sector to not only ensure a reliable and stable power supply but to also put in place contingency plans and emergency protocols in case of power shortages.

In the National Capital Region (NCR), where the most COVID-19 cases are concentrated, and inoculation rollout is critical, power distributor Meralco has implemented a network rehabilitation and upgrade program to ensure there is enough supply to meet projected demand and keep the cold chain and vaccination centers powered.

The country’s largest distributor, Meralco, set up a task force earlier this year to anticipate the vaccine rollout’s demands. The task force will inspect and monitor distribution facilities and substations to address potential causes of forced outages in vaccine storage facilities and vaccination centers. This month, Meralco is tracking 304 facilities, including 101 vaccine cold storage facilities and 203 vaccination centers. This includes MetroPac Movers, Inc.’s facilities, where over a million doses of Sinovac and AstraZeneca were delivered. The task force will closely watch healthcare facilities identified as vaccination centers, such as the Lung Center of the Philippines, the Dr. Jose N. Rodriguez Memorial Hospital, the Philippine General Hospital, Rizal Medical Center, the Philippine National Police General Hospital, and Pasay City General Hospital.

When the NCR was placed under the stricter quarantine ECQ again this week, Meralco also announced that its customers do not need to worry about service disconnections until April 15.

It may be an aspect of daily life that we often take for granted. Still, the pandemic has highlighted the integral role reliable electricity generation and distribution have in our economic and social well-being and our effective response against COVID-19.

Lastly, it is also worth pointing out that given the breadth of the pandemic response measures being implemented by energy sector stakeholders, on the one hand, and the government’s bungled COVID-19 response initiatives, on the other, I am glad the energy sector was privatized in the 1990s. Given its vital role in this era of COVID-19, there is no doubt that we would be in an even worse situation if maintaining a reliable supply of electricity was added to the government’s long list of to-dos.

 

Paco A. Pangalangan is Executive Director at the Stratbase ADR Institute.

Learning from and about China — 3

(Last of three parts)

China has done wonders eliminating dehumanizing poverty in a record time of 20 years, from 2000 to 2020. Can we then expect China to continue this ”human miracle” by becoming the richest nation in the world also in no time at all?

Most probably not. China is still way, way behind the richest large nations in the world like the US, Germany, the UK, France, and Japan who, in 2019, had, according to the World Bank, per capita incomes of $65,281, $46,259, $42,300, $40,494, and $40,247, respectively in comparison to China’s $10,260 in the same year.

In trumpeting its economic success, China may even make the legitimate claim that its total GDP in absolute terms, using Purchasing Power Parity (PPP) in measuring income is already larger than that of the US. GDP comparisons using PPP are considered more useful than those using nominal GDP when assessing a nation’s domestic market because PPP takes into account the relative cost of local goods, services, and inflation rates of the country, rather than using international market exchange rates which may distort the real differences in per capita incomes. According to the IMF, in 2020, China’s GDP in PPP terms was $24.162 trillion compared to the US’ of $20.807 trillion. It may be asserted that in PPP terms, China has now the largest GDP in the world. Such a fact, however, is mainly attributed to its large population, almost four times that of the United States. Even in PPP terms, the per capita income of the US is still 3.4 times that of China. It will take a while, if ever, for China to match the per capita income of the US.

To further restrain the Chinese leaders from prematurely claiming economic victory over the United States, or for that matter over other OECD countries with much larger per capita incomes than China, we should again consider that in calculating its poverty incidence as of 2020, China uses a poverty line of about $2.25 a day. Even if the World Bank uses a lower threshold of $1.90 a day, what can $2.25 a day purchase for an individual? To get an idea, let us convert this amount into Philippine pesos which would be about P122, obviously a pittance considering today’s living standards in a middle-income economy. For upper-middle-income countries like China, the World Bank reckons that a reasonable poverty line is $5.50 a day. In an article by Indermit Gill, writing for Brookings Institute (Jan. 25, 2021), it was reported that China is almost as well off today as the United States was 60 years ago when it became a high-income economy.

In 1960, the US first adopted an official definition of poverty, classifying people as poor if their daily consumption was less than $21.70 in 2011 prices, four times what the World Bank today considers reasonable and about 10 times what China believes is adequate. In 1960, using the $21.70 cutoff, fewer than a quarter of all Americans lived in poverty. But by this criterion, between 80% and 90% of Chinese people would today be considered poor. Given these standards, China is years — if not decades — behind schedule. President Xi Jinping and company have no reason to be complacent.

To have a reasonable chance to match the economic power of the US in the coming years (or decades), China is well advised to heed the following, as recommended in the Brookings paper:

• Forget the flattery. China should not get used to being praised for reducing poverty in record time. As the country prospers, the praise becomes progressively less admiration and more flattery. China should seriously consider the experience of the US from 1920 to 1960, especially the achievements and limits of poverty programs in Southern states. No serious Chinese student of economic history will find comparisons with the US flattering.

• Forget $1.90 a day or even $2.25 a day. These poverty thresholds are no longer interesting and relevant and repeated references to them may actually be counterproductive. They are not appropriate for an upper-middle income country about to become an advanced economy. Since the 1960s, the US has been using a poverty line that is 10 times higher. China should use its centenary celebrations of the CCP to crank up ambition, not to go on about doing what Vietnam and Taiwan had done when they were a lot poorer.

• Forget “precise relief.” Even at $15 a day, poverty incidence in the US, Japan, and South Korea when they made their transitions to high income, was less than 10%. Using this higher rate, poverty incidence today in China would be 75% for the whole country and 90% in rural China. With these more realistic numbers, China is decades behind in poverty reduction. To catch up, China needs a radically more ambitious strategy than targeted relief.

The greatest threat to China’s ambition to become a “First World Country” in the near future is the very high probability that it would fall into the so-called Middle Income Trap like many countries in Latin America, such Brazil, Venezuela, and Argentina. These countries reached upper-middle income levels decades ago and have stagnated since.

Since 1960, just 15 economies have escaped this trap, among which were the tiger economies of Asia such as Japan, Hong Kong, Taiwan, and South Korea. Major reasons for falling into this trap have been losing competitiveness in exports of manufactured goods because of rising wages, suffering from low investments, inability to innovate and move up the technology ladder, poor labor market conditions, slow growth in the secondary sectors of the economy, and lack of investment in infrastructure, education, and research in science and technology. In fact, it is believed that China’s Belt and Road initiative and Made in China 2025 are strategies to avoid the Middle Income Trap.

Countries that fell into the Middle Income Trap did so because they were unable to invest sufficiently in infrastructure, innovation, and research, and high quality education, among other reasons. China did not suffer from such inadequacies. The main factor that could imprison China in the Middle Income Trap is its rapidly ageing population that can be mainly attributed to the brutal one-child policy that was enforced for decades. Although this policy was relaxed in 2016, there has been little success in convincing couples to have more children, not too different from the experience of Singapore that has been trying for decades to reverse its low fertility rate without any success. A Time Magazine article on Feb. 7, 2019 reported that in 2018 there were close to 250 million people over 60 years old, constituting 17.9% of the total population. By 2050, it is estimated that 330 million Chinese will be over 65. Its population will peak at 1.44 billion in 2029 before entering unstoppable decline, according to the Chinese Academy of Social Sciences. This population bomb will seriously constrict its labor force, put excessive burden on its already very inadequate pension system and greatly dampen its domestic market.

Add all these to the very high debt burden, which is over 200% of GDP, and you have a formula for long-term stagnation. China’s biggest problem today is that it has started to age rapidly before becoming rich. The rich countries of today experienced rapid population decline only after they reached levels of GDP per capita of $20,000 or over. Lesson for the Philippines: make sure that at least our middle-class families will continue to have an average of three children (if the fertility rate falls below 2.1 babies per fertile woman, the population starts its long-term decline). Our demographic dividend is still our major engine of growth: a young, growing and English-speaking population. Without such a demographic dividend, we would not have the more than $30 billion annually of remittances from OFWs which constitute some 10% of our GDP, the large earnings of the BPO-IT workers, and the huge domestic market on which is based the number one source of GDP growth, which is consumption expenditures. 

 

Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is Professor Emeritus at the University of Asia and the Pacific, and a Visiting Professor at the IESE Business School in Barcelona, Spain. He was a  member of the 1986 Constitutional Commission.

bernardo.villegas@uap.asia

What does the world need? More humans

ALVIANUS DENGEN/UNSPLASH

HOW WORRIED should we be about global depopulation? Some East Asian countries have fertility rates near or even below 1.0, while much of the core population of Europe is shrinking. In the US, fertility rates have fallen below replacement rates, hitting a historic low of 1.7 in 2019, and will likely fall even further in 2020 in part due to COVID-19. Many of the world’s poorer countries are seeing their birth rates plunge at unprecedented rates. By the year 2100, according to one projection, world population growth will be practically zero.

If you think the world is overpopulated and has serious environmental problems, you might welcome this news. But as my colleague Robin Hanson has pointed out, dwindling populations create their own inexorable logic. If the Japanese population shrinks by half, to 65 million or so, what’s to stop it from declining to 30 million? Or 20 million?

There is some evidence that shrinking populations are bad for the global economy. To me, however, the greater tragedy would be a failure to take full advantage of the planet’s capacity to sustain human life. No kind of family policy should be mandatory. But there should be policies that make larger families a more appealing option, both economically and otherwise.

One possibility is that a shrinking population itself will bring self-reversing mechanisms. For instance, a Japanese population half its current size would make Japan an emptier place, presumably lowering land prices. Some families would find it easier to afford a larger apartment in central Tokyo and perhaps decide to have more children.

But that mechanism seems more likely to reduce population decline than to reverse it. Living space is only one of many factors behind decisions about family size. And as population declines, the stock of houses and apartments will decline too, so in the longer run the amount of space per family may not increase by very much.

Population trends depend on how permanent are the causes of fertility decline. In many cases women prefer to pursue careers, or to start having children later, and that means lower birth rates. This same logic would apply in a much less populous Japan or Italy.

Another factor in declining fertility, especially in the US, is single parenthood. If a potential mother is facing a fertility decision without another full-time parent on the scene, she is more likely to choose to have fewer children. As population falls, will single-parent families become less common? It is hard to see why. Whether the issue is a lack of marriageable men, unstable family norms, or women who simply prefer to go it alone, there is no particular reason to think those factors will disappear in an era of population decline.

If anything, the impetus toward smaller family size might continue or even accelerate. Job opportunities for women may keep improving in quality, which increases the opportunity costs of having a large family. Furthermore, many countries around the world are becoming wealthier. As wealth increases, religiosity tends to decline, and religiosity also tends to boost family size.

What might be some other intervening factors to restore fertility? Perhaps tender and loving robots will make it much easier to raise young children. Or maybe, as populations fall to much lower levels, a sense of moral panic will set in. Families might decide to have more children, feeling that the very survival of their country is at stake. A more elaborate and dystopian scenario would be that corporations take over empty parts of the globe and pay for the raising of children there, in return for a share of their future income.

Undoubtedly there are other unusual (and more utopian) scenarios. Whatever their likelihood, it would not be wise to count on them. It is already the case that in many places, such as Singapore, governments have embarked on aggressive yet ineffective pro-family subsidy policies.

Depopulation is a major problem that the world in general, and its wealthier countries in particular, are failing even to discuss, much less address. In any given year, in any given country, a shrinking population may not be much of an issue, and it may even be welcomed. But make no mistake: Over time, collectively, we are choosing a very different future for humanity.

BLOOMBERG OPINION

Giant next-gen container ships will make Ever Given look like a toy

IF YOU THINK the ultimate reason the Suez Canal got blocked last week is because container ships are getting too big, get ready for the future. The next few generations of cargo vessels are going to make the Ever Given look like a bath toy.

Big enough to carry 20,124 twenty-foot equivalent units, or TEUs — the standard measure for cargo, representing a single shipping container — the Ever Given was one of the world’s largest such vessels when it was launched in 2018. The first container ship to break the 20,000 TEU mark had been at sea for less than a year. One famed 1999 study, written at a time when the largest boats carried less than 8,000 TEUs, argued it would prove impossible to build craft bigger than 18,000 TEUs.

The Ever Given, finally floating on its way again, is now distinctly in the second class of mega freighters. There are nearly 100 ships carrying more than 20,000 TEUs on the seas or under construction, and the bigger vessels being assembled in Chinese and South Korean shipyards are mostly around the 24,000 TEU mark. A quarter of the capacity moved by the world’s largest container line, AP Moller-Maersk A/S, is on boats above the 17,500 TEU mark.

That’s unlikely to be the end of it. Chinese shipyard Hudong-Zhonghua Shipbuilding Group Co. has already registered designs for a 25,000 TEU vessel, and it has become relatively commonplace to predict that 30,000 TEU monsters will be plowing the oceans before the decade is out.

Such enormous hulls may cause problems that will put the Ever Given’s mishap into the shade. At Rotterdam, the largest ships already have to arrive at high tide to ensure there’s enough clearance for them to get through the channel, according to a 2019 study by Nam Kyu Park of South Korea’s Tongmyong University. Larger vessels will soon be unable to berth at Shanghai, Busan, and Hong Kong even at high tide, unless channels are dredged out further, Park wrote.

There are similar problems with infrastructure on dry land. Modern ports are astonishingly efficient at unloading, and can turn around a fully laden 20,000 TEU vessel in a couple of days. But the time spent waiting for a berth can cut deep into the wafer-thin economics of a container line. Longer quays may have to be built to accommodate the larger ships, as well as cranes that can reach across wider decks, larger loading yards for tens of thousands of containers, and faster rail and road terminals to take cargo to its next destination.

Current vessels are already at the limits of what can fit along major shipping lanes. The Ever Given is too bulky to squeeze through the Panama Canal, where boats must be lifted over its mountainous spine with massive lock gates. At 24 meters (79 feet) deep, the Suez Canal has more capacity — but it’s roughly as deep as the Straits of Malacca and Singapore, so dredging it further to accommodate bigger ships won’t help much. The binding constraint on East-West trade at this point isn’t engineering, but geology.

Extending 15.7 meters below the water line, the Ever Given shouldn’t, on paper, have trouble making it through any of those channels, which typically require 3.5 meters of clearance from the bottom. Next-generation ships with a 20-meter draught, on the other hand, would be at constant risk of grounding.

How have container ships managed to defy expectations that their size would hit fundamental limits? A large part of it is because the economies of scale are so compelling. Bigger vessels use more fuel, but relative to the number of boxes stacked on their decks they’re far more efficient. They can also turn around a larger number of containers at a time and serve a wider array of feeder ports, ensuring they can defray their massive capital costs quicker.

There’s little sign that this is about to change. New International Maritime Organization  (IMO) regulations against the burning of sulfur-intensive fuel oil introduced last year mean current ships are using costlier diesel, putting more pressure on naval architects to come up with yet more efficient designs. Beyond that, the IMO now has plans to reduce carbon dioxide emissions by 40% in 2030 compared with 2008, and by 70% by 2050. Even with a switch to cheaper, less polluting liquefied natural gas as the main fuel, that’s going to mean further drastic improvements in efficiency, not to mention propulsion technologies that don’t exist yet. To date, the best way to chip away at fuel consumption and emissions is by increasing size.

It’s hard to know how the industry is going to cope with this. Perhaps Suez, Malacca, and Singapore can be dredged to accommodate even bigger vessels. Perhaps shipyards will find ways to squeeze a few more inches out of existing channels.

If not, alternative routes around the Cape of Good Hope and through the deeper Straits of Sunda and Lombok between Indonesia’s islands may prove the only viable way to accommodate such massive boats. Should that happen, those economies of scale will have to be drastically larger to make up for the longer sailing time. We’ve seen container ships leap from 10,000 TEUs to 24,000 TEUs. Don’t be shocked to see 50,000 TEU vessels plying the sea in your lifetime.

BLOOMBERG OPINION

Westbrook triple-double propels Wizards to win over Indiana Pacers

Russell Westbrook notched his 16th triple-double of the season to lead the Washington Wizards past the Indiana Pacers (132-124) in their NBA matchup on Monday. — WASHINGTON WIZARDS FB PAGE

RUSSELL Westbrook collected 35 points, a season-high 21 assists and 14 rebounds to fuel the host Washington Wizards to a 132-124 victory over the Indiana Pacers on Monday.

Westbrook made 14 of 26 shots from the field, including 4 of 6 from 3-point range. The triple-double was Westbrook’s NBA-leading 16th of the season and second in as many games.

Rui Hachimura had 26 points and eight rebounds and Chandler Hutchison added 18 points off the bench for the Wizards, who played without NBA leading scorer Bradley Beal (right hip contusion). Raul Neto scored 15 points off the bench to help Washington win its second in a row after losing eight of its previous nine.

All was not rosy for the Wizards, however. Recent acquisition Daniel Gafford rolled his ankle and left the court in a wheelchair.

Domantas Sabonis recorded 35 points and 11 rebounds and Malcolm Brogdon added 26 points for the Pacers, who were foiled in their bid to win three in a row for the first time since capturing the first three games of the season.

Indiana scored nine straight points to secure a 116-110 lead with 5:47 remaining in the fourth quarter before Washington countered with a 22-8 run to end the game. Westbrook drained a stepback jumper, a layup and two 3-pointers during the pivotal surge.

Hutchison made three baskets to help Washington bridge the third and fourth quarter with a 9-0 run and claim a 97-92 lead. Indiana quickly forged a tie after Myles Turner sank a 3-pointer and Edmond Sumner added a pair of free throws.

Brogdon drained three 3-pointers en route to scoring 11 points to stake Indiana to a 28-24 lead at the end of the first quarter. Hachimura scored eight points to pace the Wizards, who misfired on all four attempts from 3-point range.

The teams continued their tight battle throughout the second quarter, with Sabonis’ dunk, hook shot and free throw allowing the Pacers to secure a 58-57 lead at half time.

2021 NBA DRAFT
Meanwhile, with the modified National Basketball Association (NBA) season scheduled to run deep into July, the league announced Monday that the 2021 NBA Draft will be held on July 29.

The league also announced that the draft lottery will be held on June 22, with the NBA combine set for June 21-27.

The current NBA regular season runs to May 16, with the NBA Finals due to be completed by July 22.

The deadline for players to apply for early entry for this year’s draft is May 30, and those who opt to withdraw from early entry must do so by July 19.

Setting the date roughly a month later than the traditional June NBA draft, the league has yet to determine whether the draft (with the first round televised in prime time) will be virtual or in-person, owing to the changing parameters surrounding the coronavirus pandemic. — Reuters

Local volleyball body hails Jaja Santiago’s latest achievement

VOLLEYBALL star Jaja Santiago was congratulated by the Philippine National Volleyball Federation, Inc. (PNVFI) for the integral part she played in her team’s conquest of the Japanese V.Cup title at the weekend.

Ms. Santiago, 25, became the first Filipino to win a volleyball title outside of the Philippines, helping Saitama Ageo Medics to the championship.

“On behalf of the entire leadership of PNVF, I extend my warmest and most heartfelt congratulations for your achievement,” said PNVFI President Ramon Suzara in a congratulatory message to Ms. Santiago.

Adding, “Let this be an important milestone that will bring even much more to your already outstanding career.”

One of the country’s top volleyball talents, Ms. Santiago was tapped by Ageo Medics in the 2019-20 season as an import in its campaign in the top-tier Japanese league.

Ms. Santiago and Saitama beat NEC (26-24, 20-25, 25-21, 25-17) in the gold medal match on Sunday at the Ota City General Gymnasium in Tokyo.

The Filipino player chalked up 11 points on nine spikes and two blocks.

Her play complemented well those of her teammates Yuka Sato and Shainah Joseph, who finished with 15 and 14 points, respectively, to help tow their team to the title.

The team’s showing was an improvement from its bronze medal finish in the 2020 V.League.

Ms. Santiago is due back in the country this week and is set to turn her focus on the Premier Volleyball League where her Chery Tiggo team will make their professional debut.

A former University Athletic Association of the Philippines most valuable player with National University, Ms. Santiago played for and won club championships with PLDT Home Ultera and Foton in the Philippine volleyball circuit. — Michael Angelo S. Murillo

Tennis ace Alex Eala takes on another ‘first’ in Switzerland

FILIPINO tennis ace Alex Eala’s groundbreaking year on the women’s tour continues as she is set to play in her first-ever $60,000 tournament in Switzerland next week.

Fifteen-year-old Eala, a Rafa Nadal Academy scholar and long-time Globe ambassador, gained entry into the main draw of the International Tennis Federation (ITF)-sanctioned Bellinzona tournament in Switzerland happening from April 5 to 11.

It will be the first $60,000 tournament in her young career, which has taken an impressive ascent early in 2021.

The Bellinzona tournament comes on the heels of her Women’s Tennis Association (WTA) Tournament debut last week at the Miami Open.

In Miami, Ms. Eala, ranked 737th in the world, played in the qualifiers but fell short against world no. 104 Viktória Kužmová of Slovakia (6-4, 4-6, 2-6).

She started the match strong against her older opponent, but could not sustain it the rest of the way en route to the defeat.

Despite the loss, Ms. Eala views her experience in Miami as something that would only serve to prepare her for the challenges ahead.

“It’s just an amazing experience. I am still in awe of the Miami Open experience,” she wrote on a Facebook post following her bid.

She went on to share that apart from playing, practicing with top WTA professionals at the Miami Open inspired her to continue working on her game and pursuing her tennis dreams.

Ms. Eala has racked up a 12-5 win loss slate in the WTA, while she holds a 17-9 overall record to include her matches in the ITF for the year.

She earned her first-ever singles title since turning professional when she ruled the opening leg of the Rafa Nadal Academy ITF World Tour in Mallorca, Spain, in January. Ms. Eala followed it up with three consecutive quarterfinal appearances in her next three tournaments. — Michael Angelo S. Murillo