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PHL employer healthcare costs seen rising 8.8% in 2021

THE cost of healthcare benefits borne by employers in the Philippines is expected to rise 8.8% in 2021 due to the pandemic, according to a survey of medical insurers conducted by Willis Towers Watson, an advisory, broking and solutions company.

The Philippine growth rate as estimated by medical insurers outpaces the Asia Pacific average of 8.5% in 2021. The regional average was 6.2% this year and 7.5% in 2019, according to the firm’s 2021 Global Medical Trends Survey, Willis Towers said in a statement.

“The pandemic undoubtedly had a major impact on slowing trend increases this year as it sparked a sharp decline in non-urgent surgeries and elective care,” said Susan La Chica, Head of Health and Benefits, Philippines at Willis Towers Watson.

Ms. La Chica said that while there was a drastic decline in the number of non-emergency patient visits in hospitals or clinics due to fear of exposure to coronavirus, there was a rise in the frequency of emergency room visits.

She added that actual cost of care per outpatient visit or confinement also rose due to the cost of personal protective equipment (PPE) for healthcare workers and the nature of conditions being managed.

“Continued delay in treatment in 2020 could mean an even larger increase in 2021 than projected,” she said.

Aside from the Philippines, China, India, Indonesia, Malaysia, New Zealand, Singapore, Thailand and Vietnam are also expected to see an increase of more than 8% in the cost of healthcare benefits in 2021.

It said that 49% of the insurers surveyed in the region expect that the medical benefit cost growth trend will remain constant over the next three years while 40% expect it to rise further.

According to the report, private medical care in the Philippines is largely dominated by health maintenance organizations (HMOs), which account for 80% of the plans.

Various physician organizations negotiated with HMOs and were granted a 50% increase in fees starting May to cover PPE costs, the report said, adding that the cost increase is expected to remain for the duration of the pandemic.

“Overall this helps explain why trend rates in the Philippines have edged up for 2020 to 8.5% from 7.8% in 2019 and are projected to continue increasing for 2021, although continued delay in treatment in 2020 could mean an even larger increase in 2021 than projected,” according to the report.

The study showed that cancer, cardiovascular diseases and conditions affecting the musculoskeletal and connective tissue are the top three conditions affecting medical costs in the region, it said.

Overuse of care by medical practitioners recommending too many services is the most significant cost-driving factor according to 75% of the respondents, it said, followed by overuse of care by insured members.

Willis Tower Watson also said that external factors affecting the increase of medical costs outside the control of employers and vendors were healthcare providers’ profit motive, the higher cost of medical technology, and the pandemic.

Ms. La Chica said personal healthcare awareness and hygiene improved because of the pandemic.

Use of telehealth, which could offset potential higher costs “and provide a more efficient way for those insureds to access and use healthcare in the future” also accelerated, she said. “However, that may also boost utilization due to ease of access and add to overall costs.”

The survey was conducted between July and September and took in responses from 287 leading medical insurers in 76 countries. — Vann Marlo M. Villegas

Holiday retail sales expected to be subdued amid questions about economic recovery

RETAIL SALES during the end-of-year holidays are expected to be subdued as the economy recovers, with consumers expected to keep a lid on spending due to the uncertainty caused by the pandemic.

Retail sales have improved after the easing of lockdown restrictions since August, but operations are limited due to sparse foot traffic and dwindling cash flow for store owners, the Philippine Retailers Association (PRA) said.

Overall consumer expenditure is low due to public health anxiety and restrictions on the elderly, large public gatherings, and public transportation, which is keeping consumers from shopping, the industry group said.

“People will still do their Christmas shopping though (this) may be limited. Retailers will always have their December sales as the best month of the year in terms of sales. This may be in (the) form of in-store or/and online experiences,” PRA Vice-Chairman Roberto S. Claudio, Sr. said in an e-mailed response to questions on Tuesday.

He said that consumers are patronizing restaurants albeit at limited capacities. Food and medicine sales are strong, while non-essential fashion stores are performing poorly.

“However, health and fitness equipment retailers are experiencing higher demand for ‘workout at home’ (goods),” which are sought after as consumers seek “to counter the lockdown’s  physical and mental stress,” he said.

Third-quarter consumption declined by 9.3%, against the 15.3% drop in the second quarter, according to the Philippine Statistics Authority. Household spending had risen 6% in the third quarter of 2019.

With government stimulus, household spending could grow by 5.7% in 2021, with increased spending on recreation, furniture and homes, alcoholic drinks and tobacco, and clothing and footwear, global research firm Fitch Ratings said last month.

The government has been offering loans for small businesses during the pandemic. But Mr. Claudio said that both government and bank loans remain inaccessible.

“Government loans to businesses should be available with longer repayment terms. Profit will not recover immediately in this pandemic, but MSME’s (micro-, small-, and medium-sized enterprises) need the cash flow to sustain operations,” he said.

The Philippine Chamber of Commerce and Industry has asked that mall and commercial center operators extend rent relief for smaller tenants, and proposed that businesses instead pay a percentage of sales until they have recovered. — Jenina P. Ibañez

IEA: Regulation main source of uncertainty in growth of Philippine renewables industry

THE renewables outlook to 2025 for the Philippines and some of its neighbors is for growth in the solar and wind-energy industries, with regulation seen as the main source of uncertainty, the International Energy Agency (IEA) said in a report issued Tuesday.

“PV (photovoltaic) expansion in Indonesia, the Philippines and Thailand will gain momentum, but regulatory and administrative challenges hamper faster growth,” the IEA said in its 2020 Renewables report made available to BusinessWorld.

The report did not outline the specific challenges faced by solar projects.

As part of the Philippine renewable portfolio standards (RPS) scheme, the government will conduct auctions for the supply of green energy, but implementation remains a “forecast uncertainty” for wind-powered projects, the IEA said.

In July, the Department of Energy announced that it would open its first-ever green energy auction to help electricity providers reach their RPS goals. It is scheduled to be held next year.

“Renewables are resilient to the COVID crisis but not to policy uncertainties. Governments can tackle these issues to help bring about a sustainable recovery and accelerate clean energy transitions,” IEA Executive Director Fatih Birol said in a separate statement.

According to the IEA report, the auctions are expected to “drive up PV growth, with annual deployment reaching almost 0.5 GW (gigawatts) through 2022 and a further increase to 0.8 GW during 2023-25.”

The scheme is also expected to increase the Philippines’ wind power capacity from 2022 onwards.

The IEA said investor appetite for renewables remains strong. Between January and October, it estimated that global auctioned renewable capacity rose 15% year on year.

It also noted that shares of publicly-listed renewable equipment manufacturers and project developers have been “outperforming in most major stock market indices and the overall energy sector.” In October, shares of solar companies worldwide were more than double their year-earlier levels, the IEA said.

According to Mr. Birol, renewables are set to become the largest source of electricity generation worldwide, supplying one-third of the world’s power in 2025.

The IEA examines the impacts of energy issues across the globe. Although the Philippines is not an IEA member, it was included in this year’s global report. — Angelica Y. Yang

House commits support for 12 economic revival measures on Finance dep’t agenda

THE House of Representatives will expedite the passage of 12 economic measures sought by the Department of Finance (DoF) to help the government jumpstart the economy following the damage done by the pandemic, a senior legislator said Tuesday.

Majority Leader Martin G. Romualdez said he has been instructed by Speaker Lord Allan Q. Velasco to prioritize the 12 bills, five of which are in the interpellation stage in plenary, and the rest in committee.

“I have explicit instructions from Speaker Lord Allan Velasco. We have to prioritize these 12 bills that were endorsed by DoF Secretary Carlos G. Dominguez III as part of the legislative priorities of the DoF,” Mr. Romualdez said. “These legislative imperatives are needed to help ensure that the economy recovers quickly from the corona-induced crisis in a strong, sustainable, and resilient manner.”

The priority measures include House Bill (HB) No. 7749 or the proposed Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery act, which is in plenary. Its purpose is to strengthen the capacity of government financial institutions to provide assistance to micro-, small-, and medium-sized enterprises.

Other priority measures in plenary are HB 7425 or the proposed Digital Transactions Value-Added Tax act, HB 7406 or the proposed Bureau of Fire Protection Modernization Program act, HB 6135 or the Fiscal Mining Regime, and HB 7425 or the proposed Internet Transactions Act/E-Commerce Law.

Priority measures that have yet to make it past committee are the Military and Uniformed Personnel Services Separation, Retirement, and Pension bill,  the Armed Forces of the Philippines Modernization bill, the Coconut Farmers Trust Fund bill, the Department of Water Resources and Water Regulatory Commission bill, the Warehouse Receipts bill, the National Disease Prevention and Management Authority bill, and the National Land Use bill.

“I have no doubt that the House will be able to pass all these measures before the onset of election fever next year,” Mr. Romualdez said. — Kyle Aristophere T. Atienza

E-voucher program to disburse cash aid to farmers, fishermen via DBP; food aid via Agri dep’t

BW FILE PHOTO

THE Department of Agriculture (DA) said it entered into an agreement with the Development Bank of the Philippines (DBP) to offer an e-voucher program which will deliver subsidies to farmers and fisherfolk.

Agriculture Secretary William D. Dar and DBP President Emmanuel G. Herbosa signed the memorandum of agreement and implementing guidelines of the subsidy program on Nov. 9.

The cash assistance and food program has an allocation of P4.5 billion under Republic Act No. 11494 or the Bayanihan to Recover as One Act (Bayanihan II) and is projected to benefit around 900,000 farmers and fisherfolk.

Eligible beneficiaries enrolled in the Registry System for Basic Sectors in Agriculture will receive P5,000 worth of assistance that consists of P2,000 in food and P3,000 in cash.

Under the e-voucher system created by the DA, farmer beneficiaries can claim their cash assistance at DBP-accredited payment centers by presenting a government-issued identification card and the unique reference code sent by the implementing agencies.

Food assistance can be claimed at DA-accredited outlets participating in its Kadiwa ni Ani at Kita program.

Dennis M. Layug, DA senior adviser on information technology and farm digitalization, said the new system provides an efficient delivery system for aid, and facilitates monitoring of disbursements.

Mr. Dar said the program aims to help marginal farmers, fisherfolk, enterprises, and farm industries affected by the coronavirus disease 2019 (COVID-19) pandemic.

The program hopes in particular to reach beneficiaries “not included in previous amelioration programs that catered to rice farmers,” Mr. Dar said.

The program’s implementing agencies include the DA Corn Program, Philippine Coconut Authority, Sugar Regulatory Administration, Bureau of Fisheries and Aquatic Resources, and the National Commission on Indigenous Peoples for the corn, sugarcane, fisheries, and indigenous peoples sub-sectors. — Revin Mikhael D. Ochave

Farmers bring in P5.57B worth of palay and corn ahead of Storm Ulysses

THE Department of Agriculture (DA) said that around P5.57 billion worth of palay and corn was harvested before Tropical Storm Ulysses made landfall on the Pacific coast of Luzon.

In a bulletin Tuesday, the DA said rice valued at P5.48 billion was brought into storage in Cagayan Valley, Central Luzon, Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon), and CAR (Cordillera Administrative Region).

Total volume was 341,812 metric tons (MT) across 69,716 hectares of farmland.

Meanwhile, P85.62 million worth of corn, equivalent to 6,757 MT, were brought in across 1,550 hectares in the Ilocos, Cagayan Valley, and Central Luzon regions.

“Damage and losses in the agriculture sector are expected from CAR, Ilocos Region, Cagayan Valley, Central Luzon, Calabarzon, Mimaropa (Mindoro, Marinduque, Romblon and Palawan), Bicol Region, and Eastern Visayas Region,” the DA said.

On Tuesday the Philippine Atmospheric, Geophysical, and Astronomical Services Administration said Ulysses is likely to make landfall in Quezon Province on Thursday after approaching via Catanduanes and Camarines Norte Wednesday.

In a separate bulletin, the DA said crop damage from Typhoon Rolly (international name: Goni) amounted to P5 billion, up from the previous esti mate of P3.01 billion.

The typhoon affected 42,151 farmers and 126,077 hectares of agricultural land, resulting in the loss of 194,181 MT in produce.

Affected commodities include rice, corn, high-value crops, livestock, as well as various agricultural facilities.

Damage to rice amounted to P1.17 billion, equivalent to 63,960 MT, across 22,924 hectares.

High-value crop losses are now at P1.9 billion. Some 10,569 hectares of land were affected while 114,826 MT was lost.

Other commodities that reported losses include abaca at P1.02 billion, coconut P569.81 million, corn P52.86 million, livestock and poultry P48.65 million, and fisheries P22.28 million.

Damage to agricultural facilities hit P190.78 million, while losses to machinery and equipment was pegged at P875,000. — Revin Mikhael D. Ochave

BSP weighing scaled-back relief measures as economy recovers

THE Bangko Sentral ng Pilipinas (BSP) said it is evaluating the timing of moves to wind down its stimulus program as the economy recovers, in order to avoid any negative effects from policy action taken during the height of the crisis, such as the persistence of low interest rates.

“Most of these monetary instruments will need to be scaled back, if not reversed entirely, even if other instruments of the central bank may have to utilized,” Marites B. Oliva, an economist with the BSP’s Center for Monetary and Financial Policy, said in a forum organized by the Philippine Economics Society Tuesday.

The central bank implemented a range of policy actions to provide support during the crisis. It started cutting rates in February, before the pandemic started affecting the economy. The BSP reduced key policy rates by a total of 175 basis points, bringing down the overnight reverse repurchase, lending, and deposit facilities to .25%, 2.75%, and 1.75%, respectively.

It also reduced the reserve requirement for banks by a total of 200 bps, in an effort to increase liquidity. It also agreed to classify loans to small businesses as a form of reserve compliance.

The BSP’s policy measures have injected P1.9 trillion into the financial system, equivalent to 9.6% of gross domestic product.

The BSP has also granted a total of P840 billion via provisional advances to the national government through a repurchase agreement with the Bureau of the Treasury and direct provisional advances. The amount is P10 billion less than the P850-billion limit.

“The unwinding of conventional measures is anchored on the medium- and long-term outlook for price stability. For unconventional measures, the unwinding will depend on the impairment of the monetary policy transmission to the financial system and the market,” Ms. Oliva said.

“Waiting too long could give rise to systemic risks especially amid a prolonged environment of low interest rates,” she added.

Ms. Oliva cited as an example BSP’s continued purchases in the secondary market, which she said “would have to be gradually normalized to avoid conflicting signals and policy conditions.”

BSP Governor Benjamin E. Diokno has said that the bank will carefully assess the timing of unwinding the measures taken during the pandemic to avoid serious repercussions.

“Moving forward, an optimal exit strategy should be one that is induced by a favorable macroeconomic environment,” Ms. Oliva said. — Luz Wendy T. Noble

Phoenix Fuel Masters look to secure QF incentive outright

THE Phoenix Super LPG Fuel Masters look to secure the twice-to-beat advantage in the quarterfinals (QF) of the PBA Philippine Cup complication-free when they take on the Rain or Shine Elasto Painters on the final play date of the elimination round on Wednesday at the Angeles University Foundation Arena in Pampanga.

Currently sporting a 7-3 record, good for joint second place, the Fuel Masters are in a good position to land one of the quarterfinal incentives given to the top four teams at the end of the eliminations of the ongoing Philippine Basketball Association (PBA) tournament.

A win by Phoenix in its 6:45 p.m. clash with Rain or Shine assured for it at least the third seed in the quarterfinals, but a loss could be tricky as it opens the possibility of the team being in a 7-4 logjam with five other squads which could see it dropping in the seeding, even outside of the top four, depending on the quotient which is in effect to break ties.

The Fuel Masters did their top-four push a boost on Monday when they dug deep to come from behind and beat also-rans Blackwater Elite, 100-95.

Down by as much 16 points at one point in the second half, Phoenix showed tremendous resolve to claw its way back past Blackwater for the important win.

The duo of Jason Perkins and Calvin Abueva towed their team to the victory, registering solid numbers.

Mr. Perkins finished with 18 points, 3-of-5 from three-point territory, and 12 rebounds for Phoenix, with Mr. Abueva being his all-around self with 17 points, 13 rebounds, eight assists, two steals, and two blocks.

Matthew Wright also had 17 points while Brian Heruela had 15 for the Fuel Masters, who won their third straight game with the victory.

While they welcome the chance to finish in the top four, Phoenix coach Topex Robinson said primary for the team still is bringing out the best out of themselves, regardless of where they end up in the seeding. “We never look at where we are because everything is getting tighter and tighter right now. Again, I said just be the best version of ourselves and roll. We don’t have any control with the other teams, but we have 100 percent control of how we would be,” Mr. Robinson was quoted by the official PBA website as saying after their win.

Meanwhile, out to derail the push of Phoenix is Rain or Shine, in eighth place and still not assured of a spot in the quarterfinals as of this writing but was hoping to change that with a win over the TNT Tropang Giga later on Tuesday.

Also seeing action on the last playing date of the eliminations are the NLEX Road Warriors (4-6) versus Terrafirma Dyip (1-9) at 10 a.m., Northport Batang Pier (1-8) against the Meralco Bolts (6-4) at 1 p.m., and Magnolia Hotshots Pambansang Manok (6-4) vs. Blackwater (2-8) at 4 p.m. — Michael Angelo S. Murillo

Rain or Shine books a spot in the quarterfinals

By Michael Angelo S. Murillo, Senior Reporter

The Rain or Shine Elasto Painters are heading into the PBA Philippine Cup quarterfinals after defeating the TNT Tropang Giga, 80-74, in a key match on Tuesday at the Angeles University Foundation Arena in Pampanga.

Needing a win out of its last two games in the elimination round of the ongoing Philippine Basketball Association tournament to claim the final quarterfinal berth, the Elasto Painters did not waste time and jumped on the opportunity of getting it at the first instance.

Rain or Shine put up a steady fight throughout the contest and hung tough in the end to book the win to improve to 6-4 with one game left in its schedule in the eliminations.

The win also eliminated the NLEX Road Warriors (4-6) from the playoff race.

The loss, meanwhile, dropped TNT to 7-4, missing the chance at claiming a top-four spot and a twice-to-beat advantage in the quarters outright.

TNT took early control of the contest, booking a 19-13 advantage at the end of the opening quarter.

In the second frame, however, Rain or Shine started humming on the lead of veterans James Yap and Mark Borboran. It would go on and outscore TNT, 30-19, to claim the lead, 43-38, at the break.

Rain or Shine would continue to command control in the third canto.

It stretched its lead to 10 points, 55-45, in the first five minutes of the quarter.

The Tropang Giga tried to inch closer after that but still found themselves down by double digits, 67-57, heading into the final 12 minutes.

Despite being continuously frustrated by Rain or Shine, TNT was undeterred and kept charging in the payoff quarter.

Led by Ray Parks Jr. and Poy Erram, the Tropang Giga steadily chipped away on the lead of the Elasto Painters, levelling the count at 72-all with 2:15 left in the game.

But Rain or Shine outscored TNT, 5-2, in the next minute and a half to go on top, 77-74.

The Tropang Giga had a chance to come near, or even tie the contest, but Troy Rosario blew their chance after he was called for an offensive foul while he drove to the basket with 19 ticks to go.

TNT was forced to foul after, sending Javee Mocon to the charity line.

Mr. Mocon calmly sank his free throws to extend their lead, 79-74.

It was a hole that the Tropang Giga could not get themselves out of, eventually slumping to the defeat.

Messrs. Yap and Mocon top-scored for Rain or Shine with 16 points apiece with Beau Belga and Mr. Borboran adding 12 and 10 points, respectively.

Mr. Rosario, meanwhile, paced TNT with 18 points, followed by Mr. Erram with 14. The two also combined for 23 rebounds.

The Tropang Giga played without Jayson Castro and Ryan Reyes, who were rested to help their body recover from some discomfort.

“We told the players we have at least two chances to enter the playoffs but that we had to finish it now because things will not get easier for us. We’re happy with the win and we look forward to the game tomorrow (Wednesday) because we still have a chance to enter the top four,” said Rain or Shine coach Caloy Garcia after the game.

Rain or Shine plays the Phoenix Super LPG Fuel Masters on Wednesday in its final game in the eliminations.

‘LEE-THAL WEAPON’ IS POW
Meanwhile, Paul Lee of the Magnolia Hotshots Pambansang Manok was hailed PBA Player of the Week for the period of Nov. 3-8.

The “Lee-thal Weapon” had it solid in said stretch, leading the Hotshots to a 4-0 record with numbers of 25.3 points, 4.5 rebounds and 3.8 assists.

Magnolia’s winning streak propelled it to the thick for the fight for a quarterfinal spot after opening the tournament shaky.

Mr. Lee, 31, beat out Phoenix’s RJ Jazul, Barangay Ginebra’s Stanley Pringle, Meralco’s Chris Newsome, and the NLEX’s Kevin Alas and Jericho Cruz for the weekly citation handed out by members of the media covering the league.

Winning the Rookie of the Week award was Aaron Black of Meralco after he averaged 5.8 points, 6.5 rebounds and 2.5 assists in his team’s 3-1 outing last week.

He won the award over Terrafirma’s Roosevelt Adams and Magnolia’s Aris Dionisio.

The Biden presidency and the future of the Indo-Pacific

Following a tight race in the state of Pennsylvania, former Vice-President Joe Biden was able to secure the remaining electoral votes needed to defeat President Donald Trump and become the 46th President of the United States. Winning both the electoral college and the overall popular vote, he is expected to become the first presidential candidate in US history to receive more than 75 million votes. Together with his running mate Kamala Harris, the first woman to earn the title of US vice-president, Biden now has the opportunity to reverse the controversial policies that were introduced by the Trump administration and restore “dignified leadership” at home and on the world stage.

While Biden may have to face the challenges of a divided Congress to pursue his domestic policy goals, he will have more control in shaping the country’s foreign policy. In turn, this could serve as his cornerstone for moving forward in the realm of international politics. Under his leadership, the US is expected to shift from Trump’s “America First” approach to a US policy that recognizes and considers the importance of alliances and multilateral cooperation.

During the campaign, Biden promised to take immediate steps to counter the rising authoritarianism in the world by reinvigorating US democracy and strengthening the coalition of democratic states. He also pledged to rejoin a number of initiatives that were shelved by the Trump administration including the Iran nuclear deal and the Paris Agreement on climate change.

The direction of Biden’s foreign policy reflects his commitment to restore the country’s global reputation and re-engage with many of its allies, including NATO and the European Union. In the Indo-Pacific, however, the Biden administration faces familiar roadblocks, including China’s aggressive expansionism and the region’s sharp democratic decline, to advance shared values and promote cooperation among like-minded states.

The ongoing strategic competition between the US and China, along with Trump’s erratic foreign policy initiatives, have resulted in both risks and opportunities for the Indo-Pacific. As China continues to expand its role and reduce US presence in the region, nations including the Philippines, Vietnam, Malaysia, Brunei, and Taiwan have struggled to locate and balance themselves between the two contending superpowers.

Given the circumstances, Biden is projected to prioritize regional interests and set forward an updated version of President Obama’s policy of strategic rebalancing. According to his foreign policy advisor Anthony Blinken, the former vice-president is planning to actively engage the Indo-Pacific on critical issues and reassert US leadership through diplomacy. Although it would not erase the Trump administration’s four turbulent years, Biden’s return to globalism would be beneficial for the region, especially for countries that were sidelined by the inward-looking policy of the US.

In terms of approaching the China challenge, the established bipartisan consensus that China is a strategic competitor will most likely remain under the new administration. Biden portends to go beyond the US versus China narrative and implement a more consistent China policy by strengthening partnerships in the region and expanding its informal security network, including the Quad.

Kurt Campbell and Jake Sullivan, two of Biden’s top advisors, also said that the US leader is planning to craft a competitive coexistence framework that would be based on four key domains: economic, political, military, and global governance. Although both countries have an opportunity to stabilize their relationship under Biden’s administration, the country’s tough stance against China is not going to change any time soon.

Notwithstanding, Biden’s victory in the 2020 US presidential elections could benefit the Indo-Pacific in the long run. However, middle-power countries should realize that although the US presence in the region is essential to ensure peace and stability, the Indo-Pacific’s future should not be dictated by or charted under a unipolar hegemony. As the US-China competition continues to intensify, there is a crucial need for countries such as Japan, Australia, and India to step up and build a network of like-minded states in order to protect and sustain an open and multipolar Indo-Pacific region.

By utilizing multilateral institutions and giving importance to the role of middle powers, the Indo-Pacific acquires that vantage point in having a better chance to address emergent issues and threats in the promotion of a rules-based international order.

 

Victor Andres “Dindo” C. Manhit is the President of Stratbase ADR Institute.

Biden needs to keep an eye on jobs — in China

AS A BIDEN PRESIDENCY takes shape in the US, it’s worth wondering to what extent the hardline Trumpian stance on China will persist. While a fraying relationship is to some extent priced in, there’s now more to consider.

China’s labor market could become a key lever. For all of Beijing’s talk about boosting innovation and productivity to achieve so-called quality growth, little gets said of the hundreds of millions of working people who would actually fulfill President Xi Jinping’s ambitions. They may be the ones holding up the sky.

Days before the US election, Beijing unveiled its latest blueprint for the coming five years. It envisions an upgraded economy rooted in technical progress — fifth generation networks, automation, smart factories — and a turn inward, driven by domestic consumers and output. To reach their goals, state planners will need to boost productivity.

Yet a larger challenge looms: Can the labor market adapt? If it doesn’t, the quality growth that Xi’s hopes are pinned to won’t materialize, regardless of the heaps of cash thrown at it. Beijing doesn’t want to be held hostage to an unpredictable, volatile or even hostile US. This is the backdrop confronting Joe Biden’s presidency over the next four years. How the new US administration understands and navigates China’s own challenges matters.

If this isn’t the China of 2016, it’s not the same America, either. The last four years saw President Donald Trump try to reverse job losses in traditional domestic industries. But the US labor market now faces long-term changes because of COVID-19. More than 40% of American jobs lost due to the pandemic will eventually be gone, according to Brookings Institution researchers.

China’s focus is on “dual circulation” — a plan to create domestic supply and demand. One effect would be to reduce vulnerability to the kind of powers Trump flexed to choke Chinese tech giants through blacklists and trade restrictions. The likes of Huawei Technologies Co. and Hangzhou Hikvision Digital Technology Co. are trying to cut reliance on American technology. They’ll end up creating jobs at home and overseas in the process.

In China, COVID-19 worsened a slowdown that had already been gathering pace and pushed up unemployment. Manufacturing and sectors that had previously boosted growth were hard hit. As household incomes fell and people started feeling the pain earlier this year, jobs and social stability moved to the top of Beijing’s agenda. Employment was one of the most mentioned words in the 2020 Government Work Report to help navigate the year.

There are signs of a turnaround, but does China actually need traditional manufacturing jobs to come back? Something more may be required.

Official data suggest that Beijing is close to hitting its employment targets, creating nearly 9 million new urban jobs in the first three quarters. It isn’t clear what kind of work was generated, but state media continues to tout pro-employment measures. Last month, at the State Council’s executive meeting, Premier Li Keqiang noted that the jobless rate “of certain groups of populations and regions remains high.”

It’s no longer about the number of jobs, though. What increasingly counts is the type, and how productive they’ll be. The five-year plan’s big push for innovation won’t happen with a shortage of skilled workers. A study in July found that while real gross domestic product has expanded at an average growth rate of 10.5% since 2000, labor efficiency has fallen every year by 0.53%. That implies a negative impact of 2.52% on economic growth. The decline has been geographically uneven, but the researchers conclude “the deterioration in labor efficiency is a comprehensive problem for China’s whole economy.”

For now, subsidies and incentives have kept people in jobs and forced companies to retain headcount, but reskilling and upgrading needs to happen. Growth in the coming years will depend on how productive each Chinese worker is. High-tech industries depend on that as much as increasing capital. So-called total factor productivity from advanced industries plays a large role in China. The country needs this kind of investment from foreign employers. Last year, a survey found that new jobs offered by overseas companies dropped by 25%.

Over the next decade, more than 20% of China’s workforce is expected to be re-employed in high-end manufacturing. Workers will need clearer direction in this new environment on jobs, incomes and benefits. Already, state media is publicizing a host of new jobs like artificial intelligence trainers as officially recognized occupations that can bring big increases in pay.

Xi needs a not-too-hostile US president who doesn’t hit China where it could really hurt — social stability. Biden will obviously want to protect American jobs, but also has to take an interest in the global companies creating new ones in the US. Being shut out of China’s transformation — if it really happens — would be a big mistake.

Ultimately, US policy will have a marginal impact, but would be more effective if Beijing’s priorities are understood. China will look out for its own people. Without jobs, higher incomes and greater corporate competence, Xi’s promises to stay ahead in advanced manufacturing and industrial heft won’t amount to much. Biden needs to contend with this to manage the world’s most important relationship.

BLOOMBERG OPINION

Pfizer vaccine data offers real pandemic optimism

LAST WEEK I wrote that based on clinical trial math, the earliest looks at coronavirus vaccine data were less likely to succeed. I’ve never been happier to be wrong. Pfizer, Inc. and BioNTech SE announced Monday that their vaccine candidate prevented over 90% of COVID-19 (coronavirus disease 2019) cases in an early look at results from their 44,000-person clinical trial.

It’s fantastic news and a historic scientific accomplishment. Not only do we have the first effective vaccine, but the data also looks robust. Instead of evaluating the shot at the first possible moment, Pfizer waited for more data, which gives weight to the impressive results.

There are still unknowns about the vaccine, and with limited supplies available until next year and two shots needed to complete treatment, it won’t end a rampant pandemic overnight. The news does, however, substantially boost the chances of a quicker and easier resolution. Investors are justified in taking Pfizer shares and the broader market higher.

Trials like Pfizer’s compare the number of confirmed COVID-19 cases among those who get the vaccine to those that take a placebo. The initial plan was to analyze the data after just 32 cases. But after discussions with the Food and Drug Administration, the companies decided to wait until there were 94. Their patience only modestly delayed results and makes it far easier to trust in the vaccine’s considerable promise.

Data collection will continue; the FDA requires at least two months of safety follow-up from most participants before considering an emergency use authorization. That data should be available later this month. Absent surprising side effects, quick authorization is more than likely. After all, the agency’s bar for efficacy is just 50%.

Some questions remain. We still don’t know how well the vaccine works in subgroups such as the elderly. Nor does the initial press release discuss the extent to which the vaccine prevents severe disease, the ability to transmit the virus, or how long its protection lasts. It’s also unclear what the result may mean for other vaccine candidates.

Thankfully, there’s reason for optimism on both fronts. An immune response strong enough to derail disease in so many patients may well be highly effective in other ways. As for other vaccines, Monday’s news bodes well for Moderna Therapeutics, Inc.’s candidate, which uses the same cutting-edge mRNA technology as Pfizer’s. (Moderna is due to reveal data relatively soon as well.) Many others in development aim at the same target — the coronavirus’s signature “spike protein.”

With efficacy established, the big problem is availability. Pfizer and BioNTech expect to produce 50 million doses worldwide by the end of the year, enough for 25 million to get the required two shots. Manufacturing will ramp up, but it will take multiple vaccine candidates to get enough of the global population vaccinated to end the threat of COVID-19. It remains crucial that other vaccine efforts succeed.

It’s not time for anyone to let up their guard. COVID-19 cases continue to surge and hospitalizations are also rising, threatening to strain health systems. Once a vaccine is ready, distributing it will take another historic effort. But make no mistake: Pfizer’s vaccine news marks a major step forward in the COVID-19 fight.

BLOOMBERG OPINION

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