Why China’s Debt Defaults Are More Alarming This Time
November 23, 2020, 4:32 PM GMT+8 Updated on
Chinese companies are facing a reality check after years of ramping up debt. A crackdown on unregulated lending — so-called shadow banking — and tighter rules on asset management made it harder for some to borrow fresh funds to repay existing debt, leading to a record number of bond defaults in 2018 and 2019. When the pandemic put business activity on hold in early 2020, policy makers initially rushed to prevent another wave of missed payments. As the year wound down, private-sector defaults seemed to be coming down but the list of state-tied firms in distress had grown, despite signs of an economic recovery. That new source of risk has roiled China’s credit markets, prompting a renewed emphasis on financial discipline and a “zero tolerance” approach to misbehavior.
1. How big is the problem?
Chinese defaults actually dropped by 20% in the first three quarters of 2020 to 85.1 billion yuan ($13 billion), according to Bloomberg-compiled data. That was largely due to pandemic-related measures in the first half: At least a dozen companies managed to relieve pressure..
China was ahead in the global race to develop coronavirus vaccines with the most candidates in late stage of trials earlier in the year and its first approval of a homemade shot for the general public came on Thursday, yet with no detailed efficacy data.
Following is what we know about China’s vaccine development, efficacy data and approval timeline.
Which are the most advanced?
Five vaccines from Sinovac Biotech, China National Pharmaceutical Group (Sinopharm), CanSinoBIO and the Chinese Academy of Sciences are in late-stage clinical trials. None of them has released detailed efficacy data.
Authorities approved a vaccine developed by Sinopharm’s Beijing affiliate on Thursday, a day after the developer said interim analysis of its Phase 3 trial showed 79.34% efficacy, without providing details.
The efficacy reading is lower than the 86% rate for the same vaccine announced by the United Arab Emirates on Dec. 9, based on preliminary data.
A Sinopharm executive said on Thursday detailed data would be released later without giving a specific timeline.
Sinovac’s candidate has also showed varied efficacy readouts. Data from a late-stage trial of its CoronaVac shot in Turkey showed a 91.25% success rate, while researchers in Brazil said its efficacy was between 50% and 90%.
Brazil expects to release CoronaVac’s efficacy data by Jan. 7 after three delays.
CanSinoBIO plans to submit clinical trial results for its vaccine to authorities in Mexico next week, a top Mexican health official said.
How many people have been inoculated?
While China has been slower than several other countries in approving COVID-19 vaccines, it has been inoculating its citizens for months with three different shots undergoing late-stage trials.
China launched an emergency use programme in July aimed at essential workers and others at high risk of infection and has administered more than 4.5 million doses of Sinopharm’s two vaccines and Sinovac’s CoronaVac.
It has been ramping up the programme over the past month in anticipation of greater transmission risks over the winter.
The South China Morning Post newspaper reported that China would vaccinate as many as 50 million people before the Lunar New Year holiday in mid-February.
China also approved a vaccine from CanSinoBIO for military use and the vaccine had been given to some 40,000 to 50,000 people, a CanSinoBIO executive said on Nov. 28.
What technology is used?
Sinopharm’s and Sinovac’s vaccines are based on traditional technology that uses inactivated or dead virus, that cannot replicate in human cells, to trigger an immune response.
The overall occurrence rate of adverse reactions of those COVID-19 shots is similar to those of other inactivated vaccines, and the occurrence rate of relatively serious adverse effects such as allergy is about two in a million, National Health Administration official Zeng Yixin said on Thursday.
Who is buying China’s vaccines?
The United Arab Emirates became the first country to roll out a Chinese vaccine to the public this month.
Pakistan announced on Thursday a 1.2 million dose purchase deal with Sinopharm.
Sinovac’s CoronaVac shot has been signed up by Brazil, Indonesia, Turkey, Chile and Singapore. The company is also in supply talks with Malaysia and the Philippines.
CanSinoBIO has a supply deal with Mexico.
President Xi Jinping has pledged to make China’s vaccines a global public good.
Bloomberg -January 2, 2021 6:09 PM
BEIJING: China’s box-office takings climbed to 545 million yuan on New Year’s Day, the highest for the day since records began in 2011, according to ticketing platform Maoyan Entertainment.
Local Chinese films were the top contributors to Friday’s figure, led by “A Little Red Flower”, a story about two cancer-fighting families, and romantic comedy “Warm Hug”.
The increase in ticket sales adds to signs the world’s largest film market is bouncing back after takings slumped by about two thirds last year amid a six-month shutdown of cinemas to combat the coronavirus.
China’s total box-office revenue for 2020 was US$2.8 billion, down from a record US$9.1 billion in 2019.
Still, the reduced figure was higher than the US$2.1 billion recorded in the US for 2020, according to data from Maoyan and market tracker Box Office Mojo.