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Good morning from Singapore, where there is finally at least a glimmer of hope that regional travel to the East Asian region could be possible in the not too distant future, even without a vaccine against Covid-19 that is still available.
The reason for this optimism is the recent announcement by the Singapore and Hong Kong authorities that they will soon allow each other's residents to travel relatively freely between the region's two leading financial centers. As long as people test negative for coronavirus, they can travel between the Southeast Asian city-state and the Chinese Special Administrative Region without quarantine.
Now imagine that other Chinese cities – such as Beijing, Shanghai, Guangzhou and Shenzhen – could be integrated into this program. There is already a rough template for this. In China, international travelers have long been allowed to stay in certain cities for several days between transit flights without a visa, provided they do not leave the city limits. This has made it easy for someone traveling from London to Hong Kong to fly via Beijing and spend a few business days in the Chinese capital without ever having to apply for a formal visa.
If Singapore, Hong Kong, and some of China's largest cities could agree to allow quarantine-free travel, it could mark the start of a long-awaited return to normal in the Asia-Pacific region – and help revive events like the Canton Fair, that is Main theme of today's post.
Policy monitoring looks at the steps taken by the EU market regulator to address some investor concerns about post-Brexit trading Chart of the day highlights how China has become the dominant force for bilateral lending in sub-Saharan Africa.
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A virtual canton fair
On March 12, China's Prime Minister Li Keqiang made a surprising statement. The country's largest and longest running fair, held annually in the southern city of Guangzhou since 1957, would hold its spring session as usual.
Given the speed at which the coronavirus pandemic has spread around the world, this seems inconceivable at the moment, but at the time the Canton Fair was taking place it seemed possible. By early March, China had successfully contained the virus, particularly in cities and provinces far from its center in central Hubei Province, and it was not yet clear that major outbreaks would occur in other parts of the world.
Under these circumstances, the scheduled holding of the Canton Fair would be an important symbol that the world's second largest economy was still open to business. After all, the fair was known for not missing a session since its inception in 1957 – it survived traumatic events like the Great Leap Forward famine of 1959-61 that killed tens of millions, the decades of turmoil of the Cultural Revolution and The Tiananmen Square protests and the ensuing massacre in the spring of 1989. Chinese officials did not want the mass to be interrupted.
However, at the end of that year, the government had to bow to reality. As the outbreaks increased in Europe, the United States and developing countries in late March, China closed its borders to foreign travelers – including foreign residents with valid permits to live and work in China.
The spring session of the Canton Fair was postponed from April to June and only went online. The autumn meeting, also called virtually, ended on October 24th. The hotels, restaurants and bars in Guangzhou had to do without hundreds of thousands of visitors.
So do two online sessions count to keep the long series of masses alive – or is that a fraud?
Mr. Li's government says it was a triumph. Both he and President Xi Jinping "attended" the online spring session opening ceremony and "visited" online booths. Around 26,000 exhibitors showed their goods to registered buyers from 217 countries and regions on the fair's website.
"The virtual Canton Fair has broken new ground in international development," argue the organizers. They claim this is just the beginning of a brave new future for the event: “A Canton Fair that never ends is being built with integrated online and offline functions to make new contributions for Chinese and overseas companies to develop wider markets . "
For Guangzhou, in particular, the importance of the fair extends well beyond its inaugural session in 1957 and beyond what it says about the city's relative openness even during the darkest periods of Maoist China.
For Guangzhou, the importance of the fair goes well beyond its opening session in 1957. © Alamy
China's largely Beijing-based rulers have grown and waned in enthusiasm for foreign trade over the centuries. Regardless of whether such trade has been actively encouraged or barely tolerated, Guangzhou has long been proud of being one of the country's leading trading centers.
The city is dotted with ancient mosques that serve as monuments to Guangzhou's trade ties with the Arab world, which are at least 1,300 years old. And not far from the cave-like exhibition halls of the Canton Fair on the banks of the Pearl River is Shamian Island, where western traders were allowed to set up trading posts in the late 18th century.
Given this proud legacy, it was not an option for the Chinese government to officially expire the fair – even during a one-off pandemic. After the two online sessions this year, Beijing now hopes that the trade fair will be able to resume operations as usual in spring 2021. If it can, it will be an important sign that life is continuing to normalize – at least in this part of the world.
The official name of the Canton Fair is China Import and Export Fair, but it is misleading. The event has always been about exports, with an emphasis on matchmaking between local manufacturers and foreign buyers. Over time, this emphasis became problematic for the Chinese government, particularly when US President Donald Trump railed against China's trade surpluses and tried to slow its export sector.
Two years ago, at a time of increasing trade tensions with the United States, President Xi Jinping's government launched the annual China International Import Expo, held every fall in Shanghai. The idea was to show the world that it needn't fear China's export strength, because it also has a large and growing demand for imports.
The third annual meeting of the CIIE opens next week. In contrast to the Canton Fair, however, attempts are made to achieve this in the real rather than the virtual world. The area will be increased by 20 percent compared to the previous year in order to meet the demand from exhibitors. Participants will undergo a series of health checks and monitors as organizers hope to keep the event Covid-19 free.
China has become the largest bilateral lender to Africa over the past two decades, sending nearly $ 150 billion to governments and state-owned companies. However, as FT reporters across the continent note, the pandemic has shown the fragmentation of Chinese lending as well as Beijing's reluctance to fully adapt to global debt relief plans. According to the World Bank, China's share of the bilateral debt of the world's poorest countries to members of the G20 has increased from 45 percent in 2015 to 63 percent last year.
EU investors can still trade publicly traded companies such as IAG, the parent company of British Airways. © Andy Rain / EPA-EFE / Shutterstock
The EU market regulator has taken steps to partially allay investor concerns about post-Brexit trading by advising that EU investors will be able to trade sterling-listed stocks of European companies trading in London, write Phil Stafford and Jim Brunsden.
The Paris-based European Securities and Markets Authority changed the guidelines on Monday as corporations and some EU governments had concerns that the bloc's rules could fragment the stock market and cut European companies out of deep pools of capital in London.
Esma said that trading EU stocks on a UK exchange in pounds sterling is exempt from an EU rule known as a stock trading obligation, which sets out where investors can trade. This means EU investors will still be able to trade publicly traded companies such as AstraZeneca, Relx, Tui, the parent company of British Airways, IAG and G4S, in London as these companies are listed in sterling.
However, many Irish companies such as Ryanair, Kingspan and Bank of Ireland remain vulnerable when trading euros. An industry lobbyist in Brussels said it was "the closest accommodation", adding that it "does not solve what Ireland needs".
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The EU will hold back from immediately imposing punitive tariffs on US products in the dispute between the two sides over subsidies for Boeing and Airbus. Diplomats say the bloc is unlikely to act before the US presidential election.
Beijing and Wall Street have deepened their ties despite geopolitical rivalries and defied the trade war with growing investment.
By and large, there is no doubt that China has contained the disease well after abusing the first outbreak. However, the inability to accept criticism suggests that Pro-Beijing triumph is premature.
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