COVID-19 Developments 4/2/20

U.S.-China relations and someone said something about oil

US-China relations. The New York Times reports that senior Trump Administration officials, including Jared Kushner, Steve Mnuchin, and Larry Kudlow, are urging President Trump to exercise restraint in relations with China right now so that the the two countries can work together to manage the economic fall-out of COVID-19 -- and so that the US can import much needed medical equipment from China. (The Wall Street Journal meanwhile has an amazing story about the New England Patriots sending their team plane to China to pick up 1 million N95 masks to bring back to the US.) 

What it means: While there has been a definite softening in China’s tone since Xi and Trump spoke on the phone last week, and while increased levels of Chinese exports of medical equipment are most welcome, I have trouble putting too much stock in this. Check out this stone-cold Xinhua commentary from two days ago, in which former Trump advisor Steve Bannon is called a “living fossil of the Cold War” (great burn) and U.S Secretary of State Mike Pompeo and White House trade advisor are described as mudslingers. Or a Chinese Foreign Ministry spokesperson taking to Twitter to criticize U.S. president Mike Pence for “immoral and inhumane” behavior in criticizing China’s initial COVID-19 response. It is an unambiguously good thing for the world if China and the US can put aside differences and work to help buttress the global economy and fight COVID-19...but I think we are still in the land of “if” on that score.

Oil. The price of Brent crude surged by more than 40 percent at one point earlier today. The reason? U.S. President Donald Trump tweeted that he had spoken to Crown Prince Mohammed bin Salman (MBS) of Saudi Arabia and that he expected Russia and Saudi Arabia to cut oil production by as much as 10 million barrels per day. Saudi Arabia also called an OPEC+ meeting earlier today; apparently the rumor that Trump was considering levying tariffs on US oil imports from other countries got the Saudis attention. Russia remains mostly inscrutable so far, though Russian President Vladimir Putin did say that the world should find a solution to the “challenging” situation in global oil markets.

What it means: I’d be careful staking too much on President Trump’s tweets on this score. The US has obviously succeeded at putting enough pressure on MBS and Saudi Arabia to appear like they are coming to the table, and perhaps with Russia seeing a spike of 771 new COVID-19 cases today and Putin extending a no-work order through the end of the month, Moscow is looking for a temporary reprieve. But I remain skeptical that either Saudi Arabia or Russia is ready to let this fight go quite yet, and even if a temporary truce emerges, it’s longer-time viability seems in doubt. I guess I’m having a generally skeptical day.

China manages a second wave. Although China’s vice-minister of the Ministry of Industry and Information Technology recently said 98.6 percent of Chinese industrial enterprises and 76 percent of small and medium-sized enterprises had gone back to work, it appears China is also dealing with a new outbreak of COVID-19 in Henan province. China has imposed strict lockdown measures in Jia county, which is a roughly 5-hour drive north of Wuhan, COVID-19’s original stomping grounds. Residents need special permits just to leave their homes and must be checked for a fever and wear a mask before leaving the house, even with a permit.

What it means: This is happening in a number of Asian countries; once the initial surge of cases is brought under control, until a vaccine is developed, combatting COVID-19 is going to require constant vigilance. China appears to know the patient-zero for this outbreak: a doctor who traveled to Wuhan to help with the situation there before returning back to Jia and infected at least three other people who tested positive on Sunday. By all accounts, China’s industrial production is roaring back to life despite the new batch of infections in Henan.

Honorable mention

Thailand reopened four ports at the Mekong River that had been closed since March 21 to make it easier for essential goods to be shipped too and from China.

The situation in Catalonia has gotten so bad that President of the Generalitat Quim Torra is welcoming assistance from the Spanish Army

Chinese President Xi Jinping spoke to Indonesian President Joko Widodo and offered China’s help in combating COVID-19; fatalities reached 170 today in Indonesia.

Hungary’s government will classify all information on a 2.3 billion euro rail-line between Budapest and the Serbian capital of Belgrade for the next ten years.

Germany decided to lift a ban it imposed last week on seasonal farm workers entering the country; Germany will now allow 80,000 workers to enter the country during April and May and is calling for 20,000 additional workers from Germany’s unemployed or furloughed workers.

The Dutch government said it is willing to give up to 1 billion euros to a potential EU-wide fund as a gift to deal with COVID-19 economic impact -- but that it remains adamantly opposed to common European debt instruments. 

Canada and China are reportedly involved in negotiations over Canadian canola seed exports, which have been blocked since China cited “pest” concerns aka was displeased with Canada arresting Huawei CFO Meng Wanzhou in 2018.

Georgia’s (my home-state, not the country) governor, Brian Kemp, said during a press conference that he had only learned that COVID-19 could be spread asymptomatically in “the last 24 hours” -- anyone have the man’s e-mail address? Sounds like he needs to be added to the distribution list.