Alibaba Donates a Third of Its Cash to Chinese Initiatives. The Stock Is Down.

Business

Barron's 03 September, 2021 - 06:30am 24 views

During their interview with Ann Griper on Pod Save the Queen they admitted Prince William has been ‘deeply hurt’ by the accusations.

Reportedly, “The issues about whether they (Harry and Meghan) were prepared to name the so-called 'royal racist' – the member of the Royal Family Harry and Meghan had claimed had made derogatory comments about the skin colour of their unborn child.”

“They were then persuaded not to (Finding Freedom claims), that would have been particularly explosive, especially because Harry said in the Oprah Winfrey interview he was choosing not to name that person because it would be very damaging to their reputation.”

He also went on to say, “William was furious, as the book puts it, that she was choosing to air their dirty linen in public.”

“I think you can tell by William's reaction when he was asked by a TV correspondent whether the Royal Family is a racist family, and he said, paraphrasing, that they certainly are not a racist family.”

“You could tell in his voice and his manner at that time, that he was particularly aggrieved. We've spoken about it at length, William was deeply hurt that that was their course of action.”

Read full article at Barron's

Alibaba's $15.5 billion 'common prosperity' pledge

CNN 03 September, 2021 - 03:10pm

Alibaba's $15.5 billion 'common prosperity' pledge

Reuters 03 September, 2021 - 03:10pm

China Tech Stocks Drop as Alibaba’s Donation Worries Investors

Yahoo Finance 03 September, 2021 - 03:35am

The Hang Seng Tech Index closed down 1.1% in Hong Kong, in part led by Alibaba Group, which fell 3.6%. The decline came on concerns that the e-commerce giant’s $15.5 billion pledge to Beijing’s “common prosperity” vision would hit profits in coming years.

“The donation doesn’t guarantee that there will not be more regulations to target at Alibaba,” said Castor Pang, head of research at Core Pacific Yamaichi International H.K. Ltd. “It’s more or less affecting the whole tech sector sentiment today.”

The handout is a “big deal” and the company’s future earnings growth could fall to low double digit, which would “make its shares a completely different asset,” he added.

Alibaba joins a growing number of peers in promising to give back after accumulating vast wealth during a decade-long mobile internet boom. Pinduoduo Inc. pledged its next $1.5 billion in profit to farmers’ welfare. Tencent Holdings Ltd. said last month it will double the amount of money it’s allocating for social responsibility programs to about $15 billion.

Other technology firms might be forced to make their own contributions too, which will cause investors to worry “because this is the money going out from company,” said Hao Hong, head of research and chief strategist at Bocom International.

Meituan was the worst performer in the tech gauge on Friday, as traders sold the stock after the firm and some other car-hailing service providers were asked by the government to rectify instances of what it considers misconduct by December. Shares had been gaining in the previous four sessions, which was the longest stretch since May 21.

On Thursday, China’s broadcaster regulator also ordered sweeping action to clean up the entertainment industry, vowing to ban film stars with “incorrect” politics, cap salaries and address problems in the fan-based culture. Entertainment shares were mixed, with Mango Excellent Media Co. finishing 3.6% lower while Huayi Brothers Media Corp. climbing 3.1%.

Despite the retreat on Friday, the Hang Seng Tech Index still advanced 6.4% for the week. The gauge is up more than 14% since its Aug. 20 low following a bout of bargain hunting in recent weeks.

More stories like this are available on bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

The Chinese tech giant follows in the footsteps of Tencent and Pinduoduo in pledging vast sums of cash to initiatives in its home country.

(Bloomberg) -- Beijing’s municipal government has proposed an investment in Didi Global Inc. that would give state-run firms control of the world’s largest ride-hailing company, according to people familiar with the matter.Under the preliminary proposal, Shouqi Group -- part of the influential Beijing Tourism Group -- and other firms based in the capital would acquire a stake in Didi, the people said, asking not to be identified discussing private information. Scenarios under consideration inclu

China's plans to launch a new exchange in Beijing, announced by President Xi Jinping on Thursday, boosted shares in Chinese brokerages but knocked down Shenzhen start-up board ChiNext and shares of Hong Kong's bourse amid fears of rising competition. Although China's securities regulator said the planned Beijing stock exchange is based on the city's existing New Third Board, and complements Shanghai and Shenzhen bourses, some fear a rivalry for listing resources is inevitable.

Some employees at TikTok-owner ByteDance were shocked to find their August paychecks slashed 17% after the company ended its policy of requiring its China-based staff to work a six-day week every second week. "My workload hasn't actually changed," a product manager at ByteDance told Reuters, declining to be identified given the sensitivity of the topic. It was also a guarantee of high pay as Chinese law stipulates that employees are entitled to double pay for working overtime on weekends and triple pay for public holidays.

The e-commerce giant became the latest in a series of big companies to take up Beijing’s drive to bolster social equality and foster economic development in China.

BEIJING (Reuters) -China is facing growing difficulties in expanding its mass COVID-19 vaccination drive, but it will continue to inoculate more people and step up the programme of booster shots, a health official said on Friday. Zheng Zhongwei, an official at the National Health Commission, did not specify the obstacles but stressed that those who have not been vaccinated could not rely on being protected by those who have had the shots amid concerns over the highly transmissible Delta variant. "Recently, as (pushing vaccination work) came to the later stage, it has become increasingly difficult," Zheng said at a health forum.

Summer is still technically in session, but a snowball is slowly developing in the world of apps, and specifically the world of in-app payments. A report in Reuters today says that the Competition Commission of India, the country's monopoly regulator, will soon be looking at an antitrust suit filed against Apple over how it mandates that app developers use Apple's own in-app payment system -- thereby giving Apple a cut of those payments -- when publishers charge users for subscriptions and other items in their apps. The move would be the latest in what has become a string of challenges from national regulators against app store operators -- specifically Apple but also others like Google and WeChat -- over how they wield their positions to enforce market practices that critics have argued are anti-competitive.

Georgia Bulldogs safety Richard LeCounte is looking like one of the better picks in the 2021 NFL draft.

(Bloomberg) -- A California county’s $21 billion pension is considering whether to drop Ray Dalio’s hedge fund after it underperformed for most of the past 16 years.The Orange County Employees Retirement System’s investment in Bridgewater Associates’s Pure Alpha fund has returned an annualized 4.5% since 2005, about 2.5 percentage points less than its benchmark, according to a memo seen by Bloomberg from Meketa Investment Group, the pension’s consultant. The strategy has topped OCERS’s target on

Alibaba stock looks like it's on sale after pulling back sharply off highs. But after a hefty fine from Chinese regulators, is BABA stock a buy right now?

(Bloomberg) -- Scores of listed Chinese companies have name-checked President Xi Jinping’s “common prosperity” drive in earnings reports, as the private sector seeks to align itself with China’s campaign to reduce wealth inequality.At least 73 companies, including China’s largest insurer Ping An Insurance (Group) Co., food delivery giant Meituan and the state-owned Bank of China Ltd., used the flagship slogan in statements to shareholders filed to the Hong Kong, Shanghai and Shenzhen stock excha

C3Ai Inc (NYSE: AI) shares are trading lower after the company reported worse-than-expected first-quarter EPS results. The company also issued second-quarter and FY22 guidance. Piper Sandler analyst Arvind Ramnani maintained C3.ai with an Overweight and lowered the price target from $98 to $78 Needham analyst Jack Andrews maintained C3.ai with a Buy and lowered the price target from $146 to $122 Morgan Stanley analyst Sanjit Singh maintained C3.ai with an Underweight and lowered the price target

Japan's trade ministry is ready to back Western Digital's bid to merge with memory chipmaker Kioxia provided control of cutting edge technology stays in Japan, two sources with knowledge of the industry regulator's internal discussions said. The tie-up could give Japan greater leverage in geopolitical rivalries increasingly dominated by technology, including over shortages of chips. It could also help Japan forge deeper semiconductor industry ties with its U.S. ally, a commitment that President Joe Biden and Prime Minister Suga made in April.

Salesforce (CRM) CEO Marc Benioff sees a disconnect between the C-Suite and employees being asked to return to work.

Israeli Prime Minister Naftali Bennett assured the leaders of U.S Jewish organizations on Friday that he would take steps to reduce the conflict with the Palestinians.Why it matters: Bennett holds hardline positions on the Israeli-Palestinian conflict and opposes the two-state solution, but he also wants to show that he can make progress on the issue even without any political breakthrough.Get market news worthy of your time with Axios Markets. Subscribe for free.Bennett's remarks follow Sunday'

Qatar’s top diplomat said Thursday that experts are racing to reopen Kabul's airport but warned it was not clear when flights would resume, with many still desperate to flee Afghanistan's new Taliban leaders amid concerns over what their rule will hold. In the wake of their rapid takeover, the Taliban have sought to calm those fears, including pledging to let women and girls attend school and allow people to travel freely. When they last held power in the late 1990s, the Taliban imposed a repressive rule, meting out draconian punishments and largely excluding women from public life.

HANOI (Reuters) -Vietnam's coronavirus epicentre Ho Chi Minh City, which has kept residents confined at home under lockdown, is considering reopening economic activity from Sept. 15, shifting from a "zero COVID-19" strategy to a policy of living with the virus. Ho Chi Minh City last month deployed troops to enforce its lockdown https://reut.rs/3gZuBvY and prohibited residents from leaving their homes to slow a spiralling rate of deaths. Just 3% of Vietnam's 98 million population has been fully vaccinated.

Chinese state-backed tabloid the Global Times called U.S. efforts to block cross-border acquisitions of tech companies a "red flag" that impedes China's tech sector and disrupts the growth of the global tech sector. The outlet, which is published by the People's Daily, China's official newspaper for the ruling Communist Party, argued a recent attempt to block a Chinese purchase of a Korean chip company "represents a dangerous precedent for the industry as a whole." "If the US succeeds in blocking the deal this time, it could set a very bad precedent for global high-tech mergers and acquisitions, further consolidating the industrial concentration in the US," the op-ed read.

The U.S. economy added back jobs at a far slower pace in August following an early-summer jump in employment, as an initial wave of reopening hiring waned and concerns over the Delta variant increased.

Crypto is making a steady recovery as Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) have traded higher by more than 20% over the last month. The most interesting part of the recent crypto rally is that Bitcoin dominance has been steadily declining, Cumberland's Chris Zuehlke said Thursday on CNBC's "Squawk On The Street." Bitcoin dominance is near an all-time low, Zuehlke said. Bitcoin dominance is the measure of Bitcoin's market cap relative to the market cap of the rest of the crypto indust

China Tech Stocks Drop as Alibaba’s Donation Worries Investors

Nikkei Asia 03 September, 2021 - 03:35am

The Hang Seng Tech Index closed down 1.1% in Hong Kong, in part led by Alibaba Group, which fell 3.6%. The decline came on concerns that the e-commerce giant’s $15.5 billion pledge to Beijing’s “common prosperity” vision would hit profits in coming years.

“The donation doesn’t guarantee that there will not be more regulations to target at Alibaba,” said Castor Pang, head of research at Core Pacific Yamaichi International H.K. Ltd. “It’s more or less affecting the whole tech sector sentiment today.”

The handout is a “big deal” and the company’s future earnings growth could fall to low double digit, which would “make its shares a completely different asset,” he added.

Alibaba joins a growing number of peers in promising to give back after accumulating vast wealth during a decade-long mobile internet boom. Pinduoduo Inc. pledged its next $1.5 billion in profit to farmers’ welfare. Tencent Holdings Ltd. said last month it will double the amount of money it’s allocating for social responsibility programs to about $15 billion.

Other technology firms might be forced to make their own contributions too, which will cause investors to worry “because this is the money going out from company,” said Hao Hong, head of research and chief strategist at Bocom International.

Meituan was the worst performer in the tech gauge on Friday, as traders sold the stock after the firm and some other car-hailing service providers were asked by the government to rectify instances of what it considers misconduct by December. Shares had been gaining in the previous four sessions, which was the longest stretch since May 21.

On Thursday, China’s broadcaster regulator also ordered sweeping action to clean up the entertainment industry, vowing to ban film stars with “incorrect” politics, cap salaries and address problems in the fan-based culture. Entertainment shares were mixed, with Mango Excellent Media Co. finishing 3.6% lower while Huayi Brothers Media Corp. climbing 3.1%.

Despite the retreat on Friday, the Hang Seng Tech Index still advanced 6.4% for the week. The gauge is up more than 14% since its Aug. 20 low following a bout of bargain hunting in recent weeks.

More stories like this are available on bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

The Chinese tech giant follows in the footsteps of Tencent and Pinduoduo in pledging vast sums of cash to initiatives in its home country.

(Bloomberg) -- Beijing’s municipal government has proposed an investment in Didi Global Inc. that would give state-run firms control of the world’s largest ride-hailing company, according to people familiar with the matter.Under the preliminary proposal, Shouqi Group -- part of the influential Beijing Tourism Group -- and other firms based in the capital would acquire a stake in Didi, the people said, asking not to be identified discussing private information. Scenarios under consideration inclu

China's plans to launch a new exchange in Beijing, announced by President Xi Jinping on Thursday, boosted shares in Chinese brokerages but knocked down Shenzhen start-up board ChiNext and shares of Hong Kong's bourse amid fears of rising competition. Although China's securities regulator said the planned Beijing stock exchange is based on the city's existing New Third Board, and complements Shanghai and Shenzhen bourses, some fear a rivalry for listing resources is inevitable.

Some employees at TikTok-owner ByteDance were shocked to find their August paychecks slashed 17% after the company ended its policy of requiring its China-based staff to work a six-day week every second week. "My workload hasn't actually changed," a product manager at ByteDance told Reuters, declining to be identified given the sensitivity of the topic. It was also a guarantee of high pay as Chinese law stipulates that employees are entitled to double pay for working overtime on weekends and triple pay for public holidays.

The e-commerce giant became the latest in a series of big companies to take up Beijing’s drive to bolster social equality and foster economic development in China.

BEIJING (Reuters) -China is facing growing difficulties in expanding its mass COVID-19 vaccination drive, but it will continue to inoculate more people and step up the programme of booster shots, a health official said on Friday. Zheng Zhongwei, an official at the National Health Commission, did not specify the obstacles but stressed that those who have not been vaccinated could not rely on being protected by those who have had the shots amid concerns over the highly transmissible Delta variant. "Recently, as (pushing vaccination work) came to the later stage, it has become increasingly difficult," Zheng said at a health forum.

Summer is still technically in session, but a snowball is slowly developing in the world of apps, and specifically the world of in-app payments. A report in Reuters today says that the Competition Commission of India, the country's monopoly regulator, will soon be looking at an antitrust suit filed against Apple over how it mandates that app developers use Apple's own in-app payment system -- thereby giving Apple a cut of those payments -- when publishers charge users for subscriptions and other items in their apps. The move would be the latest in what has become a string of challenges from national regulators against app store operators -- specifically Apple but also others like Google and WeChat -- over how they wield their positions to enforce market practices that critics have argued are anti-competitive.

Georgia Bulldogs safety Richard LeCounte is looking like one of the better picks in the 2021 NFL draft.

(Bloomberg) -- A California county’s $21 billion pension is considering whether to drop Ray Dalio’s hedge fund after it underperformed for most of the past 16 years.The Orange County Employees Retirement System’s investment in Bridgewater Associates’s Pure Alpha fund has returned an annualized 4.5% since 2005, about 2.5 percentage points less than its benchmark, according to a memo seen by Bloomberg from Meketa Investment Group, the pension’s consultant. The strategy has topped OCERS’s target on

Alibaba stock looks like it's on sale after pulling back sharply off highs. But after a hefty fine from Chinese regulators, is BABA stock a buy right now?

(Bloomberg) -- Scores of listed Chinese companies have name-checked President Xi Jinping’s “common prosperity” drive in earnings reports, as the private sector seeks to align itself with China’s campaign to reduce wealth inequality.At least 73 companies, including China’s largest insurer Ping An Insurance (Group) Co., food delivery giant Meituan and the state-owned Bank of China Ltd., used the flagship slogan in statements to shareholders filed to the Hong Kong, Shanghai and Shenzhen stock excha

C3Ai Inc (NYSE: AI) shares are trading lower after the company reported worse-than-expected first-quarter EPS results. The company also issued second-quarter and FY22 guidance. Piper Sandler analyst Arvind Ramnani maintained C3.ai with an Overweight and lowered the price target from $98 to $78 Needham analyst Jack Andrews maintained C3.ai with a Buy and lowered the price target from $146 to $122 Morgan Stanley analyst Sanjit Singh maintained C3.ai with an Underweight and lowered the price target

Japan's trade ministry is ready to back Western Digital's bid to merge with memory chipmaker Kioxia provided control of cutting edge technology stays in Japan, two sources with knowledge of the industry regulator's internal discussions said. The tie-up could give Japan greater leverage in geopolitical rivalries increasingly dominated by technology, including over shortages of chips. It could also help Japan forge deeper semiconductor industry ties with its U.S. ally, a commitment that President Joe Biden and Prime Minister Suga made in April.

Salesforce (CRM) CEO Marc Benioff sees a disconnect between the C-Suite and employees being asked to return to work.

Berry rockets to the stars with Patrick Wilson in the bonkers trailer for Roland Emmerich's new disaster movie.

Israeli Prime Minister Naftali Bennett assured the leaders of U.S Jewish organizations on Friday that he would take steps to reduce the conflict with the Palestinians.Why it matters: Bennett holds hardline positions on the Israeli-Palestinian conflict and opposes the two-state solution, but he also wants to show that he can make progress on the issue even without any political breakthrough.Get market news worthy of your time with Axios Markets. Subscribe for free.Bennett's remarks follow Sunday'

Qatar’s top diplomat said Thursday that experts are racing to reopen Kabul's airport but warned it was not clear when flights would resume, with many still desperate to flee Afghanistan's new Taliban leaders amid concerns over what their rule will hold. In the wake of their rapid takeover, the Taliban have sought to calm those fears, including pledging to let women and girls attend school and allow people to travel freely. When they last held power in the late 1990s, the Taliban imposed a repressive rule, meting out draconian punishments and largely excluding women from public life.

HANOI (Reuters) -Vietnam's coronavirus epicentre Ho Chi Minh City, which has kept residents confined at home under lockdown, is considering reopening economic activity from Sept. 15, shifting from a "zero COVID-19" strategy to a policy of living with the virus. Ho Chi Minh City last month deployed troops to enforce its lockdown https://reut.rs/3gZuBvY and prohibited residents from leaving their homes to slow a spiralling rate of deaths. Just 3% of Vietnam's 98 million population has been fully vaccinated.

Chinese state-backed tabloid the Global Times called U.S. efforts to block cross-border acquisitions of tech companies a "red flag" that impedes China's tech sector and disrupts the growth of the global tech sector. The outlet, which is published by the People's Daily, China's official newspaper for the ruling Communist Party, argued a recent attempt to block a Chinese purchase of a Korean chip company "represents a dangerous precedent for the industry as a whole." "If the US succeeds in blocking the deal this time, it could set a very bad precedent for global high-tech mergers and acquisitions, further consolidating the industrial concentration in the US," the op-ed read.

The U.S. economy added back jobs at a far slower pace in August following an early-summer jump in employment, as an initial wave of reopening hiring waned and concerns over the Delta variant increased.

China's tech giants pour billions into Xi's vision of 'common prosperity'

CNBC 03 September, 2021 - 12:47am

GUANGZHOU, China — Alibaba will invest 100 billion yuan ($15.5 billion) over the next few years into "common prosperity" initiatives, joining a chorus of technology giants pouring money into President Xi Jinping's goal to spread wealth.

The Chinese e-commerce giant will put the money into 10 initiatives including technology innovation, economic development, high quality job creation and supporting vulnerable groups.

Last month, Xi called for the "reasonable adjustment of excessive incomes" and encouraged high income groups and businesses to "return more to society."

"Alibaba is a beneficiary of the strong social and economic progress in China over the past 22 years. We firmly believe that if society is doing well and the economy is doing well, then Alibaba will do well," said Alibaba CEO Daniel Zhang.

"We are eager to do our part to support the realization of common prosperity through high-quality development."

The call for common prosperity — the government's push toward moderate wealth for all — has been answered by technology giants which are currently under intense regulatory scrutiny from Beijing.

China has introduced a slew of regulation around anti-monopoly and data security and protection.

Regulators have also fined Alibaba $2.8 billion in an anti-monopoly probe, dramatically cut the time under-18s are allowed to play online games, and opened a cybersecurity probe into ride-hailing giant Didi days after its U.S. IPO. There have been many other actions too.

Alibaba is not the only internet giant pledging support for Xi's call to "common prosperity."

Last month, Tencent said it would double the money it is putting toward social initiatives to 100 billion yuan. The money will go toward areas including rural revitalization and helping grow earnings for low-income groups.

Tencent said at the time that its actions were a proactive response to the "national strategy." The gaming and social media company said it's clear "we should promote common prosperity in stages," and allow some people to get rich first then help others get wealthy.

China's high-profile technology CEOs and founders have also pledged individual sums of money.

Pinduoduo founder Colin Huang, Meituan's Wang Xing, and Xiaomi's Lei Jun, have collectively donated billions of dollars to social causes.

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Xi Jinping’s drive for economic equality comes at a delicate moment for China

The Guardian 02 September, 2021 - 01:00am

President Xi Jinping announced plans this month to spread “common prosperity” in what is one of the world’s most unequal major economies, signalling a shift from his predecessors’ pursuit of growth and heralding a tough crackdown on wealthy elites – including China’s burgeoning group of technology billionaires.

Figures published on Wednesday show factory output went into reverse in August, slumping to an 18-month low, while the main survey of the services sector showed it took an even greater hit and contracted for the first time since last March.

The spillover effects were felt across south Asia, where countries from Malaysia to Vietnam have come under pressure, not just from falling trade with China, but their own recent coronavirus attacks and the chaos in the shipping industry that has stranded containers many miles from where they are needed, leaving firms badly short of raw materials.

Only the economies of Japan, South Korea and the city-state Singapore have shrugged off the spread of Covid-19 to maintain their recovery from lockdowns earlier in the year.

China, as the first country to succumb to pandemic-fuelled recession and the first to emerge, is however now spooking international investors, fearful that a summer blip in growth could herald a longer-term slump lasting into 2022.

She said the Xi’s determination to reduce China’s growing wealth gap was a dangerous move in the midst of a resurgent disease.

“Xi Jinping has embarked on an ambitious but uncharted path as he aims to make good on the party’s promise of a socialist system that does not put the needs of the few over the needs of the many,” said the director of Enodo Economics.

“But he is taking the risk that his comprehensive income and wealth distribution agenda will undermine [what has] powered China’s strong catch-up growth over the past 40 years.”

According to World Bank data, China has one of the highest measures of inequality after the US. It comes after the pursuit of economic prowess, decades in the making since president Deng Xiaoping first moved to open up the country to global trade in 1978, with the acknowledgment that to do so would have to “let some people get rich first” to help poorer areas in the long run.

Under the shift orchestrated by Xi, focus will be on the quality of economic growth, with potential implications for other countries around the world.

Nasdaq-listed e-commerce website Pinduoduo said earlier this year it would donate its second-quarter profit and all future earnings to help with China’s agricultural development until the donations reached at least 10bn yuan ($1.5bn). The move prompted its shares to jump by 22%.

Hong Kong-listed Tencent, reading the same signals from Beijing, set aside 50bn yuan for welfare programmes supporting low-income communities, bringing this year’s total philanthropic pledge to $15bn.

Nonetheless, China is moving to restrict domestic companies from listing on US stock exchanges, in a move threatening to restrict the growth of tech firms that had come to symbolise record Chinese economic growth rates and the emergence of rich company bosses.

Rana Mitter, a historian and director of the University of Oxford China Centre, said Xi’s “common prosperity” rhetoric stemmed from genuine concern that previous economic models had created growth at the expense of inequality.

“Party officials also fear that the tech giants and the people who run them are out of control and need to be reined in. And then we must add Xi’s determination to be nominated next year for a third term, that changes to the constitution now allow,” he said.

Mitter warns that Xi is constructing a broad populist agenda that will make his bid for a third term in power unstoppable.

“He might not be facing a general election, but he wants social media to be behind him, cheering on policies that bring tech billionaires, property magnates and even film stars down to size,” he added.

He said it was unclear exactly how far reaching the reforms will be, though they are likely to “focus on improving the social safety net, improving labour productivity, reducing systemic financial risks and achieving more balanced growth in the long run”.

He added: “As a result, we see some downside risks for real GDP growth in the short and medium term but we expect the growth momentum to be more balanced and sustainable. We also expect the policymakers to put more emphasis on risk management, especially the debt risks and data security.”

Some analysts believe evidence of weaker growth rates will lead to China’s central bank easing borrowing rules to allow a mini-credit boom. With more borrowing by consumers and small businesses, the pain of increased taxes can be absorbed and the economy can return to higher levels of growth.

Mitter said Beijing faces a more fundamental problem as it considers how to balance the virus and the need to maintain economic growth.

“One of the difficulties at the moment is reading how Xi will answer the question: what is the economic future if your plan is to eliminate the virus.

“For instance, will China’s huge middle class be able to go on foreign holidays? The expansion of foreign holidays has not only kept a large number of people satisfied, it has given Beijing huge influence in neighbouring countries,” he said.

“If the virus means tourists and business people cannot travel and you don’t have easy connectivity for trade and leisure, then you need to consider a radically different economic model.”

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