Hong Kong has been living on borrowed time ever since the British made it a colony nearly 180 years ago, and all the more so after Beijing took control in 1997 and granted it autonomous status.
 
China’s passage of a national security law for the city is the latest sign that the 50-year “one country, two systems” arrangement that allowed Hong Kong to keep its own legal, financial and trade regimes is perishable.
China’s communist leaders have been preparing for decades to take full control of the glittering capitalist oasis, while building up their own trade and financial centers to take Hong Kong’s place.  
For them, national security and patriotism trump the civil liberties that brought millions of Hong Kong residents into the streets last year, hoping to protect their own vision for their future — protests that would not be tolerated across the border.
In the early 1980s, as China’s own economy began to open up to trade and investment after decades of Cold War isolation and political upheaval, the contrast between the mainland and Hong Kong was evident on crossing the border into the bucolic rice paddies and fish ponds of Shenzhen.  
Several generations later, Shenzhen is a metropolis of skyscrapers, high-tech campuses and huge, modern ports that dwarf Hong Kong’s own, at least in trading volume. Railways, roads, bridges and other infrastructure have transformed the Pearl River Delta region that surrounds it into a whole ecosystem of built-up cities that is China’s answer to Silicon Valley and then some. It also is home to increasingly influential tech companies like Huawei Technologies and Tencent.
Railways, roads, bridges and other infrastructure have turned Hong Kong into just one of the big cities of the Pearl River Delta region that surrounds it.  
The region has been transformed into a whole ecosystem of built-up cities that is China’s answer to Silicon Valley and then some, and it is home to increasingly influential tech companies like Huawei Technologies and Tencent.
“Hong Kong is a Chinese city,” said Kenneth Courtis, an expert on Asian economies and chairman of Starfort Investment Holdings. Instead of Hong Kong transforming its neighbors in Guangdong province, he said, “it’s more likely that Hong Kong will be more and more absorbed into Guangdong.”
The rise of industrial and financial centers like Shenzhen and Shanghai has sidelined Hong Kong in other respects. The city accounts for less than 3% of China’s economic activity, down from a peak of 27% in 1993, the height of its role as go-between in China’s ascent as an export powerhouse.  
China’s promise to leave Hong Kong’s own legal and economic systems intact for 50 years, until 2047, has helped the city of 7 million retain its attraction as a regional financial hub and bastion of Western-style civil liberties.  
The national security law endorsed in Beijing followed recent arrests of Hong Kong pro-democracy advocates. Critics say it will undermine civil liberties and might be used to suppress political activity, and many in Hong Kong reacted with dismay.  
Many of the millions of Hong Kong citizens who turned out in protests that began a year ago either escaped from the mainland or have parents that left decades ago. Having fled communist rule, they are clinging to liberties forbidden in mainland China, where public dissent is treated as subversive and punishable by long prison terms.  
“The most frightening thing is that you will never be able to know exactly what would cross the bottom line for the Chinese Communist Party, or even where that bottom line is. No one knows,” said Philip Chan, who was walking in downtown Hong Kong’s Central district under the watchful eyes of masses of police in riot gear, a common sight nowadays.
Hong Kong’s government has insisted that the new security law will only affect a small minority of people, saying that life will continue as normal for most.
The city’s tycoons planted the seeds both for its success and its eventual undoing when they invested billions in Guangdong, across the border, taking advantage of special incentives and cheap labor, and eventually helping turn China into the world’s factory floor.  
For the most part, those ultra-wealthy elites have sought to keep the peace with Beijing in return for wielding enormous influence both in local politics and business.  
Billionaire Li Ka-shing, whose fortune has taken a hit over the past year as Hong Kong’s economy stumbled, told local media that he viewed Beijing’s moves as its “sovereign right.” He and his peers have voiced support for the security legislation, saying they hope it will help ensure public order.
Beijing’s insistence on enacting the national security law, among other measures including now-tabled extradition legislation that sparked months of anti-government protests last year, prompted Washington to announce it no longer will treat Hong Kong as being autonomous from Beijing.
It’s unclear whether the Trump administration will push ahead with the threat to no longer treat Hong Kong as an autonomous free port or how big the impact of such a move would be.
Hong Kong accounted for about 8% of China’s exports to the U.S. and about 6% of its imports from the U.S. in 2018, but its overall role in trade has been eclipsed by big ports to the north.
The city was the world’s second-biggest port after Singapore in 2005 and now is the eighth-largest: Shanghai is by far the biggest and its throughput has doubled during that time while Hong Kong’s has fallen.  
The city is utterly dependent on the mainland for much of its water, most of its food, and to a large extent, tourism and investment.  
Before the protests and later the coronavirus pandemic virtually wiped out tourism, the city was a thriving cosmopolitan destination. It’s a shopping and dining mecca with a vibrant cultural scene, strong traditions of philanthropy and historic preservation, and mass media and educational institutions largely unfettered by Communist Party dogma and censorship.  
At the same time, tensions have been building as the gap between rich and poor has widened. Political sentiment has become polarized as Beijing gradually extended its influence by ensuring its supporters would hold the deciding votes over such decisions as who would be the city’s top leader.  
“These issues are very much central to the demonstrations,” Courtis said. “Beijing would be very smart to address some of these issues. Repression isn’t the answer.”
While many in Hong Kong grew frustrated with disruptions from the anti-government protests that turned violent at times, still more have shown with the votes they are able to cast that they favor more, not less democracy.  
Some gathered in pop-up demonstrations Friday, including dozens who were chanting in protest n the busy IFC shopping mall downtown.  
Jerome Lau, 70, said he feared the government would crack down on public gatherings and free speech.  
“Until I take my last breath, I will come out and fight for freedom,” he said. 
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Protests at shopping centers in Hong Kong were held again Friday, one day after China’s National People’s Congress approved imposing a national security law on Hong Kong.Protesters gathered during lunchtime at an upscale shopping center in Hong Kong’s busy central business district.”To take my last breath, I would come out and fight for freedom. There’s no freedom of speech, gatherings and education. They are trying to suppress as much as possible,” said Jerome Lau, 70-year-old protester.Protesters observing coronavirus restrictions were holding a banner reading “Free Hong Kong – Revolution Now.” Other banners draped over the balcony read “Liberate Hong Kong, Revolution of Our Times” and “Hong Kong Independence,” exactly what the protesters are fighting for and what Beijing is trying to suppress.Police were on stand-by outside the shopping mall but did not seem to intervene.U.S. Secretary of State Mike Pompeo and Speaker of the U.S. House of Representatives Nancy Pelosi have slammed China’s new security law on Hong Kong.A strong condemnation also came Friday from German Foreign Minister Heiko Maas, who said the European Union agreed that Hong Kong’s “high degree of autonomy cannot be undermined.” “We expect the freedoms and rights of citizens to be respected clearly and in the principle of one country, two systems,” Maas said. 
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The Justice Department unsealed charges Thursday against more than two dozen North Korean individuals accused of making at least $2.5 billion in illicit payments linked to the country’s nuclear weapons and missile program. The case, filed in federal court in Washington, is believed to be the largest criminal enforcement action ever brought against North Korea. The 33 defendants include executives of North Korea’s state-owned bank, Foreign Trade Bank, which in 2013 was added to a Treasury Department list of sanctioned institutions and cut off from the U.S. financial system.  According to the indictment, the bank officials — one of whom had served in North Korea’s primary intelligence bureau — set up branches in countries around the world, including Thailand, Russia and Kuwait, and used more than 250 front companies to process U.S. dollar payments to further the country’s nuclear proliferation program. Five of the defendants are Chinese citizens who operated covert branches in either China or Libya. “Through this indictment, the United States has signified its commitment to hampering North Korea’s ability to illegally access the U.S. financial system and limit its ability to use proceeds from illicit actions to enhance its illegal WMD and ballistic missile programs,” acting U.S. Attorney Michael Sherwin said in a statement. The prosecution underscores ongoing concerns about sanctions violations by North Korea. Last month, United Nations experts recommended blacklisting 14 vessels for violating sanctions against North Korea, accusing the country in a report of increasing illegal coal exports and imports of petroleum products and continuing with cyberattacks on financial institutions and cryptocurrency exchanges to gain illicit revenue. The U.S. has seized about $63 million from the scheme since 2015, according to the indictment. It was not immediately clear whether any of the defendants had lawyers.
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Nguyen Hung usually tends to rice paddies in central Vietnam, unaware that, fewer than 30 centimeters below the soil, cluster bombs still lurk decades after the U.S. scattered them in the Vietnam War. But last month as the farmer stood in his lime-green field, an announcement blared over loudspeakers: he and his neighbors had to clear out, so a detonation team could move in. A new report from Captain Nguyen Thi Thuy of all-female landmines clearance team marks detected zones on a map of Hai Lang district, near a former U.S military base used during Vietnam War, in Quang Tri province, Vietnam, March 4, 2020.Some of the work is funded by the United States, where officials ask how such use of weapons, which still kill Southeast Asians today, should inform the U.S. conflict in Iraq and Afghanistan. Project Renew said it found 14 cluster bombs beneath Nguyen’s rice paddies last month. Many of them were 20- to 30 centimeters below the plants, according to Truong Cong Vu, a team leader on the project.  As nations wage war on COVID-19, Vietnam is cleaning up the remnants of an actual kinetic war. Project Renew adapted to the pandemic. It continued the work in February and March, while following guidelines from the state, which told people to wash their hands for 30 seconds and stay two meters apart to curb the spread of the coronavirus. “Survey and clearance operators were required to keep a distance from each other while working in the fields, wear face masks and practice hygienic etiquette,” the organization said in a recent report, titled FILE – U.S. Defense Secretary Mark Esper, center, and Vietnamese Defense Minister Ngo Xuan Lich review an honor guard in Hanoi, Vietnam, Nov. 20, 2019.On a visit last November, U.S. Defense Secretary Mark Esper touted efforts at cooperation between both sides, saying, “These include U.S. efforts to clean up dioxin contamination and to remove unexploded ordnance, along with Vietnam’s strong support for U.S. personnel accounting activities.” In June 2019, staff at the U.S. Congressional Research Service (a department within the Library of Congress) sent legislators an analysis of the $400 million the U.S. has spent on UXO clearance in Southeast Asia. It said cleanup will probably involve several more decades and casualties. These human and dollar costs, as well as the long time that war legacies have lasted, are factors for legislators to consider, the report said. The authors wrote the “continued presence of UXO in Southeast Asia” raises issues, including whether U.S. remedies have “lessons for similar activity in other parts of the world, including Iraq and Afghanistan; and, more generally, efforts to lessen the prevalence of UXO in future conflicts.”   
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China’s rubber stamp parliament has approved a new national security law for Hong Kong that critics say threatens the city’s semi-autonomous status.   The National People’s Congress approved the controversial measure Thursday by a vote of 2,878 to one, with six members abstaining.   The new law would prevent and punish acts of “secession, subversion or terrorism activities” that threaten national security. The law would also allow Chinese national security organs to set up agencies in Hong Kong.  The legislature’s Standing Committee will begin drafting details of the law, which is expected to take effect in September.   The legislation was widely condemned by business groups and Western nations as the death knell for Hong Kong’s status under the “one country, two systems” concept established after Britain handed over control of the financial hub to China in 1997, especially since it bypasses Hong Kong’s legislature. Hong Kong police arrested dozens of protesters on May 27, 2020. (Photo courtesy of Hong Kong Police Facebook)Beijing’s announcement of the national security law for Hong Kong last week sparked a new round of protests similar to the massive and often violent demonstrations that engulfed the city during the second half of 2019.  The protests were initially provoked by a controversial extradition bill that eventually evolved into a demand for greater democracy for the city. As many as 360 people were arrested Wednesday night to protest the national security bill. Secretary of State Mike Pompeo speaks during a press briefing at the State Department on May 20, 2020, in Washington.U.S. Secretary of State Mike Pompeo said Wednesday he has reported to the U.S. Congress that Hong Kong is “no longer autonomous from China” and “Hong Kong does not continue to warrant treatment under United States laws,” given facts on the ground.   The secretary’s remarks indicate the United States is considering suspending the preferential status that has made the city a top U.S. trading partner.   Hong Kong’s pro-democracy activists are also angry over legislature under consideration in the city’s Legislative Council, dominated by pro-Beijing lawmakers, that would criminalize disrespect of China’s national anthem.  The legislature was forced to adjourn Thursday’s session after two pro-democracy lawmakers were ejected from the chamber during an angry debate over the anthem law.     
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Congress voted Wednesday to toughen the U.S. response to a brutal Chinese crackdown on ethnic minorities, adding another factor to the increasingly stormy relationship between the two countries.The House passed a bipartisan bill that would impose sanctions on Chinese officials involved in the mass surveillance and detention of Uighurs and other ethnic groups in the western Xianjiang region, a campaign that has drawn muted international response because of China’s influence around the world.The measure already passed the Senate and needs a signature from President Donald Trump, who said this week he’ll “very strongly” consider it amid U.S. anger over China’s handling of the coronavirus outbreak and tension over a Chinese plan to restrict civil liberties in Hong Kong.Both issues emerged, along with other sore points in the China-U.S. relationship, as Republican and Democratic members of Congress spoke in support of the bill. No one spoke against it, and it passed by a 413-1 vote.”Beijing’s barbarous actions targeting the Uighur people are an outrage to the collective conscience of the world,” House Speaker Nancy Pelosi said in a floor speech in support of the bill.FILE PHOTO – In this Dec. 3, 2018, a guard tower and barbed wire fences are seen around a facility in the Kunshan Industrial Park in Artux in western China’s Xinjiang region.It was the first bill in history to pass with proxy votes after House Democrats, over Republican objections, adopted a measure allowing such votes in response to the coronavirus outbreak.Congress late last year voted to condemn the crackdown in Xianjiang, where Chinese authorities have detained more than a million people — from mostly Muslim ethnic groups that include Uighurs, Kazakhs and Kyrgyz — in a vast network of detention centers.This new legislation is intended to increase the pressure by imposing sanctions on specific Chinese officials, such as the Communist Party official who oversees government policy in Xianjiang.The legislation also requires the U.S. government to report to Congress on violations of human rights in Xianjiang as well as China’s acquisition of technology used for mass detention and surveillance. It also provides for an assessment of the pervasive reports of harassment and threats of Uighurs and other Chinese nationals in the United States.A provision that would have imposed export restrictions on surveillance and other equipment used in the crackdown was initially passed in the House but then stripped out in the version that passed in the Senate earlier this month.Despite the limitations, the legislation amounts to the first concrete step by a government to penalize China over the treatment of the Uighurs since the existence of the mass internment camps became widely known in recent years, said Peter Irwin, a senior program officer at the Uighur Human Rights Project.”It signals that a member of the international community is actually taking some steps to address the problem,” Irwin said. “The legislation itself has to spur the rest of the international community, particularly the European Union and other powerful blocs of states, to actually take this as a template and pass their own legislation.”FILE – Rep. Michael McCaul, R-Texas, the ranking member of the House Foreign Affairs Committee, attends a hearing on Capitol Hill in Washington, Oct. 23, 2019.Rep. Michael McCaul, a Texas Republican and chairman of the House China Task Force, called what’s happening in Xianjiang a “cultural genocide” of Uighurs and other mostly Muslim ethnic groups.The passage of the bill with strong bipartisan support would “show the Chinese Communist Party and the entire world that their treatment of the Muslim Uighurs is inexcusable and will not be allowed without serious consequences,” McCaul said.China has publicly brushed away criticism of its crackdown in Xianjiang, which it launched in 2014 as the “Strike Hard Against Violent Extremism” in a vast resource-rich territory whose inhabitants are largely distinct, culturally and ethnically, from the country’s Han Chinese majority.The Chinese government, when not bristling at criticism of what it sees as an internal matter, has also said the detention camps are vocational training centers. Uighur activists and human rights groups have countered that many of those held are people with advanced degrees and business owners who are influential in their communities and have no need of any special education.People held in the internment camps have described being subjected to forced political indoctrination, torture, beatings, denial of food and medicine and say they have been prohibited from practicing their religion or speaking their language. China has denied these accounts but refused to allow independent inspections.
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South Korean health officials Wednesday reported the nation’s highest number of new coronavirus infections in seven weeks as the nation is easing its restrictions.In his daily briefing in Seoul, South Korean Vice Health Minister Kim Kang-lip said that 37 of the 40 new cases are related to the recent outbreak from nightclubs in Itaewon, Seoul’s multicultural district. Kim said the remaining three are infections from abroad.All but four of the new cases were in densely populated areas in Seoul where officials are scrambling to stop transmissions linked to nightclubs, karaoke rooms and an e-commerce warehouse.Kim said authorities are keeping an eye on the warehouse, owned by local e-commerce company Coupang, after discovering dozens of coronavirus infections linked to workers there. Kim says they suspect the company was not enforcing basic workplace COVID-19 regulations, and they are testing the company’s 3,600 employees.South Korea has reported 269 deaths and 11,265 cases, after managing to contain a severe outbreak earlier.The spike comes as some two million students returned to school Wednesday.  
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Riot police in Hong Kong Wednesday fired pepper balls to disperse tens of thousands of demonstrators protesting adoption of a controversial national security law that is poised to pass in Beijing on Thursday and a proposed law criminalizing the disrespect of the national anthem tabled in the city’s legislature.   
 
Thousands of riot police officers guarded several districts in Hong Kong, firing pepper balls and using pepper spray to disperse protesters.  Police stopped and searched mostly young people outside subway stations and on the streets throughout the day.  
 
Crowds of people who gathered in Admiralty, the area where the legislative council and government quarters are located, were dispersed by police who threatened them with pepper spray if they did not comply.  There were police officers guarding every street corner in the area to prevent people from getting near the government buildings. Walkways leading to the government buildings were cordoned off.   Police quickly closed in on small groups of activists who gathered to chant slogans and give speeches expressing their opposition to the national anthem bill. At one point, police ordered people in nearby restaurants to leave.  WATCH: Street view of Hong Kong protesters Sorry, but your browser cannot support embedded video of this type, you can
download this video to view it offline. Embed” />CopyAt lunch time, hundreds of office workers turned out on the streets in Central, the heart of Hong Kong’s business district, at a rally.  Crowds chanted slogans, including “Fight for Freedom, Stand with Hong Kong,”  “Hong Kong independence, the only way” alternately and shouted obscenities at the police.  “Be a Hong Konger!” someone shouted towards the police, implying they were working for the interests of China, and not their own city.  About half an hour into the rally, police fired pepper balls and people ran into nearby buildings.
 
“Not just this national security law, we see China continuously encroaching on our freedoms and we see police being whitewashed (in a report clearing them of wrongdoing),” said a lawyer who declined to give his name.  “If we keep quiet, they can get away with it.”Hong Kong riot police on patrol during protest against National Anthem law, May 27, 2020. (Photo: Hong Kong Police Facebook)A police statement said protesters blocked roads with bins and traffic cones and threw objects at officers. It said police had “no other choice but to employ minimal force” by firing pepper balls to stop the “violent behavior.”   The interruption was however brief as traffic continued to move slowly.   
 
Hundreds of people also defied the heavy police presence to gather on the streets of Causeway and Mongkok, both busy shopping districts.  Many young people were stopped and searched by riot police.  Young people, including some in high school uniforms, were made to line up against the wall outside a shopping center in Mongkok.  Police accused protesters of blocking traffic and placing obstacles on the streets.
 
As of mid-afternoon, police said more than 290 people have been arrested for illegal assembly.
 
Protesters said they were fueled by anger at what they perceive as China’s intensifying encroachments into the semi-autonomous city, including foisting patriotism upon Hong Kongers through a law that forbids mockery of the national anthem.  They also expressed helplessness as China’s National People’s Congress prepared to pass national security laws, bypassing Hong Kong’s legislature on Thursday. 
“I know we have no power to fight against China, but I must come out to show my opposition to it.  I’m not afraid even if they jail me,” said a 71-year-old man surnamed Chow, who used to be a staunch supporter of the Communist party until the crackdown on the Tiananmen pro-democracy movement.
Inside the chamber of the Legislative Council, lawmakers made speeches to express their stance on the national anthem bill, which is expected to pass on June 4, the anniversary of the 1989 Tiananmen crackdown.  Pro-Democracy lawmakers expressed their exasperation over a bill that is poised to pass because the legislature is dominated by pro-Beijing lawmakers – only half the seats are popularly elected by ordinary voters while the rest are chosen by largely pro-Beijing “functional constituencies.”
Lawmaker Dr. Kwok Ka-Ki told the legislature that rulers should follow the teaching of ancient Chinese philosopher Mencius, who said rulers should “love their people as if they were his children.” 
“There is no need to use rubber bullets and tear gas to suppress people and to make people become subservient to your rule… and when they are already feeling emotional you suppress them with the security law to subjugate them under truncheons and guns,” Kwok said.
China last week revealed its plan to bypass Hong Kong’s legislature to impose a national security law on Hong Kong to prevent and punish acts of  “secession, subversion or terrorism activities” that threaten national security.
The move, which would also allow Chinese national security organs to set up agencies in Hong Kong, has received wide international criticism, with the United States threatening consequences for China.
 
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Hong Kong riot police established a blockade around the city’s legislative complex Wednesday as lawmakers prepared to debate a controversial bill that would make disrespecting China’s national anthem a crime. Police erected water-filled barriers around the complex to keep away protesters after a call went out the night before to surround the building to derail the proceedings.  But thousands of protesters gathered in the city’s business district shouting pro-democracy slogans and insults at police, who fired pepper pellets at the demonstrators to disperse them. Hong Kong lawmakers are holding a second debate on a bill that calls for anyone who intentionally insults the anthem by booing or any other means, to face up to three years in prison and fines of more than $6,000. The bill was introduced last year in response to fans regularly booing “March of the Volunteers” during football (soccer) matches. The global financial hub was engulfed by massive and often violent anti-government protests during the last half of 2019, sparked initially by a controversial extradition bill that eventually evolved into a demand for greater democracy. Many Hong Kongers fear their autonomy is steadily being eroded by a central government on the mainland that is increasingly meddling in its affairs. The debate over the national anthem bill coincides with a proposed national security law unveiled last week in China’s national congress that would prevent and punish acts of “secession, subversion or terrorism activities” that threaten national security. The law would also allow Chinese national security organs to set up agencies in Hong Kong. The legislation has been condemned by business groups and Western nations as the death knell for Hong Kong’s status under the “one country, two systems” concept established after Britain handed over control of the financial hub to China in 1997, especially since the proposed law bypasses Hong Kong’s legislature. 
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Around 200 homes and other buildings were destroyed by fire in Myanmar’s conflict-torn Rakhine state, Human Rights Watch reported Tuesday. The rights group says satellite images recorded the destruction on May 16.Northern Rakhine state has been riddled by conflict between the Myanmar military, also referred to as the Tatmadaw, and the Arakan Army (AA), a militant group of Rakhine Buddhists seeking self-governance. No one has claimed responsibility for the May 16 destruction.The most recent account of mass burning in Rakhine was in August 2017, when the Myanmar military and militant civilians destroyed at least 392 Rohingya villages.The Rohingya Muslims, densely populated in Rakhine, are an ethnic minority in the Buddhist-majority country. Since 1982, the government has refused to recognize the Rohingya as its citizens, viewing them as illegal immigrants from neighboring Bangladesh.The 2017 violence involved massacres, extrajudicial killings, mass gang rapes and villages burned by the Tatmadaw — events a fact-finding mission established by the United Nations Human Rights Council described as rising to the level of “both war crimes and crimes against humanity” and in “genocidal intent.”The current conflict between the Tatmadaw and AA has pushed more Rohingya to flee, leading hundreds to the sea to find safety in neighboring countries.Citing concerns about COVID-19 earlier this year, Malaysia denied entry to nearly 400 Rohingya Muslim refugees, leaving them stranded at sea for two months until Bangladesh took them in. The coronavirus causes the COVID-19 disease.
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Both North and South Korea were at fault when they exchanged gunfire earlier this month across their heavily fortified shared border, according to a probe by the United Nations Command.A report issued Tuesday by the U.S.-led U.N. Command said the incident breached the armistice that ended fighting in the 1950-53 Korean war.The report said North Korea breached the armistice on May 3 when it fired four small-arms rounds that struck a South Korean guard post. The report said South Korean troops violated the pact when they responded with two volleys of gunfire. But the U.N. Command was unable to determine if North Korea opened fire “intentionally or by mistake.” The report said North Korea was invited to take part in the investigation, but has not offered an official response.South Korea’s Defense Ministry issued a statement saying it regretted the findings by the U.N. Command without properly investigating the North’s actions. The ministry says its soldiers were following proper procedures spelled out in a response manual when they responded to the North’s gunfire.The U.N. Command oversees activity along the Demilitarized Zone, or DMZ, that serves as a buffer between North and South Korea. The two sides remain in a technical state of war as they have not reached a formal peace treaty.  
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China said Monday it boasts $182 trillion in total national assets, which it hopes will provide enough support to lift its economy out of contraction by boosting domestic consumption after the coronavirus outbreak is contained.But analysts say local consumers, who have been holding out because of lockdown policies and concerns about finances, are unlikely to go on a shopping spree to make up for lost time.Declining income?“To some extent, everyone’s wealth [income] would be affected by the COVID-19 pandemic. So, as a whole, it is almost impossible to have a wealth effect to bolster [China’s] domestic consumption,” Liang Kuo-yuan, president of Polaris Research Institute in Taipei, told VOA.China is the world’s second-biggest economy.Ning Jizhe is vice chairman of China’s National Development and Reform Commission (NDRC). He said at a news conference Monday that domestic consumption has recovered and has seen an 8.3% increase in April from March, although it still posted a 7.5% decline compared with the same period last year.Ning said he expects the improvement to be stronger in May although no catch-up spending is in sight. He added that the Chinese government has kicked off measures to boost spending in the commodity and service sectors.China has also pledged to build up 5G networks and internet connections as a way to encourage both e-commerce and spending on organic agricultural products, the official said.Economic stimulusAccording to Ning, China plans to raise $140 billion through the issuance of national treasury bills and $526 billion in local government bonds to stimulate the economy.FILE – A man wearing a face mask walks past a store of French luxury brand Louis Vuitton at a shopping mall in Wuhan, the epicenter of the novel coronavirus outbreak, Hubei province, China, February 25, 2020.Calling China’s statistics opaque, Liang said that household spending on daily necessities will provide a bit of a boost to domestic consumption.But any major spending by consumers, even among those with substantial resources, likely will not be aggressive, he argued.Given its heavy debt burden, especially those hidden in its shadow banking system, China won’t be able to substantially increase government expenditure to revive its economy as it did during the 2008 financial crisis, according to Liang.Liao Qun, chief economist at Hong Kong-based China CITIC Bank International Ltd, said he did not agree with the premise that China has a high debt burden.But he agreed that, despite their high rate of savings, consumers will not increase their spending before lockdown policies are completely lifted. He said China’s debt ratio is under 60% of its gross domestic product, or GDP.Consumption growthLiao said domestic consumption accounts for about 55% of China’s GDP with private consumption accounting for 40% and government expenditures making up the balance.Liao said the potential exists for consumption to increase if incomes from China’s manufacturing-oriented economy remain stable.Economists are divided over whether the Chinese economy will weather the virus-inflicted downturn. Questions arose after Chinese Premier Li Keqiang failed to set an economic growth target for 2020 when he addressed the much-delayed National People’s Congress on Friday. The last time China failed to set a target was in 2002.Before China’s economy contracted 6.8% in the first quarter from a year ago, the Communist leadership, which often relies on economic growth for its ruling legitimacy, had projected a 5.6% growth goal for this year.Liang said that China’s economic outlook is unclear with authorities giving mixed signals.FILE – Volunteers in protective suits disinfect a shopping complex in Wuhan, Hubei province, the epicenter of China’s coronavirus disease outbreak, March 31, 2020.W-shaped recoveryEven if the Chinese economy rebounds, at best, it will be a W-shaped recovery, Liang said, referring to cycles in which the economy goes into recession ahead of full recovery.  And challenges remain for China to address the economic fallout from the global pandemic. China watchers say growing anti-China sentiment and other issues may prompt some governments to reduce their economic dependence on Beijing and accelerate their exit from the Chinese market.But Liao said he doubts the business migration trend will hurt the fundamentals of the Chinese economy. He said the trend began a decade ago when foreign businesses moved their assembly lines to neighboring Asian countries for cheaper labor and land.During the same period, China’s exports continued to grow. He said they accounted for 13% of the world’s total exports in 2019, up from 9% a decade ago.“If it is a political calculation, everyone will suffer from the economic point of view. No one knows for sure if such a [political] move will be made. But in terms of economic [competitiveness], industries in China are still the cheapest, the most efficient and attractive” to foreign investors, Liao said.
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