Washington Insider-- Thursday
More Tensions With China
Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.
CDC Updates Report On COVID-19 Infections, Deaths at Meat And Poultry Plants
Confirmed cases of COVID-19 at 239 meat and poultry plants in 23 states in April and May were put at 16,233 with 86 related deaths, according to a report issued by the Centers for Disease Control and Prevention (CDC).
Combined with data from a study done through April 27 that included figures from six states that did not report for the updated data, at least 17,358 cases and 91 COVID-19–related deaths have occurred among U.S. meat and poultry processing workers.
Where demographic details were available, CDC said 87% of the cases were among racial and ethnic minority workers. CDC said that 12% of the cases were asymptomatic or presymptomatic, but the CDC cautioned that not all facilities performed widespread testing.
Of the 239 plants reporting cases, intervention and prevention efforts were reported by 111 of them, with 89 (80%) facilities reported screening workers on entry, 86 (77%) required all workers to wear face coverings, 72 (65%) increased the availability of hand hygiene stations, 70 (63%) educated workers on community spread, and 69 (62%) installed physical barriers between workers.
The report said animal slaughtering and processing industry employs an estimated 525,000 workers in approximately 3,500 facilities nationwide.
The CDC cautioned that the report findings have limitations, including that not all states responded with information and that the source of exposure and infection could not be identified as coming from the workplace or the community.
Sen. Grassley To Push For RELIEF Act To Be Included In Next Stimulus Plan
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said this week he will put to get the Responding to Epidemic Losses and Investing in the Economic Future (RELIEF) for Producers Act of 2020 to be included in the next stimulus plan.
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It would provide aid to producers forced to euthanize livestock due to lack of access to processing facilities, calculating the value based on the national average market value between March 1 and the date of enactment. The reimbursement would be calculated for a 30-day period starting from the date of initial depopulation. Producers would get 85% of the value of their loss, and the value of losses would be reduced by 10% each 30-day period after that.
The plan has also been backed by some House members.
Meanwhile, the White House and Senate Majority Leader Mitch McConnell, R-Ky., are both talking of wrapping up another COVID aid plan before the August congressional recess.
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While the Trump administration's top officials are sticking with reassuring comments about the future of U.S.-China trade, Bloomberg is increasingly gloomy. It reports this week that “the U.S.-China rivalry is shifting into new and unpredictable areas, engulfing everything from a popular video app to Hong Kong's status as a global financial hub.”
The latest tensions are overshadowing a trade agreement in January that was meant to draw a line under the trade war and be a boon for business. Instead, differences between both powers are deepening right at a time when the global economy is facing its worst crisis since the Great Depression, Bloomberg says.
It notes that “this week alone,” President Trump said he is considering banning ByteDance Ltd.'s short video app TikTok as retaliation against China over its handling of the coronavirus. Some “top advisers” want the U.S. to undermine the Hong Kong dollar's peg to the greenback to punish China for recent moves to chip away at the former British colony's political freedoms. There are even concerns over the visa status of hundreds of thousands of Chinese students who enroll at U.S. colleges and universities each year.
China in turn has promised its own response, warning the U.S. and others to stop interfering in Hong Kong and other issues.
The economic backdrop could hardly be gloomier with the IMF estimating that by the end of this year 170 countries – almost 90% of the world – will have lower per capita income. That's a reversal from January, when it predicted 160 countries would end the year with bigger economies and positive per capita income growth.
The deepening divisions are forcing difficult decisions for global business. Facebook Inc., Google and Twitter Inc. – all of which have been blocked on the mainland – are at risk of the same fate in Hong Kong.
Hours after Hong Kong announced sweeping new powers to police the internet on Monday night, those companies plus the likes of Microsoft Corp. and Zoom Video Communications Inc. suspended requests for data from the Hong Kong government. It's not yet clear how the authorities will respond to that lack of compliance with local rules.
ByteDance's TikTok, which has Chinese owners, announced it would pull its viral video app from the territory's mobile stores altogether in the coming days. HSBC Holdings Plc, which draws more than two-thirds of its pretax income from Hong Kong, slumped in Hong Kong trading on Wednesday on fears it would lose out if the administration moves ahead with any plan to punish banks in the city and destabilize the currency peg to the dollar.
The expectations are that threats and counter threats will only ratchet up further ahead of the U.S. presidential election in November, with little prospect of a near-term reset. “I don't see any immediate circuit breaker,” said Fraser Howie, author of Red Capitalism: The Fragile Financial Foundation of China's Extraordinary Rise – certainly not in the sense that there is a reset where everyone says 'weren't we all being foolish, let's get back to being friends.' I don't see that coming any time soon.”
And it's not just the world's two biggest economies being affected. India said it will ban 59 of China's largest apps after a deadly Himalayan border clash with Chinese troops that killed 20 Indian soldiers. China warned the UK it will face “consequences” if it chooses to be a “hostile partner” after reports emerged that the government was preparing to begin phasing out the use of Huawei Technologies Co. equipment in the UK's 5G telecommunications networks as soon as this year.
Since April, China has imposed crippling tariffs on Australia's barley industry, halted beef imports from four meat plants and urged its tourists and students to avoid going to the nation due to the risk of attacks from racists. The government in Canberra had earlier called for an independent inquiry into the origins of the coronavirus.
While economists say it's unlikely that the U.S. would follow through on its threat against the Hong Kong dollar, given the risk of damage to U.S. banks and companies, even the discussion of such a move is unnerving for confidence.
“It is a nuclear option, which could result in a financial crisis for Hong Kong, as well as considerable collateral damage for U.S. banks and investors,” said Kevin Lai, chief economist for Asia, excluding Japan, at Daiwa Capital Markets. “It is not impossible, but we think it is unlikely to happen.”
The idea of striking against the Hong Kong dollar peg — perhaps by limiting the ability of Hong Kong banks to buy U.S. dollars — has been raised as part of broader discussions among advisers to Secretary of State Pompeo but hasn't been elevated to the senior levels of the White House, Bloomberg News reported.
“There is a fast-evolving realignment of forces happening,” Alicia Garcia Herrero, chief Asia Pacific economist with Natixis SA, told the press. “The spiraling threat will remain with us at least until the U.S. election and, very likely, also afterwards. It is just a new paradigm,” she said.
So, we will see. Both sides appear increasingly “dug in” on this fight, with much more than economics at stake experts say. The threats and counter-threats appear both significant and real, and should be watched closely by producers as the fight continues, Washington Insider believes.
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