Top Stories of the Month: Why China Still Doesn’t Have an mRNA Shot
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As the rapidly mutating coronavirus drives a surge of global investment into vaccine development, Chinese companies are scrambling to catch up with overseas competitors in producing powerful shots, despite their technological shortfalls in developing mRNA-based Covid vaccines.
Meanwhile, as tough measures implemented in line with China’s “zero-Covid” policy have weakened consumption and slowed exports, policymakers are pinning their hopes on infrastructure investment to boost economic growth.
In the financial sphere, the Henan village bank scandal has turned the spotlight once again on the risks lurking in China’s vast rural banking sector, where regulation has failed to prevent corruption and abuse of power by major shareholders.
Last but not least, the Weekend Long Read offers a look back at the Asian financial crisis, a veritable storm that swept through East Asian economies 25 years ago.
# Covid Vaccine #
As the fast-evolving coronavirus tests scientists’ capacity to develop more-effective vaccines, drugmakers in China are scrambling to catch up with the most advanced technology for producing more powerful shots to better protect the world’s largest population.
Since the pandemic started, China has approved seven home-grown Covid-19 vaccines using four proven technologies to back the country’s vaccination campaign, the world’s largest. But shots based on the new mRNA technology that have been widely used elsewhere are still not available in China. MRNA vaccines, led by products developed by Pfizer-BioNTech and Moderna, have outperformed most other shots in efficacy rates against Covid-19.
More than two years into the pandemic, scientists and regulators are still struggling to catch up with the stealthy, rapidly mutating coronavirus as it continues ravaging the world.
Despite the number of effective Covid-19 vaccines in use around the world, new variants increasingly find ways to break through immune system defenses and infect more people. It has become a pressing issue for scientists to find more powerful weapons for containing the new variants.
China’s top state leaders have been vaccinated against Covid-19 with domestically-developed jabs, deputy head of the National Health Commission (NHC) said at a briefing.
“It shows the leaders’ confidence in Chinese vaccines,” Zeng Yixin said, according to a readout (link in Chinese) of the briefing. It did not identify any of the vaccinated leaders by name.
# Henan Rural Bank #
A financial scandal in central China that’s triggered protests outside a regional office of the country’s central bank has turned the spotlight once again on the risks lurking in the vast rural banking sector, where regulation has failed to prevent corruption and abuse of power by major shareholders.
Customers of six small lenders, all linked to a shadowy investment firm in Henan province, have been denied access to tens of billions of yuan of their savings since April, when the banks froze their deposits without explanation, sources with knowledge of the matter told Caixin. After remaining tight-lipped about repayment since the scandal first hit the headlines that month, local financial regulators have finally acted, spurred by a protest that turned violent when groups of plain-clothes security men clashed with savers outside the office of the People’s Bank of China (PBOC) in Zhengzhou, the capital of Henan province.
# Infrastructure Investment #
Renewable energy, technology and water management projects are set to be among the largest beneficiaries of China’s latest infrastructure investment boom, the likes of which has not been seen since the global financial crisis.
Policymakers are doubling down on infrastructure in the second half of the year, putting more than 1 trillion yuan ($149 billion) in additional funding to work as they try to revive the economy, which just recorded the weakest quarterly growth since early 2020 in the second quarter.
The Chinese government has once again leveraged its policy banks to aid its “all-out” infrastructure investment drive, in hopes of rescuing a struggling economy in the last six months of the year.
With China recording the weakest quarterly GDP growth in the second quarter since the Covid-19 pandemic first gripped the country in early 2020, achieving the annual growth target of around 5.5% has become ever more challenging. Policymakers are pinning their hopes on infrastructure investment to boost domestic demand as tough “zero-Covid” measures in the first half of the year have weakened consumption and slowed exports.
# Weekend Long Read #
Twenty-five years ago on July 2, 1997, the Thai authorities decided to float their currency, the baht, after having practically run out of international reserves in its defense since late 1996. That move triggered the Asian financial crisis (AFC), a veritable storm over East Asian economies — from Indonesia to Malaysia, South Korea, the Philippines and Hong Kong.
In the wake of the AFC, oil prices collapsed and as a result the Russian Federation defaulted on its domestic debt. Brazil was also hit by renewed debt problems requiring a record $42 billion bailout. One of the largest hedge funds in the world — Long-Term Capital Management, with two Nobel laureates on its board — had to be saved to prevent a Wall Street meltdown. Global GDP growth for 1998 turned out only half of what it had been projected to be before the crisis.
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