New Virus Flu strain denting China’s improved PMI and geopolitical win through Hong Kong legislation

Geopolitical tensions with neighbouring countries such as India, Hong Kong, Tibet, and Japan, or creating trade constraints with Australia, China has been making headlines since the last few weeks. Blamed for spreading the virus worldwide because of its inability to contain the virus, the Chinese government has been subject to backlashes in the country and from Western Governments.

Despite the ongoing tense environment, further developments have been cited regarding China's factory output and the Hong Kong Security Law. However, the emergence of a new viral flu strain as a possible threat for another pandemic is alarming. Let us throw some light on each development separately.

The Hong Kong Security Law

The newly passed national security legislation for Hong Kong, the world's premier financial hub, has transformed the territory's politics and economic decision-making. Hong Kong, which used to contribute up to one-fifth of the Chinese economy in 1997, is accountable for less than 3% of Chinese output. So, even if the national security legislation puts a dent on Hong Kong's business or economic prospects, both domestically and internationally, it seems China's GDP will be hardly impacted.

On 30 June 2020, China had passed the controversial national security legislation for Hong Kong unanimously by the National People's Congress’ Standing Committee, according to media reports citing unnamed sources. The draft of the law had not been disclosed to the public yet.

The bill has been deemed essential to address issues such as terrorism, subversion, and foreign interference. The bill comes into effect from 1 July, after it is gazetted in Hong Kong. 1 July marks the anniversary of the territory's return to Chinese rule. The rally on the anniversary of the 1997 handover has been banned because of coronavirus restrictions. However, as per SCMP, referring to "police insiders", almost 4,000 officers would be deployed to handle any unrest if people defy the ban.

According to Joshua Rosenzweig, head of Amnesty International's China team, the security bill shows the real intention of China. Given that the bill details were not made public to people of Hong Kong indicates China's aim of governing Hong Kong through fear from this point forward.

China's official state agency, Xinhua did reveal some of the provisions of the bill which overtake the existing Hong Kong legislation giving the power of interpretation to the National People's Congress Standing Committee.

Beijing will be overseeing the city government through supervision, guidance, and support by setting up a national security office in Hong Kong with the power to exercise jurisdiction in some instances. What activities are deemed illegal, and the punishment they carry is yet to be known. As per the authorities in Beijing and Hong Kong, the legislation is not designed to affect the rights and freedom of people nor hurt investor interests.

The security bill is expected to add fuel to the protest that had been subdued due to the coronavirus pandemic prohibiting mass gatherings. The bill is also subject to backlash from countries including the United States, the United Kingdom, Japan, and Taiwan. As per Western Governments, the bill takes away the semi-autonomous status of Hong Kong that was granted on 1 July 1997.

The US government has already acted in response to the legislation by eliminating Hong Kong's special status under US law, halting exports related to defence, and restricting Hong Kong's access to high technology products. The UK government has decided to support around 2.9 million of Hong Kong's 7.5 million people by extending visa rights for their British national (overseas) (BNOs) passport.

In response to western retaliation, the Chinese government has responded to the western government by denouncing the backlashes as interference in China's internal affairs. The foreign ministry spokesperson, Zhao Lijian stated that Beijing would respond by retaliating with visa restrictions on "US personnel who perform badly on Hong Kong related issues."

China’s manufacturing activities grow further; PMI at 50.9 for June

The opening of the economy globally, to uplift financial position, has driven the Chinese manufacturing industry towards expansion. Domestic consumption has also increased with the opening of Chinese lockdown.

On 29 June 2020, China reported official Purchasing Manager's Index (PMI)at 50.9, more than the May PMI of 50.6, demonstrating an expanded manufacturing activity in June. The June PMI was above the expected PMI as projected by economists in a survey.

However, Caixin and IHS Markit are expected to come out with their own PMI data based on surveys that collect responses from a bigger mix of small- and medium-sized firms. The official PMI survey only considers a large proportion of big businesses and state-owned companies for poling.

The manufacturing sector in China was walloped with major lockdown imposed to contain the virus, halting all business activities. The slump in China and the spread of the virus had a tumultuous effect on the world with global economies stalling and millions affected by the virus.

As per the National Bureau of Statistics, the monthly orders have been increasing with better reading regarding import and export indices, as major economies around the world are reopening.

However, with the resurgence of cases and newly imposed social distancing restrictions, the manufacturing may again experience a dent.

The emergence of a New Viral Flu Strain

Professor Kin-Chow Chang and colleagues working at Nottingham University in the UK highlighted that while coronavirus is keeping people distracted, people should be vigilant about new, potentially dangerous new viruses.

Scientists have identified a new set of viral flu strain in China that has the potential to coerce the world towards another pandemic. The new strain carried by pigs is descended from "swine flu" that emerged in 2009 and bears all the essential hallmarks of a candidate pandemic virus. The new virus should be monitored closely as the virus can mutate further and spread quickly from person to person triggering a global outbreak.

As a warning sign, people can have little or no immunity to this flu strain as it is a new virus. The new strain of flu, ‘G4 EA H1N1’, is a variant of swine flu. It contains the "G4″ genotype, prevalent, since 2016, in swine populations. Also, current flu vaccines do not appear to protect against it, although they could be adapted if needed.