In the News: Coronavirus Spreads; Financial Regulators Respond; and EU Relief for Huawei

Deloitte Consulting has recommended "10 Key Actions" for Chinese companies to take in response to the coronavirus based on analyses of best practices of multinational companies. These include establishing emergency decision-making teams, establishing flexible vacation and work mechanisms, developing supply chain risk response plans, and notifying partners about potential non-performance of contracts. Companies must also navigate the extended holiday period as a result of the virus. The public holiday period of the Chinese New Year has been extended to Feb. 2 nationally, while several regions and cities including Shanghai have extended that further to Feb. 9. Jeanette Yu, Head of Employment & Pensions at CMS China, writes that companies in Shanghai must still pay full salaries to their employees during this period according to guidelines issued by the city government on Jan. 28.

Chinese regulators unveil coronavirus response measures

The People's Bank of China (PBOC) has extended the Chinese New Year closure of numerous financial markets until Feb. 3, including stock, bond and foreign exchange markets. It also injected $174 billion into markets via reverse repo operations on the first day of resumed trading to prevent possible fund shortages due to the effects of the epidemic.

According to a central bank statement, the PBOC will "use monetary policy tools such as open market operations to provide sufficient liquidity in a timely manner to maintain reasonable and sufficient liquidity in the banking system." Moreover, China's banking and insurance regulator issued a statement calling on banks to support those who lose income as a result of the epidemic through credit support and delaying repayment requirements on mortgages and credit cards.

China's financial markets have not been immune to the epidemic which China is currently battling. The securities regulator has issued a circular calling on all securities, futures and fund management firms to encourage investors to conduct remote trading. Securities firms have also been tasked with guiding investors to act "rationally and objectively". The regulator also revealed that it will suspend evening futures trading from Feb. 3, while Reuters reported that brokerages have been instructed to limit short-selling activities. Furthermore, the foreign exchange regulator has established a temporary "green channel" to facilitate foreign exchange flows in response to the epidemic. It has also said that foreign debt limits may be loosened if necessary to support cross-border financing.

More from CLP:

Financial opening: China's Financial Sector Opens Its Door Wider to Foreign Investors

EU falls short of outright Huawei ban

The European Union (EU) will not implement an outright ban on controversial Chinese telecoms giant Huawei from participating in its 5G networks, against the wishes of U.S. President Donald Trump. The EU issued a policy document on Jan. 29 calling on its member states to draw up restrictions on suppliers of key 5G components according to merit. The U.S. has been putting pressure on the EU to impose a preemptive ban on all Chinese involvement in establishing 5G networks in EU countries.

The EU's decision came on the back of the U.K. announcing the previous day that Huawei components will be allowed into non-core networks. According to EU guidelines, member states have until the end of April to implement their 5G plans.

Despite being blacklisted by the U.S., Huawei surpassed U.S. tech giant Apple to become the world's second-largest smartphone seller in 2019 behind Samsung, according to a report by research firm Counterpoint. Although the EU's decision not to outright ban Huawei from participating in its 5G networks will be welcomed by the company and its supporters, it does not mean that Huawei will not face restrictions in Europe as the EU recommends member states limit the involvement of "high-risk" companies like Huawei in their telecoms networks.

More from CLP:

Huawei Hit: In the News: Huawei's Sales Growth Slows

5G Race: In the News: 5G Network Launches