China Increases Bond Issuance to Help Its Economy
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China Increases Bond Issuance to Help Its Economy

Move to fund infrastructure projects comes alongside unusual increase of budget-deficit target

By Stella Yifan Xie and Lingling Wei
Wed, Oct 25, 2023 11:05amGrey Clock 3 min

China ramped up efforts to stimulate its beleaguered economy, issuing additional sovereign bonds and raising its budget-deficit target, the first time it revised its budget outside the regular legislative session in more than a decade.

The country’s top legislative body approved on Tuesday a plan to raise 1 trillion yuan, equivalent to around $137 billion, in additional sovereign debt, half for use before the end of this year and half for next year, according to the official Xinhua News Agency. Policy makers said the bond issuance was intended for infrastructure projects in the wake of severe flooding and other natural disasters, Xinhua reported.

The latest stimulus, which follows a flurry of piecemeal measures such as interest-rate cuts and the lowering of mortgage costs for home buyers, signals that Beijing continues to worry about the weakness of the economic rebound it had counted on after doing away with all pandemic restrictions.

Part of the problem is a mounting debt burden for local governments in more areas of the country and a real-estate crisis that shows little sign of abating. Beijing has so far avoided offering support to households to help the economy transition into one more driven by consumption, in large part because of leader Xi Jinping’s focus on ideology and reluctance to resort to handouts to consumers.

While many economists puzzled over the timing of the announcement as growth in recent weeks has appeared to stabilize, they viewed the new debt issuance as incremental in nature and said it wouldn’t be enough to reverse longstanding headwinds for the economy such as a lack of demand from businesses and consumers.

The 1 trillion yuan of sovereign bonds make up less than 1% of China’s gross domestic product. By comparison, the stimulus China launched in the 2008 global financial crisis accounted for more than 12% of its GDP at the time.

“It’s certainly not a game changer,” said Larry Hu, chief China economist at Macquarie Group. “But it confirms that the overall policy stance stays supportive given the recovery is still fragile.”

Some economists say the stimulus bill sent an unusual signal that the central government is willing to shoulder responsibility in funding infrastructure projects, after leaving the task to local governments for much of the past few decades.

The Wall Street Journal reported in June that policy makers weighed issuing around 1 trillion yuan in special treasury bonds to help indebted local governments and prop up business confidence. The policy proposal didn’t get approved at the time by Xi, who has centralized decision-making. In the top leader’s view, austerity is preferred over stimulus, according to people close to Beijing’s policy-making process.

But the heavy flooding this summer displaced millions of people and further strained finances in northeast China, especially the province of Hebei that neighbors Beijing. Public anger flared up following the losses caused by the flood.

The decision to help the disaster-struck regions was made at a high-level meeting presided over by Xi in August, according to Tuesday’s Xinhua article.

Much of the new debt raised will be used to help with reconstruction after recent flooding, improve urban drainage and help fend off other natural disasters, according to the plan that was approved by the standing committee of the National People’s Congress this week, Xinhua said.

As a result, China’s official fiscal deficit, which doesn’t count special bonds issued by local governments, will rise to 3.8% of GDP, up from the 3% ceiling set by the government in March.

While the fresh stimulus should help China maintain 10% growth in infrastructure investments for the remainder of the year, according to Hu from Macquarie Group, it falls short of the type of stimulus that economists say China desperately needs: direct or indirect transfer of wealth to households to boost consumption.

Chinese officials last week reported a stronger-than-expected 4.9% on-year growth in the third quarter, a result that will likely ensure China will hit around 5% growth this year as desired, dimming the prospect for Beijing to unleash more relief measures urgently, economists said.

China last changed its budget outside the legislative session in 2008, when officials said they planned to spend 1 trillion yuan in funds raised through local government funding, bank loans, donations from residents and other channels to rebuild areas devastated by the Sichuan earthquake. Later that year, Beijing announced a stimulus package it billed as totaling $586 billion to bolster domestic demand and help avert a global recession.

“It is rare for the central government’s fiscal plans to be revised outside the usual budget cycle, so this move signals clear concern about near-term growth,” economists from Capital Economics said in a note to clients.

The funding gap for local officials has been exacerbated by the bursting property bubble, since local governments long have counted on land sales as a source of revenue, said Wei Yao, chief Asia economist at Société Générale.

“At minimum, Beijing recognized that local governments face structural fiscal constraints,” she said. “That’s a pretty big deal.”



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The Loneliness of the American Worker

More meetings and faceless chats. Fewer work friends. How the modern workday is fueling an epidemic of isolation.

By TE-PING CHEN
Wed, May 29, 2024 6 min

More Americans are profoundly lonely, and the way they work—more digitally linked but less personally connected—is deepening that sense of isolation.

Nick Skarda , 29 years old, works two jobs in logistics and office administration in San Diego to keep up with his bills. After a couple of years at the logistics job, he has one friend there. He says hi to co-workers at his office job but doesn’t really know any.

“I feel sort of an emptiness or lack of belonging,” he says. Juggling two jobs leaves Skarda exhausted, with little energy or time to grab drinks with co-workers . “It makes it harder to go in and give it your all if you don’t feel like anyone is there rooting for you,” he adds.

Employers and researchers are just beginning to understand how workplace shifts over the past four years are contributing to what the U.S. surgeon general declared a loneliness health epidemic last year. The alienation affects remote and in-person workers alike. Among 1-800-Flowers.com ’s 5,000 hybrid and fully on-site employees, for instance, the most popular community chat group offered by a company mental-health provider is simply called “Loneliness.”

Consider these phenomena of modern work:

It is a marked shift from even a decade ago, when bonds fostered at work helped compensate for declining participation in church , community groups and other social institutions. As the American workday becomes more faceless and scheduled , the number of U.S. adults who call themselves lonely has climbed to 58% from 46% in 2018, according to a recent Cigna poll of 10,000 Americans.

The faceless workday

The disconnection is driving up staff turnover and worker absences, making it a business issue for more employers, executives and researchers say. Cigna, the health-insurance company, estimates that loneliness is costing companies $154 billion a year in absenteeism alone.

“Work is social, it’s a lot more than a paycheck,” says James McCann , founder and chairman of 1-800-Flowers.com.

Earlier this year, 1-800-Flowers.com moved from three days in the office to four to boost a sense of connectivity among workers. It has also begun tapping workers across teams to serve as designated hosts during lunchtime, encouraging people to sit with colleagues they don’t know in common areas and chat, and suggesting conversation topics.

While today’s workers have more ways to connect than ever, “there are only so many memes and jokes you can send over Slack,” says Maëlle Gavet , chief executive of Techstars, a pre-seed fund that has invested in 4,100 startups. “We tend to have more and more people with back-to-back calendars, more meetings and less connections.”

Gavet says that is especially the case for hybrid workers on in-office days, which they tend to use to dash from one meeting to the next.

Paradoxically, meetings can make people feel lonelier—and even more so if the meetings are virtual, behavioural researchers say. A 2023 survey by employee experience and analytics company Perceptyx found people who described themselves as “very lonely” tended to have heavier meeting loads than less-lonely staffers. More than 40% of those people spent more than half their work hours in meetings.

In Cincinnati, Kelly Roehm says she came to chafe at the meetings—sometimes as many as 12—consuming her day after joining a consulting company in 2021. She would often feel her eyes glazing over as she multitasked on other screens.

“It’s like you’re a zombie, there but not there,” says Roehm, who lived 10 minutes from the office but worked mostly remotely because she says few colleagues typically came in. It is a more common setup as companies distribute teams across more locations: At Microsoft , 27% of the company’s teams all worked in the same location last year, compared with 61% in 2019.

She compares that experience with her time more than a decade ago at a company now owned by AstraZeneca . There, she enjoyed lots of social outlets at work: a Weight Watchers group and a lunchtime crochet club.

“Now if I were to think about asking, ‘Hey, do you want to participate in something like this,’ it would just sound weird,” says Roehm, who left this year to focus on her own career-consulting business. “There wasn’t that emotional attachment that made it difficult to say, it’s time to move on.”

The power of small talk

Office chitchat, sometimes an unwanted distraction, seems to provide more benefits than many people realise, says Jessica Methot , an associate professor at Rutgers University who studies social ties at work.

In a study of 100 employees at different workplaces, Methot and fellow researchers surveyed participants at points throughout the day. They found those who had engaged in small talk reported less stress and more positivity toward co-workers.

Even exchanging pleasantries with a co-worker you barely know can help, says Sarah Wright , an associate professor at New Zealand’s University of Canterbury who studies worker loneliness.

“We used to think loneliness has to be overcome by developing meaningful relationships and having that degree of intimacy,” Wright says. “More and more, though, we’re seeing it’s these day-to-day weak ties and frequency of [interactions] with people that matters.”

Such interactions are substantially harder to replicate in a virtual environment. “The default now is, I have to schedule time with you, even if it’s five minutes, instead of just picking up the phone,” says Katie Tyson , president of Hive Brands, an online food retailer founded in 2020 as a fully remote company.

The frictions add up, she says. Last fall, the company added an office in New York where employees voluntarily gather a couple of times a week to foster more cohesion.

Coming to the office, even on a hybrid basis, tends to yield a roughly 20% to 30% boost in serendipitous connections, according to Syndezo, which analysed survey data and email and messaging traffic from more than two dozen large companies.

Yet there are diminishing returns to time in person, says Philip Arkcoll , founder of Worklytics, which analyses workforce data for Fortune 500 companies. Coming in once a month provides a significant boost in ties; two or three times a month adds a little more, Worklytics data show. Once or twice a week results in a smaller increase, though, and working in-person four or five days a week makes almost no difference.

A business priority

Ernst & Young has asked managers to use the first five minutes of team calls to engage in conversation “as real human beings,” says Frank Giampietro , whose title, chief well-being officer for the Americas, was created in 2021 to help support employees during the pandemic.

The professional-services firm is also training employees to spot and reach out to co-workers struggling with issues such as isolation. To date, more than 1,600 employees have taken the training.

One challenge is that American workers have sacrificed connection for productivity, says Julie Rice , co-founder of fitness chain SoulCycle. These days, with more business contacts preferring video calls, she finds breakfast meetings and coffee dates on her calendar have been replaced with Zoom. Though efficient, such video calls are less likely to yield conversations that can turn into useful professional connections or lasting friendships, she says.

Julie Rice says that her work schedule, once packed with coffees and in-person meetups, is now an avalanche of Zooms. PHOTO: CHRISTOPHER GREGORY-RIVERA FOR THE WALL STREET JOURNAL

“Even people I’m meeting with here in New York, we’ll just Zoom,” she says.

Last year, Rice co-founded Peoplehood, a company that runs “gathers” to improve connectivity and relationship skills, and employers are signing up. One, a beauty-services business with hundreds of field employees who never see each other, asked Peoplehood to host a series of gatherings for workers to meet and share job advice. Another, a marketing company with far-flung employees, requested help after surveys showed staff wanted to feel more connected.

“Whatever relationships we had pre-Covid have sort of run out of gas,” Rice says.

Good luck prodding employees to socialise, though. Nearly all the 150-odd staff at the Pleasanton, Calif., headquarters of Shaklee, the nutrition-supplements company, used to attend annual Earth Day gatherings, which involved community service, lunch and breaking early for the day, says Jonathan Ramot , the company’s North American human-resources director. Office happy hours, bowling outings and “mix and mingles” were also robustly attended.

Now that the workforce has gone remote, last year’s Earth Day event attracted 20 staffers, even though most workers live nearby.

“We have a lot of people asking for in-person events, but when we plan them, they don’t show up,” Ramot says. “Then they complain they’re lonely.”

This past April, Shaklee instead held a mandatory get-together with the chief executive, who had relocated to Florida during the pandemic and was in town. About 100 employees gathered at a brewery for food, drinks and conversation—and no speeches from the bosses.

There was a buzz in the air, Ramot says, as staff hugged and delighted in seeing each other, some for the first time. “People were saying, I miss this,” he says.

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