U.S. and China Play to Home Audiences on Virus

(Bloomberg) --

The Trump administration's relentless attacks on China over the cause of the coronavirus outbreak are targeted at a domestic audience in an election year. But they may have the effect of emboldening Beijing's leaders.

President Donald Trump yesterday promised a “conclusive” report on the Chinese origins of Covid-19, shortly after Secretary of State Michael Pompeo said — without providing proof — that “enormous evidence” showed the outbreak began in a Wuhan laboratory.

For weeks now, China has aggressively pushed back at the U.S., Europe and Australia over criticism about its handling of the virus. Last week it called the Wuhan lab allegations “baseless,” and even released an animated video mocking the U.S. response. U.S. intelligence agencies don't believe the coronavirus was created by humans or genetically modified in China.

Each side has its own imperatives. Trump needs to counter criticism of his own response to the virus. Beijing's leaders see their economy worsening, and whipping up nationalism is a tried-and-true distraction.

But it also reflects China's increased confidence. Since Trump took office, China has absorbed blows from Trump on everything from trade to human rights to security concerns over 5G networks. And yet the world's second-biggest economy has shown it is key to global supply chains and that it has deep investment pockets. An absence of global leadership by the U.S. under Trump hands China a potential advantage.

China knows it will be a punching bag for both parties in the run-up to the U.S. presidential election. But it also realizes it can afford to hit back.

Global Headlines

Center stage | Trump prodded an anxious nation to reopen for business with a combination of optimism and grievance, seeking to move past the pandemic that has killed more than 67,000 Americans and imperiled his hopes for a second term. In a virtual town hall at the Lincoln Memorial, the president said he wants a return to raucous political rallies in packed arenas and complained that some states “aren't going fast enough” to ease restrictions.

Keeping watch | With Congress turning its attention to negotiations over another round of economic stimulus, Laura Davison and Saleha Mohsin examine the accountability panels tasked with overseeing the nearly $3 trillion in virus aid lawmakers have approved so far.

Democratic Senator Elizabeth Warren is questioning whether the Pentagon's policy of increasing payment rates for contractors — intended to keep assembly lines humming during the outbreak — has enough oversight.

Baby steps | Millions of workers across Europe are returning to their jobs today as key nations begin easing the lockdowns that have devastated their economies. Italian Prime Minister Giuseppe Conte faces increasing pressure to speed up his recovery plans after new deaths and infections fell to the lowest since the shutdown began March 10.

No distancing here | President Jair Bolsonaro appeared in public yesterday without a face mask to cheer on a large protest against Brazil's top court and Congress, even as the nation's virus toll tops 7,000 and the economy sinks. Bolsonaro is grappling with crises on multiple fronts: His former justice minister claims he faced pressure to interfere in police operations, and a court has blocked him from nominating a close ally as national police chief.

Murky moment | Venezuela said it foiled a plan to “assassinate leaders of the government,” with eight men killed and two arrested as they used speed boats to try and enter along its northern coast near the capital Caracas. Interior Minister Nestor Reverol said the “mercenaries” were backed by Colombia and the U.S., but Colombia's government rejected any link to the incident. Venezuela's opposition said the alleged attack appeared staged.

What to Watch This Week

Texas Representative John Ratcliffe appears tomorrow before the Senate Intelligence Committee on his candidacy as Trump's next spy chief.
The U.S. Supreme Court will hear its first-ever argument by telephone today, opening a two-week remote session that includes disputes over subpoenas for Trump's financial records.
New Zealand Prime Minister Jacinda Ardern will join an Australian cabinet meeting tomorrow to discuss the eventual re-opening of borders between the nations.
Polish President Andrzej Duda is seeking re-election on Sunday in a specially designed only-by-mail ballot that international election monitors have criticized for being vulnerable to fraud.
The European Commission publishes its official forecast on the depth of the regional recession on Wednesday.
Prime Minister Boris Johnson is due to decide on Thursday if it's safe to ease measures after the U.K. lockdown runs out.

Thanks to all who responded to our pop quiz Friday and congratulations to Elaine Milbank who was first to name India's Narendra Modi as the leader locked in a battle with his states over the banning of alcohol sales during the virus shutdown. Tell us how we're doing or what we're missing at balancepower@bloomberg.net.

And finally ... Millions of Brazilians living in the densely populated favelas — already dealing with violent shootouts and open sewage — are struggling to embrace social distancing while living cheek by jowl in haphazard buildings and crowded homes. Residents of Paraisopolis, Sao Paulo's second-largest favela, are providing everything from 10,000 free meals and private ambulances to a grid system of volunteer “street presidents,” who check to make sure everyone in their area is OK.