Why “Covid zero” is now the biggest China threat
China is stuck in the lockdown mentality because it initially worked. It’s now strangling the economy and beginning to trigger serious unrest. Originally published in the Australian Financial Review.
A war over Taiwan? A clash in the South China Sea? Throw in, too, the danger of a financial crisis sparked by a property crash. There’s no shortage of catastrophes canvassed for China, which, for the moment, haven’t eventuated.
But anyone worried about risk in China should focus their attention elsewhere for the moment, on Beijing’s dogged adherence to COVID Zero – a policy that is strangling the economy and triggering serious unrest.
To take one snapshot, consider the possible flow-on effects of the now near daily riots outside the Foxconn factories that manufacture the bulk of the world’s iPhones, near Zhengzhou in central China.
The protests – triggered by workers who either fled COVID lockdowns or worried about being forced to live alongside people with the virus, or were simply angry at being underpaid – could hit everything from Apple’s share price, the availability of new phones to multiple top-level political careers in both China and Taiwan. (Foxconn is owned by a Taiwanese tycoon with political ambitions.)
Multiple the emerging chaos at the Apple factories many times over, with lockdowns either underway or threatened in Beijing and the upscale and downmarket manufacturing centres around Shenzhen and Guangzhou in southern China, and the impact at home and abroad becomes dire.
Local officials are floundering under conflicting objectives dictated by the centre. On the one hand, they are being told to “maximise people’s health”; on other, to “minimise impact on the economy”.
The two cannot be reconciled, and as long as Xi Jinping adheres to a COVID Zero mentality, lockdowns will win, and the economy will suffer. Growth this year will be lucky to half of the 5.5 per cent official target.
Stuck in the past
China stuck to COVID Zero because, initially, the policy worked. The party-state’s unparalleled lockdown powers and contacting tracing apparatus allowed it to suppress the virus and revive growth faster than any other large economy.
This initial success reinforced the ruling communist party’s great boast and most potent internal propaganda point – of systemic superiority over feckless democracies such as the US which had failed to control the virus, and endangered their citizens.
In the US, more one million people died with or from COVID-19. In China, the official toll ticked up by a few deaths in recent weeks, to just over 5300. Remarkably, the number had not moved for about a year.
Although the Chinese numbers are doubtless understated, the contrast with the US is nonetheless real and stark. Or at least it was, until the omicron variant penetrated Beijing’s defences earlier this year and the lockdowns returned.
With the COVID Zero policy now unravelling, Beijing’s claims of systemic superiority are starting to look threadbare.
One positive case means that your entire apartment building is sealed off for five days. If you are marked as a “close contact”, perhaps for being in the same bar a few days earlier as someone who tested positive, you might be carted off to quarantine.
In the early days, the COVID Zero policy had a rational basis. China has a patchwork health system – not bad in some wealthier cities, but poor to non-existent in many parts of the country.
In other words, if the country had dropped its guard, tens of thousands of people – running into the millions according to some modelling – would get sick and die. Many elderly men, as long-time smokers, are particularly vulnerable to a respiratory disease.
The shield that has allowed other countries to re-open, mass vaccinations, hasn’t proved to be a release valve in China.
China’s homemade vaccines aren’t as effective as western ones for starters, but Beijing so far refuses to import any, for nationalistic reasons.
Incredibly, in a country with vast, coercive powers at its fingertips, vaccinations rates themselves are lagging, especially amongst the elderly. About 20 million Chinese aged over 80 have not yet had a booster shot.
The main levers that the government uses to encourage vaccinations, such as being able to go to work and send your children to school, don’t work with the elderly.
On top of that, after two years of listening to the government’s boasts about how they had controlled the virus and protected the population, many Chinese thought they didn’t need to get booster shots anyway.
In the language of US street gangs, the party-state has been getting high on its own supply – in this case, on propaganda about what a wonderful job it has done. Now it finds it cannot walk back its message.
So when will China re-open?
Last week, I would have said not until after the northern winter, and not before the National People’s Congress in March, when a new cabinet will be appointed. And probably not until vaccination rates are up among the elderly, which takes time.
But over the weekend, protests began spreading after at least 10 people died in an apartment fire in Urumqi, in Xinjiang. Fire trucks weren’t able to reach the blaze because of strict COVID-19 lockdown protocols.
The Chinese internet erupted with fury at the deaths, as though a line had been crossed. In Shanghai, in scenes not seen for decades, protesters gathered at Urumqi Road in the city centre, yelling slogans attacking Xi Jinping and the communist party.
It is now clear that further lockdowns will only work with brutal enforcement. The Chinese can put up with a lot, but many have now reached their breaking point.
The local internet is full of angry comments from Chinese watching the World Cup in Qatar and being shocked to see such large crowds without masks.
If football fans from around the world can do that, they ask, then why can’t we?