Behind the end of China’s zero-Covid policies – Victor Shih

 

Victor Shih

Strategic analyst Victor Shih, author of Coalitions of the Weak, (2022), looks at China’s sudden exit from its contested zero-Covid policy. Was it because of the protests, was it planned before, and what does it mean for the country’s domestic policies and economics? A discussion at the New Yorker on how decisions at the  top-level take place.

The New Yorker:

Were these policy changes announced because of the protests, or for economic reasons?

We don’t have a lot of detail. But, as far as some of us can piece together, there has been a debate among top-level leaders. And we definitely can see the debate among experts who advise the Chinese government on the degree of opening. For a long time, there has been a side which strongly advocated for the continuation of a “zero covid” policy. But in recent months, even before the protests began, there were experts in the Chinese government who increasingly spoke out in favor of a more relaxed approach, emphasizing vaccination instead of draconian levels of quarantine. And I think the protests perhaps tipped things a little bit more in favor of the opening camp, or at least some degree of opening. It is unclear at this point how much opening there will be.

It really speaks to the challenge of authoritarian government, especially a kind of dictatorship that controls all forms of media, and has explicitly ordered the media to obey everything the government wants to convey. Sometimes even the Politburo itself does not get a lot of information about the level of satisfaction or dissatisfaction in the population. It took something like a multi-city protest to really make Xi Jinping realize that perhaps there is a groundswell of demand for a more relaxed approach.

Your answer implies a certain amount of debate on this, that it’s not just Xi making these decisions on his own. Is that how you see it?

At the highest level, among Politburo Standing Committee members, we don’t know whether there has been a debate. I suspect that there has been—not an open debate, but someone must have pushed some of this expert opinion to the Politburo level for the opening that we’re seeing to happen so quickly. Briefing material about why opening is potentially justifiable, and potentially not so disastrous for China, must have been there already or it wouldn’t have happened so fast after these protests.

I think that someone like Sun Chunlan, who is in charge of health policies in China, must have read a lot of this briefing material. Whether she was in favor of more opening to begin with is unclear. In fact, I think that may not be the case. It might have been someone else who has been advocating for more opening. The rumor is that Wang Huning, who’s a Politburo [Standing] Committee member, and has been an adviser to Xi Jinping since he took office, was or has been the person pushing for a more relaxed approach to covid. But these are just rumors…

Were you surprised by how quickly, at least publicly, China backed away from its covid policies? People I’ve talked to who know more than me seemed a little bit surprised.

I was surprised. There was this rumor that Wang Huning was advocating it for quite some time, but I never really believed in that rumor. I don’t really know if that’s the case. But it would take an advocate at that level to make it happen. There are two surprising aspects of this. One is that, in some places at least, we are seeing lockdown policies being liberalized very rapidly. And even in Beijing. My previous assessment had been “Oh, there could be relaxation in other parts of China, but certainly not Beijing, where the leadership lives.”

More at the New Yorker.

Victor Shih is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.

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How China self-imposed its Covid trap – Ian Johnson

 

Ian Johnson

Now China suddenly started to retract its zero-Covid strategy, strategic analyst Ian Johnson looks back at how the country got itself into this unprecedented mess at the Prospect. The economic slowdown and high unemployment “are all underlying issues that actually make the government’s challenge greater than first appears,” says Ian Johnson.

The Prospect:

First, China’s domestically produced vaccine is not very good. According to a study from Hong Kong, the Sinovac vaccine has an effectiveness of just 60 percent. Furthermore, its recipients “were three times more vulnerable to die compared to those inoculated with the German Pfizer-BioNTech vaccine.” The Chinese company Fosun Pharma signed a joint venture with BioNTech to produce an mRNA vaccine but has been waiting for approval for over a year. Ian Johnson, the Stephen A. Schwarzman Senior Fellow for China Studies at the Council on Foreign Relations, believes China’s refusal to approve the vaccine is because they “want to have their own domestic champion” to develop the vaccine. “The contract from the Chinese government to make 1.4 billion vaccines and another 1.4 billion boosters, that is a lot of money.” he told the Prospect.

Second, while Western countries prioritized vaccinating the elderly, China has not. While about 90 percent of the whole population has gotten a primary sequence of shots, just 66 percent of those over 80 years old have—and just 40 percent have gotten a booster shot…

Economically, China’s lockdowns have had brutal effects in a country that prides itself on its economic strength. Analysts estimate GDP growth will be just 3 percent in 2022—the worst figure since 1990, aside from the pit of the pandemic in 2020. The CSI 300 Index is down 22 percent since the beginning of the year, and in October, 207.7 million people, responsible for one-fifth of China’s 2021 GDP, were under some form of lockdown policy. The economic hardships of COVID lockdowns are particularly affecting the younger generation, with youth unemployment at 18.7 percent in August. There is “a sense of let’s get back to the times when China’s economy was growing faster and tomorrow was a better day,” says Johnson. The economic slowdown and high unemployment “are all underlying issues that actually make the government’s challenge greater than first appears.”

President Xi has backed himself into a corner. Either he can loosen lockdown restrictions as protesters have requested, and risk carnage, or quadruple down on zero-COVID, risking further discontent. It appears Xi will go with the first option, as sources claim China will ease quarantine restrictions and mass testing. “The problem is, when they do that, they are going to have to accept that a lot of people are going to die. No matter how good the vaccine rate is or how good the vaccine is, the fact is there are people who are going to die from COVID,” says Johnson.

As for the protests, Johnson believes they are a significant moment but not a turning point in China. The protests “may be a harbinger of the future challenges the party faces in keeping a lid on things as it enters a period of slow economic growth.” China has made efforts to prevent protests from continuing—sending police to the protest locations, placing barriers along the routes, and shutting down a small protest and arresting protesters in Hangzhou. The Biden administration has supported the right of the Chinese to protest, with Republican leaders criticizing his response as lackluster. But for President Xi, foreign criticisms are the least of his problems.

More at the Prospect.

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How tough was the Shanghai quarantine? – Mark Schaub

 

Mark Schaub

China lawyer Mark Schaub returned to London after three months of quarantine in Shanghai, including a COVID camp. He looks back at the experience in his resumed China Chit-Chat.  How bad was it really? How different is it from the US? And: are his Chinese friends leaving Shanghai?

Mark Schaub:

How tough was Shanghai’s lockdown?

My impression is that Shanghai’s lockdown was tougher than similar European lockdowns – no going to the supermarket, no pharmacies, no exercise – but not as inhumane as often portrayed in Western media. Many poorer people suffered greatly but this is not unique to China’s lockdown.

One group that suffered in particular were the elderly – Shanghai’s lockdown was in many ways an e-lockdown. Many elderly Chinese people have modest lives and do not own a smart phone. A smart phone is needed to show your PCR test result and obtain the green code. Without a green code you cannot not go about your normal life (e.g. get on a bus, enter a shop or even come back home). Many older residents also rely upon their family – isolation hit them especially hard.

I think many forget how tough Western lockdowns were – in London there was no mixing outside your social bubble, difficulties accessing medical care, you could not visit critically ill loved ones, no funerals, … it was a lonely and isolating time. Shanghai’s had all that toughness and more … but its advantage was its relative brevity and geographic containment. If China was doing its lockdown when the West was doing theirs I assume it would not have been much of a media topic.

More in the China Chit-Chat.

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How did the state deal with the Wuhan lockdown? – Ian Johnson

 

Ian Johnson

How will people remember the Wuhan lockdown, two years ago at the start of the global coronavirus crisis, asks CFR-scholar Ian Johnson in a debate at the NYU’s Institute for Public Knowledge on the book “The Wuhan Lockdown”, by Yang Guobin. How successful has the state been in suppressing the knowledge of this hiccup in communist rule in Wuhan, Ian Johnson asks the author.

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How the Beijing Winter Olympics 2022 became a headache – Ian Johnson

 

Ian Johnson

When China won 2015 the Beijing Winter Olympics in 2022, it was seen as a huge win after the successful 2008 Olympics. But the event has developed into a major headache, and it is not only because of the coronavirus, writers CFR-scholar Ian Johnson on the CFR website.

Ian Johnson:

The reality is that these games have become yet another burden that China has to bear. In 2008, when Beijing hosted the summer games, a sense of excitement was palpable in Beijing and even in places such as Hong Kong, where many felt proud that China was hosting the world’s biggest sporting event. Contrast that with today, when the city-state’s independent political and cultural scene have been destroyed, as part of Beijing’s intolerance of any pluralism. While many Chinese people are still proud of their country’s accomplishments, the games will be yet another chapter in China’s forever lockdown.

None of this could have been foreseen in 2015. But big events have a way of developing their own dynamic.

The games may go off without a hitch, Xi will gain his third term later this year, and China’s authoritarian turn will seem unstoppable. If that happens, the games may be seen as a sign of China’s ability to forge alliances and stare down global criticism. The leaders who join Xi on the reviewing stand may even become symbolic of a new alliance of authoritarian states that support each other’s undemocratic practices.

But China might not be the master of events. Some athletes might break rules and protest, despite the International Olympic Committee and the Chinese government warning against such moves. The pandemic, which the government has so far held at bay, might slip through, and cause a major outbreak, perhaps not in Beijing during the games, but afterwards.

And on some deeper level the games might cause some ordinary Chinese people to wonder why the leadership is fixated on parades and congresses and lockdowns instead of reopening the country and returning it to the conditions that has seen it flourish for the past four decades.

More at the CFR website.

Ian Johnson is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

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Travel startups dealing with the COVID-19 crisis – William Bao Bean

 

William Bao Bean

Leading VC William Bao Bean explains how travel startups managed through the COVID-19 crisis at PhocusWire Pulse. In China, they survived by focusing on booming domestic travel, but the lack of international travel hit some severely. Some of the travel startups he guided to the market had to give up their efforts to enter the Asian market, while others adjusted to the difficult market conditions.

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China used the pandemic by accelerating its digital transformation – Winston Wenyan Ma

 

Winston Ma

Never waste a good crisis, says investment expert Winston Wenyan Ma, quoting the other Winston, Winston Churchill. China used the pandemic crisis to accelerate its already ongoing digital transformation at a panel discussion to make a difference, he tells at the ORF at a panel discussion.

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Eating wild animals in China, put into perspective – Arnold Ma

 

Arnold Ma

Bats as a possible source for the coronavirus were de latest incident based on the Western myth all Chinese eat wild animals where possible. Cultural analyst Arnold Ma puts China’s eating habits into perspective, for his vlog.

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Please follow a

Beijing Winter games 2022 might save the Olympic brand – Arnold Ma

 

Arnold Ma

Running the Olympic games under a pandemic in Tokyo might hurt the Olympic brand, as many negative incidents have shown already. But marketing expert Arnold Ma is sure the Beijing Winter Olympics in 2022 will do the opposite, he tells in Campaign Asia.

Arnold Ma:

“It reflects worse on Tokyo rather than the Olympics brand—cases are rising there and they have been pushing for it to go ahead. The Olympics rely heavily on how well the host country organises the event, so it will be affecting the fame of the country, instead of the games itself.

“I think it’s a huge positive that Winter 2022 will be in China, a good move for the Olympics brand. I’m confident it will be a huge success and provide an example of how an Olympic event can be run during a pandemic. This will further isolate any negative connotations to Tokyo rather than the Olympic brand itself. China is known for being able to host large-scale events extremely efficiently, taking full advantage of a centralised government and being able to pull in huge manpower to ensure organisation and order. Further, China has been Covid-free for several months—largely due to the way they contained the spread of the virus, prevention over cure. All of this will bring more positive equity to the Olympic brand.”

More in Campaign Asia.

Arnold Ma is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

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China consumption is back on post-COVID19 recovery track – Ashley Dudarenok

 

Ashley Dudarenok

China’s consumption is growing again and sales growth is recovering on a solid post-COVID10 track, says marketing expert Ashley Dudarenok on her vlog. Government, tech companies, and consumers have their noses in the same direction.

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How to start your marketing in China – Ashley Dudarenok

 

Ashley Dudarenok interviewed at Marketing Freaks

China’s economy is booming post-corona, while much of the rest of the world is still suffering. Marketing expert Ashley Dudarenok explains how foreign companies can start their marketing in China to tap into the current opportunities in Marketing Freaks.

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Why factories might outperform in China’s 2021 New Year – Shaun Rein

 

Shaun Rein

Typically, China’s economy comes to a standstill during the annual Chinese New Year, but not in 2021, explains business analyst Shaun Rein to CNBCTV. GovermentalCovid-19 restrictions make it tough for migrant workers to return home, and double salaries at the factories might encourage them to continue working during the festival. Other industries like travel and leisure might suffer, though.

CNBCTV:

Shaun Rein, Managing Director at China Market Research Group on Wednesday said he expects the factory sector to outperform the expectations.

“The factories are offering incentives for workers to stay, they are giving double payment on their salaries. Meantime a lot of these workers have decided to stay where they work and so factories are going full steam ahead in January and February, so we expect that the factory sector is going to outperform a lot of expectations,” he told CNBC-TV18.

“You are also going to see outperforming in manufacturing and on eCommerce,” he added.

Rein’s observations come at a time when the Chinese migrant workers return home during the Chinese Lunar New Year period. Coming in the backdrop of almost a year of the coronavirus pandemic with reports showing re-emergence of the cases in January, the Chinese government got nervous and a lot of provincial governments made the COVID test mandatory.

China’s central government said that between January 28 and March 8—the six week period—there are going to be high restrictions on internal travel.

These new instructions on travel will hit the travel and leisure industry negatively, Rein said.

More at CNBCTV.

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300 million migrant workers asked to stay put to avoid another corona crisis – Arthur Kroeber

 

Arthur Kroeber

China’s authorities are trying to avoid 300 million migrant workers to go home for Chinese New Year, in an effort to avoid another embarrassing corona lockdown like in 2020, says leading economist Arthur Kroeber in the New York Times.

The New York Times:

The Chinese government is trying to avoid a major outbreak that could undermine the country’s economic recovery. Last year’s lockdowns tipped China’s economy into its first contraction in nearly a half-century, but it later bounced back as officials ordered its state-run banks to lend and factories to open. Earlier this month, China reported that its economy grew 2.3 percent in 2020, most likely outpacing other large countries, including the United States.

Getting people to spend money has been less effective. Another widespread outbreak would cast a pall on any pent-up demand for shopping that usually accompanies the Lunar New Year holiday.

“What would be really damaging is if the virus spread enough to have to shut down more factories and construction sites,” said Arthur Kroeber, managing director of Gavekal Dragonomics, an independent economic research firm.

Mr. Kroeber said the authorities did not seem eager for a repeat of last year’s draconian response.

“They are trying to walk a tightrope,” Mr. Kroeber said. To impose harsh rules on gatherings for a second year “would be embarrassing,” he added.

More in the New York Times.

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China managed the corona crisis pretty well – Ben Cavender

 

Ben Cavender

The corona crisis might still be ravaging economies worldwide, 2020 looks to end pretty well for China, says Shanghai-based business analyst Ben Cavender in the state-owned China Daily. “While there are still underlying weak spots in the economy that have been slower to recover, the overall story is very positive,” adds Cavender.

China Daily:

The world’s second-largest economy saw growth of 4.9 percent year-on-year in the third quarter, compared with 3.2 percent in the second quarter, according to data released on Oct 19 by the National Bureau of Statistics.

The nation’s GDP growth reached 0.7 percent over the first three quarters of 2020, after the economy contracted by 6.8 percent from January to March due to the national lockdown caused by the COVID-19 pandemic.

Ben Cavender, managing director at China Market Research Group, said, “It’s clear that China has managed a remarkable recovery and that policymakers have done a good job of navigating a very uncertain economic climate.

“China’s strong economy should be seen as a good thing right now, as China is such an important export market for so many other countries,” Cavender said. “The fact that China is still buying and hasn’t seen an economic collapse is important for the world, as China right now is a lifeline for a lot of multinational businesses that have seen severe reductions in sales in their home markets.”

He added that “while there are still underlying weak spots in the economy that have been slower to recover, the overall story is very positive, and China will come out of 2020 in a very strong position economically”…

Cavender of China Market Research Group said that compared with most other countries that have either not been strict enough in enforcing policy or have had difficulty in controlling the outbreak, the key to China’s success is its “ability to put in place a coordinated, aggressive early response, coupled with building out robust systems for contact tracing as well as identifying inbound cases coming from returning travelers entering the country”.

More at the China Daily.

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

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What might a Trump win mean for the trade war – Ben Cavender

 

Ben Cavender

Trump’s trade war against China has already been put in a backseat during the Covid-19 crisis, and also when US president Trump wins the upcoming elections, the state of the economy might not allow him to uphold the current tariffs, says business analyst Ben Cavender to the Jing Daily.

Jing Daily:

According to Ben Cavender, the managing director at China Market Research Group, the trade war has taken a backseat to COVID-19 and the economy over the last couple of months. “If Trump wins, there will be a lot of discussion about the general economy, so there might not be the bandwidth to keep the tariffs up. The focus will be more on how to stabilize things in the US economy.”…

“I think also we are probably looking at a scenario where he tries to de-escalate on the tariffs front,” Cavender said, adding, “calling things “a win,” even if nothing really changes.

“It’s unlikely we’ll see more aggressive tariffs — particularly as the dollar is weakening right now. So this should, in theory, make US exports more appealing to overseas buyers more — so this adds to his story of resetting the trade balance.’”

Should Trump be re-elected, a continuation of taxes on foreign luxury goods could have a positive impact on fashion companies in the US — although those benefits are more likely to be felt by bigger over small to medium-sized businesses. Smaller companies should also be further hampered by the recent announcement that Trump is delaying additional Coronavirus stimulus packages.

As Cavender explained, Trump has always favored big corporations, and this is unlikely to change. “With Trump, you’re likely to see large amounts of interest directed to corporations, and if you have the connections, you’ll have more access to unrestricted cash to use any way you want,” Cavender explained…

The fashion industry is now undergoing a Darwinian-style overhaul, and not all labels will survive, regardless of the election outcome. But luxury and China are intrinsically intertwined, and China’s consumers have been pivotal in this recovery. As far back as March, they turned to revenge spending in China’s stores. On International Women’s Day (March 8), brands on Tmall experienced double-digit sales growth, as compared to last year.

Cavender confirmed that labels are reliant on favorable relations with China now more than ever, and the sales numbers bear that out. He added: “the brands doing well are the ones that have been able to connect with Chinese consumers digitally during the crisis.” And, if the US continues its tariffs on European luxury, local brands are unlikely to ever replace those sales among domestic consumers.

Perhaps jewelry might benefit, as consumers could swap in a national brand, said Ortelli. But in reality, that is unlikely, he added: “Due to the unique attachment consumers have to their preferred labels. Honestly, in luxury, the consumer usually has brand loyalty and is not looking for an alternative.”

More in the Jing Daily.

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.

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