Tuesday, February 7, 2023

Zero-Covid Policy Torpedoes Chinese Economy As Xi Jinping Vies For Third Term

Washington, DC – Beijing’s anxiety to attain the rather ambitious goal of uprooting Covid lock, stock, and barrel before the 20th National Congress of the Communist Party of China in October 2022, which is expected to endorse President Xi Jinping’s for a record third term in power, has plunged the Chinese economy in a deep crisis. Discontent among ordinary Chinese citizens is growing against the draconian lockdown measures. A nervous CPC has decreed that retired cadres of the Communist Party must not criticize its leadership before the crucial party congress. 

In one of the most ludicrous decisions, in the second week of May 2022, the authorities tightened pandemic restrictions in Shanghai once again just as the city was recording a fall in the number of Covid cases and the relieved citizens were emerging from a month of brutal lockdown.  

New notices were issued in several districts of Shanghai, and residents were ordered to stay home. They were barred from receiving non-essential deliveries, though it was unclear what prompted the renewed tightening. The number of new Covid-19 cases continued to fall. The notices said the tightened measures could be extended depending on the result of mass testing. Authorities had been gradually lifting isolation rules, but with the new orders, the citizens appeared to be returning to conditions at the early stage of the outbreak. Thousands of residents were forced into centralized quarantine centers for showing a positive test result or for merely having been in contact with an infected person. 

Besides Shanghai, strict lockdown norms have crippled life in other big cities in China, too, like Beijing. Chaoyang, the largest city district of Beijing, has been closed down entirely, with residents told to stay home. The Sanlitun area, a hub of bars, restaurants, and stores, is reportedly deserted. The stores are closed. Beijing residents have been forbidden from leaving the neighborhood, and all activities unrelated to virus prevention have been banned. Beijing has ordered daily testing of all residents, and parks and other avenues for leisure have been closed.  

Ordinary people are a harassed lot. “After the lockdown, I think I will require psychological help,” was the pithy comment of Zhang Chen, a resident of Shanghai, a researcher with a technology company, as quoted in the media. He has kept his luggage packed for moving to a quarantine center.  

A marketing professional in the western Pudong district of Shanghai said that quality of life had declined even as living expenses continue to rise under the lockdown. “All aspects of work are affected. I don’t know when it will be time for the lockdown to come to an end,” Lu, a woman living in Shanghai, has been quoted as saying. People are reluctant to disclose their full name for fear of backlash from the authorities, who have come down heavily on dissent. The CPC typically moves quickly to crush activism and any sign of unrest that it sees as a potential challenge to its hold on power. 

Meanwhile, everyday people, especially students, are protesting against the high-handed attitude of the authorities. On May 14, 2022, graduate students at Peking University staged a rare but peaceful protest against the university’s decision to erect a sheet-metal wall to isolate them on the campus; while allowing the faculty to move about freely. Students are also irate over regulations prohibiting them from ordering food or having visitors; and the requirement of daily testing for Covid. As a CPC mandarin tried to admonish the protesting students through a megaphone, half a dozen students broke through the sheet-metal barrier. A graduate student participating in the agitation said she had been confined to the Wanliu residential compound of the university for seven days before staging the protest. In Shanghai, some residents have also clashed with the police, volunteers, and others trying to enforce lockdowns and take people to quarantine centers.  

Videos of the protests have been shared on social media and drawn supportive comments for the agitating students. The authorities have moved in quickly to take down the critical comments, but a few have remained, especially on Twitter. “Peking University students are great! Fight for rights. A single spark can start a prairie fire,” a person has written on the social media platform Weibo, ironically referring to the title of a well-known political document written by Mao Zedong.  

The CPC has also banned retired cadres of the communist party from making hostile political speeches before the crucial Party Congress that is expected to endorse an unprecedented third term for President Xi Jinping. The General Office of the CPC central committee has issued a set of regulations titled “Strengthening Party Building among Retired Cadres in the New Era,” calling on the party to ensure that retired cadres and party members listen to and follow the guidelines of the party. Violations of disciplinary rules would be dealt with seriously, the CPC veterans have been warned. 

It is believed that the CPC guidelines are meant to gag retired party officials amid growing criticism of the zero-Covid policy of President Xi Jinping, leading to lockdowns of top cities, with millions of people being locked indoors. This has evoked public criticism and dented the popularity of Xi Jinping. The guidelines, retired party officials said, have been issued keeping the 20th National Congress of CPC in mind. In recent years, retired cadres who wish to live abroad have to apply to resign from the party; the veterans are prevented from criticizing the CPC after leaving the country. 

The lockdown in Shanghai spanning the entire city and increased restrictions have taken a heavy toll in terms of economic and human costs, the result of the zero-Covid policy of the CPC. The retail sales sector is the worst hit. A slump in demand has been recorded in China, dragging down growth in sales. In Beijing, Gucci, the Italian high-end fashion house, has suffered in its sales in the first quarter of 2022 because of the stringent restrictions.  

Global Times, the mouthpiece of the CPC, has acknowledged that the economy of China shrank rather dramatically in April 2022 as a consequence of the lockdown in several cities, with experts warning that the worst is yet to come. According to official data, the industrial production in China in April contracted by 2.9 percent compared to the same period in the previous year, while retail sales went down by 11.1 percent in the same period. This meant that China’s Gross Domestic Product fell by around three percent compared to April 2021, Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered, was quoted to have said. The growth rate in the first quarter of 2022 slipped below the target set by the CPC. Besides retail sales, China’s economy has also fallen short of expectations in industrial production and investment in fixed assets. The figures for the jobless have turned the worst in the past two years. The unemployment rate increased by 6.1 percent in April, not to count the millions of migrant workers in the country. The contraction in economic activities has been the worst since the first quarter of 2020, during the first wave of the Covid outbreak. A contraction is on the cards in the second quarter of 2022 as well, South China Morning Post has written, quoting Chinese economist Tommy Wu. 

An economist from Peking University, Cao Heping, has told Global Times that the poor figures for April were the result of the drag caused by the severe lockdown measures. The indications were already there in March 2022. The impact continued in May. The downward pressure faced in April 2022 was the most formidable challenge faced by China since the first quarter of 2020 when the Covid-19 outbreak first hit Wuhan. 

The ambition of President Xi Jinping has thus put the CPC in a Catch-22 situation. The Observer Research Foundation commented, “Xi Jinping is morphing into Emperor Xi at home.” In the American media, he has been described as “China’s Napoleon.” He is sarcastically called in China “chairman of everything.” To ensure his smooth election to the third term in power, the CPC is pursuing a draconian zero-Covid policy at home. This has hit the Chinese economy hard. 

In the absence of democracy at home, the only legitimacy of the CPC to remain in power is to maintain a robust growth rate. This explains the obsession of the successive rulers of China with a high rate of growth. Now that all the countries in the world are relaxing Covid norms and veering around to the opinion that one will have to live with the virus, the zero-Covid policy of China is poised to derail the Chinese economy and knock the bottom out of CPC’s legitimacy.


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