Chinese leadership appears to have put the restrictive ‘Zero-Covid’ approach on the back-burner for now, even though some cities have been witnessing high infection numbers.
This comes amid the faltering economy of China. Chinese President Xi Jinping has declared the 20th National Congress of the Communist Party of China a ‘complete success’, where he secured a third term.
However, the party will have to tackle the most challenging period in decades as a “pervasive sense of pessimism envelopes people” in China, the Sydney Morning Herald reported. The most important challenge that the Xi-led CCP government faces is the slowing of the Chinese economy.
Amid Covid-19 outbreaks, China’s economy will unlikely move into the “highest gear in the near term”, The Japan Times reported. This comes even as China is the last among major countries which do not treat COVID-19 as endemic.
As per the news report, China’s economy could come out of isolation in 2023. However, many businesses in China, particularly customer-facing ones, are afraid that they might not be able to survive till next year as China is still fighting some of the biggest outbreaks.
According to a recent analysis (December 8) by ‘NATIXIS’ (French Corporate & Investment Bank), uncertainty regarding China’s economic growth in the upcoming year was “unprecedentedly high”.
As per the analysis, China’s economic trajectory, depended upon the ‘speed and smoothness’ of opening up from the ‘Zero-Covid’ restrictions, boosting consumption and revival of economic activities.
Further, the success of the country’s vaccination programme, targeting the most vulnerable population segments, would remain an important indicator for assessing any potential risks, following relaxations in Covid-related restrictions.
If China reconnects with the global market in 2023, the country’s economy will recover from its slowdown in decades and the prospects of a global recession in 2023 could reduce, The Japan Times reported. However, the expectation is in contrast to the economic reality that is taking place in China.
China has been adhering to a strict Covid policy, which includes mass testing, lockdown and travel restrictions to reduce the number of coronavirus cases. China’s economy is expected to reach around 3 per cent in 2022 which shows that it will miss its target of around 5.5 per cent.
According to the economic data for October, exports in China reduced, inflation slowed down, new bank lending tumbled, the property market downturn further increased and retail sales fell for the first time after Shanghai’s lockdown during April-May, as per the news report.
The culinary tourism business of Brian Bergey and his wife Ruixi Hu has been impacted in China due to Covid-19 restrictions, as per The Japan Times report. Brian Bergey stated that he is ‘fairly pessimistic’ about the reopening of China. He said ‘Their Lost Plate Company’, which has been organising food tours in several Chinese cities since 2015, will move to Southeast Asia.
Earlier this month, JP Morgan estimated that cities which reported over 10 new Covid-19 cases accounted for 780 million people and 62.2 per cent of GDP. Vaccination and booster rates continue to remain low in China, particularly among vulnerable people.
Even though Xi Jinping is focused on the importance of ideology, economic growth remains important for the people of China. In comparison to the economic heydays of the 2000s and 2010s, people in China are no longer as certain their quality of living will improve or if the next generation will be able to live a better life.
This pessimism is especially visible among the young people in China. Urban youth unemployment has reached 20 per cent, with many of them trying to find work and some are even disillusioned with work itself, as per the report. The ‘lying flat’ movement which is similar to ‘quiet quitting’ in the United States or Australia has gone viral and the urge to work to better one’s situation in life no longer remains strong.
Some of China’s economic downtown could likely be due to the zero-Covid policy, which appears to have no end as cities in China continue to be under lockdown due to Covid-19 cases. The lockdown imposed by Chinese authorities has affected businesses and people’s livelihoods, impacting both supply and demand.
Notably, China has been adhering to a zero-Covid policy since the emergence of coronavirus cases, which includes mass testing and lockdowns. Amid the economic slowdown, Chinese President Xi Jinping is making attempts to “diversify the source of party legitimacy.” Writing in The Sydney Morning Herald, Yun Jiang argued that two more sources of legitimacy have appeared from the party congress, which includes common prosperity and nationalism.
The report described ‘common prosperity’ as Xi Jinping’s ‘security policy’ to reduce inequality and improve the quality of life for ordinary people. So far, it is too early to analyse whether inequality is reducing, as the term was announced a year back.
Yun Jiang suggested that the policy has so far resulted in some big companies turning to philanthropy.