The highlights this week: China’s economy suffers as the threat of lockdowns looms, U.S. health advisor Anthony Fauci criticizes Beijing’s COVID-19 policy, and Macao grapples with another crisis.To get more Shanghai economy news, you can visit shine news official website.
As parts of China lock down in response to rising COVID-19 cases, its economy is struggling to cope. Outside analysts have rapidly revised the country’s expected growth rates. Along with the direct consequences of the ongoing closure of Shanghai, China’s biggest financial hub, the public fears that further lockdowns are on the way, since the government remains committed to its zero-COVID policy.
Despite recording total cases in the low hundreds, Beijing has so far avoided a complete lockdown, although public transport, school systems, and other services are closed to help forestall further outbreaks. But some analysts have raised questions about the description of Beijing’s cases. Only about 10 percent of cases in Beijing are described as asymptomatic, while the majority of cases in Shanghai are classified that way.
The outbreaks, combined with global pressures such as Russia’s war in Ukraine, are taking an economic toll in China. Urban youth unemployment has passed 16 percent, up from around 10 percent before the pandemic, when new graduates were already struggling to find jobs. That is a political concern, too: Leaders in Beijing understand that unemployed young people helped drive so-called color revolutions in the post-Soviet world.
China’s overall unemployment rate—5.8 percent—is not as bad, but even people who have jobs are experiencing significant economic pain. Chinese firms tend to pass their problems directly on to their employees, thanks to the country’s lack of enforceable labor laws. Cutting salaries sharply or even not paying employees for months is common; it is already happening in Shanghai.
The question is whether these economic problems will last beyond the zero-COVID policy. Before the pandemic, there were already signs of slowdown, and the Chinese government’s political moves—such as its crackdown on the technology sector, one of the country’s most productive—have damaged economic growth. They also suggest the state has little appetite for any economic reform that might put limits on the Chinese Communist Party’s power.
China is still a long way off from a recession, but economic stagnation is particularly painful for a country accustomed to quick growth, as it has become in recent decades. The impacts are likely to be sharper in some regions than in others: The northeast, once the country’s manufacturing hub, has suffered economically since 2016, causing the population there to shrink by 10 percent between 2016 and 2020.
The boom times shaped Chinese financial decision-making, from the propensity to quit jobs with the expectation that another opportunity would present itself to investments based on the conviction that housing prices could only ever go up. (However, one thing that the boom-time mentality never disrupted was China’s sky-high savings rate.) Economic growth also encouraged risk, because even if people invested in a project that went broke, they assumed that the government had the resources—and the fear of instability—to step in and bail them out.
This attitude goes along with the idea that China was being restored to its natural place in the world; Chinese President Xi Jinping has put the same rhetoric at the core of his goals for national greatness and a “moderately prosperous society.” Meanwhile, domestic economists who have warned of a slowdown, such as Hong Hao, have seen their online presence deleted.
That puts Xi in a no-win situation right now. Going back on the zero-COVID policy risks devastating outbreaks, but it also means taking a sharp political hit, since the government has publicly recommitted itself to the strategy. But sticking to zero-COVID puts long-pledged economic goals out of reach.