It Never Rains In China, It Just COVIDs

New Lockdowns In Hebei Province And Shenzen Add To China's Economic Misery

China’s “break” from Zero COVID madness has ended, not with a whimper, but a bang—actually, a fresh round of lockdowns, including in the tech hub city of Shenzen, next to Hong Kong.

In Hebei, the province surrounding the capital, Beijing, authorities on Tuesday ordered almost four million people to stay at home until the end of the week as officials scrambled to bring a minor flare-up of COVID-19 under control.

In the southern tech hub of Shenzhen, officials suspended large events and ordered the closure of entertainment venues and wholesale markets in the Longhua district, following the announcement of similar measures a day earlier in three other districts.

Shenzhen’s latest measures, which include closing the world’s largest wholesale electronics market, bring nearly half of the city’s 18 million residents under tightened COVID curbs.

In addition, 3 million residents in Dalian were placed in lockdown, while 13 million citizens in Tianjin will undergo mass testing.

That’s some 16 million citizens under lockdown and 29 million enduring fresh COVID-19 restrictions.

At the same time, the recent outbreaks have caused schools and universities across China to postpone classes and suspend offline teaching.

Zero COVID has become China’s “new normal.”

Virus Still On The Decline

Perversely, these latest lockdowns come even though COVID cases across China are still on the decline. While there was a brief one-day spike from August 28 to August 29, the overarching trend in COVID cases in China remains down.

As if to underscore the mild nature of the viral strain China thinks it can eradicate thorugh repeated lockdown policies, a sizable fraction of the cases in Shenzen are asymptomatic.

Shenzhen reported 24 new locally transmitted confirmed cases and 11 new locally transmitted asymptomatic cases of COVID-19 yesterday.

The city also reported three imported confirmed cases and three imported asymptomatic cases. 

In fact, the majority of cases China reported yesterday were asymptomatic.

China on Tuesday reported 1,717 cases of local transmission, 52 of them in Liaoning province where Dalian is located. Most of the cases were reported in Sichuan province, whose capital is Chengdu, and the vast majority were asymptomatic.

People are testing positive for the SARS-CoV-2 virus, and not necessarily getting sick from it.

Just What The Chinese Economy Doesn’t Need

With the record-breaking drought slowly wrecking China’s fall harvest, and the housing bubble market collapsing, a new wave of lockdowns is hardly helpful to the Chinese economy

In a sign that even in China “COVID fatigue” could be setting in, the Chinese stock markets failed to record much in the way of an immediate reaction, although China’s stock markets drifted slighly lower throughout yesterday.

With the major indices all down significantly for the year, new lockdowns show immediate impact. Rather lockdowns and the threat of new lockdowns are believed by many analysts to be an ongoing drag on the markets, pullling them further down.

While the two most populous cities of Beijing and Shanghai have faced only sporadic cases recently, COVID worries still weighed on Chinese stocks.

"Markets could once again be hit in the next couple of weeks, likely triggering another round of cuts by economists on the street," Nomura warned in a note, highlighting the significance of cities such as Shenzhen, also a major port.

Not so with China’s yuan, however, which started off yesterday strengthening against the dollar only to reverse, surrendering all the morning’s gains and then some.

The yuan is now at its weakest against the dollar in two years.

This highlights one of the hidden costs to China of Zero COVID. The repeated lockdowns are not merely stifling the economy domestically, they are weakening the currency, making imports of everything, including rice and even Russian oil, that much more expensive.

A Glimmer Of Discontent?

For a brief moment, one Chinese think tank, the Anbound Research Center, published a report through Chinese social media calling for the abandonment of Zero COVID.

The Anbound Research Center gave no details of possible changes but said President Xi Jinping’s government needs to focus on shoring up sinking growth. It noted the United States, Europe and Japan are recovering economically after easing anti-disease curbs.

“Preventing the risk of economic stall should be the priority task,” the think tank said in a report titled, “It’s Time for China to Adjust Its Virus Control and Prevention Policies.”

The report lasted for barely a day before being pulled from the Anbound Research Center’s WeChat and Sina Weibo social media accounts late Monday afternoon.

Still, the disident report’s brief existence highlights one of the central realities of the Zero COVID policy, and also illustrates why it cannot be easily stopped or dismantled: as damaging as Zero COVID is to the Chinese economy, Xi Jinping very likely sees the policy as the best way to shore up trust in Chinese institutions in the wake of serial failures during the initial COVID-19 outbreaks in and around Wuhan back in 2020. Xi needs Zero COVID simply to prevent dissent from spreading and threatening the CCP’s grip on the country.

For Xi, unlike most global leaders, the political risks of opening up are still far greater than the benefits.

Missteps in early 2020 to minimize — and in some cases obscure — the initial outbreak in Wuhan undermined the social contract that underpins the Chinese Communist Party’s legitimacy: An acceptance of one-party rule in return for competent governance that keeps the public safe and improves overall quality of life.

To win back trust, Xi used powers largely unavailable to democratic leaders to keep the virus out and limit fatalities. And it’s worked: While questions persist about the reliability of Chinese data, the country has reported just 5,226 Covid deaths since the pandemic began, compared with more than 1 million in the US.

While the quality of China’s reported data remains highly suspect at best, Xi Jinping is able to point to that same data as proof of Zero COVID’s effectiveness, which gives it continued justification.

However, that data also handcuffs Beijing to Zero COVID. Having decreed that zero fatalities are crucial in the fight against the virus, easing up on the policy becomes unthinkable. Even a mild strain of Omicron could, if left unchecked, result in an initially extreme number of hospitalizations and deaths.

That is a risk Xi Jinping seems unwilling to endure. After the extremity of the Shanghai lockdown this spring, the CCP does not dare move away from Zero COVID. The change would invite too many uncomfortable questions.

Zero COVID, while a slow-motion disaster for China itself, is thus a net political benefit for Xi and the CCP, and arguably a political necessity.

Political Expediency Leading To Political Suicide

Yet, in the end, Zero COVID cannot be anything other than long-term political suicide for the CCP. So long as Zero COVID remains official policy, economic growth will be stifled. China’s manufacturing base cannot function under threat of repeated improvised lockdowns entailing factory closures and continual supply chains disruptions—and China needs its factories running smoothly to restore economic vitality and return the country to its former rapid growth trajectory.

China’s ambitions of regional hegemony in Southeast Asia, of strategic alliance with Russia, and of generally displacing US influence worldwide all turn on the potency of China’s economy. Zero COVID, being certain economic poison as it is, is ultimately the bar to realizing all of these ambitions, as well as to fulfilling the necessity of ensuring jobs and a modicum of prosperity for the Chinese people.

Nor is this the first time China has chosen political expediency over economic prudence.

During the early 15th century, China also attempted to play regional hegemon in Southeast Asia, with its Great Treasure Fleet sailing throughout the region in a massive display of naval and economic might to the rest of the powers in that region¹.

Yet after seven undeniably successful voyages, the Ming Dynasty emperors beached the fleet of enourmous vessels, sacrificing them to internal political concerns² that led to China turning inward and away from the rest of the world.

By the 17th Century, the Ming Dynasty would be displaced by the Manchu Qing Dynasty³, while China overall would stagnate into an impotent shadow of its former self. The decision to abandon technological innovation and an outward-looking worldview would prove fatal to the Middle Kingdom. Political expediency led to political suicide.

By shutting down cities, provinces, and even the whole country at the slightest occurrence of COVID, the CCP is making the same inward turn the Ming emperors did by beaching the Great Treasure Fleet. History may not quite be repeating itself, but it is rhyming, at least for China. Political expediency will lead once again to political suicide.

Just as the Ming Dynasty fell into disrepair and then disrepute after it dismantled the Great Treasure Fleet, the CCP is almost certain to endure the same fate from Zero COVID, although with drought, poor harvests, and a collapsing economy already happening it will be on a much shorter timeline.

1. Szczepanski, Kallie. "Zheng He's Treasure Ships." ThoughtCo, Aug. 28, 2020, thoughtco.com/zheng-hes-treasure-ships-195235.

2. Szczepanski, Kallie. "Why Did Ming China Stop Sending out the Treasure Fleet?" ThoughtCo, Aug. 29, 2020, thoughtco.com/why-did-the-treasure-fleet-stop-195223

3. Szczepanski, Kallie. "The Fall of the Ming Dynasty in China in 1644." ThoughtCo, Aug. 26, 2020, thoughtco.com/the-fall-of-the-ming-dynasty-3956385.