Xi’s Covid failure won’t stop China’s relentless rise Business

Shenzhen began closing in January. By March, Shanghai had entered a total lockdown, with travel to and from the city severely restricted, a strict quarantine regime, mass testing and the closure of offices, schools and factories. Beijing has already begun mass testing alongside selective lockdowns, and it would hardly be surprising if the entire city went into lockdown over the next two weeks. Many other megacities could follow. After all, as we already know, the omicron variant crosses countries at lightning speed.

This is not an easy task. New Zealand’s and Australia’s zero Covid strategies have been interesting experiments for public health officials. But neither country is making a big difference in the global economy one way or another. By contrast, China is the second largest economy in the world and was expected to overtake the United States this decade. Its manufacturers are crucial to supply chains globally, and with container ships calling at Shanghai’s sprawling ports, these were already creaking.

Its money and investments drive global markets. What happens in China determines what happens in the rest of the world.

His zero Covid strategy brought out the bears strong. The lockdowns will hammer an economy that still relies heavily on manufacturing; you can’t run microchips, cars, or home phones. This will cause social unrest, the bears claim. And it will expose the limits of top-down and controlled management of Chinese society, potentially even causing a challenge to President Xi’s regime (hardly helped by his support for Vladimir Putin’s catastrophic invasion of Ukraine). Shanghai’s benchmark index has fallen from 3,600 to 3,000 so far this year as investors take off, and surveys show foreign companies are increasingly concerned about whether to pull out of the country.

Granted, Covid has hardly been handled well, and that’s before we even address the question of where the virus came from. China has been too arrogant to buy the best Western vaccines and too slow to vaccinate, especially among the elderly. When the hyper-infectious omicron variant hit, China was caught off guard and had little choice but to start shutting down cities, regardless of the cost to its economy. Had he left it to rip, as Hong Kong has shown, the healthcare system could have been overwhelmed.

And yet, it is simply ridiculous to claim that this is anything more than a minor setback or that the lockdowns are senseless. The latest evidence suggests that three doses of the local Sinovac vaccine are at least as effective as the Pfizer and Moderna vaccines, and possibly even better for the over-80s, the most crucial sector of society to protect. Once those third shots are delivered, China will be in much better shape.

Australia’s experience suggests that, realistically, lockdowns followed by mass vaccination are an effective policy, controlling death rates at relatively low cost. Shenzhen, the country’s main tech hub, is now fully reopened after a lockdown that lasted two months. Chances are Shanghai will be similar. And Beijing could well avoid the total closure. Mad? Not really. When the final count is calculated, China’s death rate will likely be lower than most other countries, and at a much lower cost.

The key point is this. The rise of China and its mighty economy remains by far the most important story of the 21st century. He may separate one day. But Covid, and a few weeks of confinement in its major cities, will not prove its loss. He’s way too strong for that and has too much momentum behind him.

By fall, temporary closures will have been forgotten, ports reopened and restrictions lifted. China’s economy will roar again, while the US and Europe are back in recession and grapple with how to pay the ruinous cost of shutting down society in 2020. In truth, this is just a upheaval – and China’s rise still has a long way to go.

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This notice was published: 2022-05-06 11:50:17

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