China’s economic engine has quivered in recent months, hurt by the blockade imposed to curb the Covid epidemic. Home sales were sluggish.Many shops and restaurants in some cities have been closed, some Maybe forever.. Youth unemployment has risen.
The slowdown raises questions about the feasibility of China’s rigorous strategy to eliminate virtually all Covid infections, that is, whether treatment is worse than the social and economic costs of restrictions.But lately Visit to WuhanXi Jinping, a Chinese leader in the city where the pandemic first occurred, said extinguishing the Covid fire was still a top priority.
“It is better to have a little temporary impact on economic development than to compromise the physical safety and health of the people,” Xi said. State media reported.. He cited the need to protect the elderly and children from infection and warned authorities of being fed up with the fierce two-and-a-half-year war with Covid. “Toughness is a victory,” he said.
Its elusive victory over Covid was made even more difficult by the fast-moving Omicron variant and its subvariant BA.5. This is the first domestic case in China last week, bypassing many of the country’s defenses.
A month after Shanghai lifted the blockade of the entire city, a new case of Covid recently occurred, and authorities ordered many of the city’s 25 million residents to be tested. Anhui Province in eastern China has implemented de facto blockades in two counties, while neighboring Jiangsu Province, the manufacturing center, is struggling to contain new infections. Xi’An, a city of 13 million people, closed schools and many businesses after a rekindling.
Like hitting a fly with a shovel, China’s Covid strategy is effective, but costly and controversial. It requires locking down apartment blocks, neighborhoods, or even the entire city for days or weeks to eradicate even a handful of incidents. As a result, Mr. Xi’s claim to Covid Zero, or the “dynamic zero” that Beijing calls it, cast an uncertain shadow on the country’s economic expectations.
The Chinese government will release key economic data for the second quarter of this year On Friday..according to Survey by Bloomberg, Economists expect the Chinese government to report a second-quarter gross domestic product increase of about 1% compared to the same period last year. This is a big drop from the 4.8% expansion in the first quarter and could reach the government’s 5.5% growth target for the entire year. Out of reach..
“Uncertainty is a major impediment to our country’s economic development,” said economist Yang Weimin, who advises the Chinese government. Speech to real estate developers in late JuneQuoting questions about, Covid and pandemic prevention measures. He also pointed out investor vigilance after cracking down on companies accused of abusing market power, ignoring regulators, and violating official moral norms.
“Uncertainty is the greatest enemy of action,” said Yang.
Xi hopes the authorities will eliminate the Covid outbreak and at the same time strengthen the economy.In Wuhan, he visited Laser equipment factoryVisited a neighborhood that praised the potential of new technologies and was touted as a model for effective Covid controls.
In reality, authorities are struggling with the diverse demands of Covid’s management and economic recovery. Results when it is almost certain that Mr. Xi will win another five-year term as party leader, a few months before the Communist Party Congress, consolidating his position as the strongest leader since Deng Xiaoping and Mao Zedong. The tensions that arise as are affecting China.
Beijing has sought to increase the trust of entrepreneurs and consumers and enable them to spend, invest and travel. However, local officials facing the threat of dismissal due to failure to counter pandemics often impose additional checks and restrictions on travelers and transport, increasing confusion and uncertainty.
Wu Chang, an independent political commentator in Beijing, said, “Often, heads of various departments and businesses attend a meeting on strengthening Dynamic Zero in the morning and a meeting on economic growth in the afternoon. To attend. “
“Tensions are within Xi’s own model for governing the country,” he said. “Tension really comes from him.”
For the past two years, many Chinese have accepted Covid’s restrictions as annoying but necessary. However, employees and employers seem to be increasingly impatient with blockages, checks and uncertainties, especially if they have loans, rents and wages to pay.
“The local government is confident that it will be zero in half a month, but I don’t think half a month is enough,” said Mr. Wang Nagaseki, who is taking advantage of the grout wall, in a telephone interview from Si County. The blocked Anhui province. He was also worried about the slump in home sales. “This year will be of no use. It wasn’t in the first place.”
Policy makers seeking to build investor confidence also said they were afraid to be accused of undermining Nishi’s policy to wipe out companies accused of fraudulent and reckless investment. .. Christopher K. JohnsonCiting a conversation with Beijing officials, President of the China Strategic Group.
“Does your boss really want to forgive some of these crackdowns, or is it temporary?” Johnson said, referring to Mr. Xi. “There is a lot of uncertainty.”
China’s stop-start Covid limit could last at least until next year. This is partly due to the government’s focus on vaccination restrictions and testing. Vaccination rates for the elderly are relatively low. According to many experts, Chinese leadership has so far refused to approve more effective foreign-developed vaccines. This is a decision based on political pride, not medical consideration.
But Chinese leaders are also concerned that a serious slowdown could lead to social dissatisfaction. This is anxiety that is exacerbated by the imminent party convention. Authorities are under special pressure to contain unemployment, with the unemployment rate rising to 18.4 percent among urban dwellers between the ages of 16 and 24 in May. National Bureau of Statistics of China.. This year, more than 10 million university graduates, a record high, are participating in job hunting. Others evacuate to graduate school.
Business can be difficult, even in Beijing, which has avoided the closure of the entire city by imposing only limited restrictions. According to Wang Jing, his restaurant, which is usually in a busy alley, lost more than 90% of its income in May when Beijing banned eating at the restaurant. The restrictions were relaxed in early June, but only about one-third of the business is back.
“This year was certainly the toughest year ever,” he said. “All my waiters have been with me for over 10 years. They take care of me, young and old, and I’m waiting for my wages. How can I get them fired? “
China is heading towards some policy compromises. Authorities halved the number of quarantine days imposed on international travelers and close contacts to reduce some of the turmoil. Mr. Nishi And premiere, Li KeqiangAlso diagonally suggests that annual growth may be lower than the government’s target of 5.5% earlier this year. Some former civil servants and policy advisers have openly stated that companies need to be clearer in order to sustain an economic recovery.
“Our mind can’t ride the waves or shake up and down, which is bad for economic growth and social development,” said Hu Deping, a former vice chairman of the All China Chamber of Commerce. He said in a speech to Chinese private business owners in June. “Entrepreneurs will only gain confidence if there are no policy conflicts.”
Even if China could contain Covid without blocking major cities, the accumulated uncertainty has led some companies to rethink their plans.
For Brazilian juice maker Citrosuco, the business was on track until Shanghai was closed in April. Joshua Lim, the city’s general manager, said a container of frozen orange juice had been placed in the city’s harbor and customs inspectors were checking the goods for the presence of the virus.
Customs clearance and shipping of juice to the warehouse usually took 3-4 days, but it took 2 weeks. Brazil’s Citrosuco boss has begun to reassess China’s outlook, he said.
“They are asking questions about how to better protect their business,” he said. “If you invest now, what will your return on investment be and what other risks will be less noticeable?”
Joydon, Zixu Wang, Li You, Claire Fu When Liu Yi Contributed to research and reporting.
