Beijing Mistakes in a Delicate Year

It is often said that the Chinese government plans decades in advance, carefully playing a long game as democracies waver and waver. But in Shanghai right now, there doesn’t seem to be a strategic genius at work. As the rest of the world abandons its restrictions on the pandemic, 25 million people in the Chinese city are stuck in their apartments and struggling to get food and medicine. Not even state censorship can hide the problem. The “zero covid” policy, which calls for isolation and sample collection as soon as an outbreak appears, has become a dead end that the Chinese Communist Party cannot escape.

It is one of three problems China will face in 2022, along with a stagnant economy and a war in Ukraine. They might be considered unrelated, but Beijing’s answers to the three questions have a common root: arrogance and arrogance in public, obsession with control in private, and dubious results. Rather than being the product of the activity of statesmen with a time horizon worthy of the Yellow Emperor (a character from Chinese mythology), China’s choices reflect an authoritarian system, led by Xi Jinping, that struggles to calibrate its policies or admit when it’s wrong .

The Chinese government system is developing new weaknesses as the concentration of power grows

This is the year when everything, for the Chinese president, must follow the predetermined script. In the fall, he is expected to use the party’s five-year congress to secure a third term as secretary-general, defying norms of a maximum of two and paving the way for a government for life. For the coronation to go smoothly, China must get there stable and healthy. In a way, Xi triumphed. The propaganda could present a lower Covid-19 death rate than any other major country and an economy that has grown more than any other in the G20 since 2018. As Europe returns to war, China is distant and safe, with a growing nuclear arsenal and the firepower and money needed to project its power from the Pacific to the Caribbean. However, looking more closely, Xi Jinping’s last year shows both China’s strengths and weaknesses.

Let’s start with the pandemic. Since Covid-19 was identified in Wuhan, Beijing has aimed to eliminate infections. The country’s borders remained closed for two years and outbreaks were met with forced quarantines, mass diagnostic tests and severe lockdowns. At the beginning, the authorities decided to carry out a gigantic experiment, which allowed the majority of the population to live in an almost contagious environment, but which caused the loss of individual freedoms, pain for the confined and the isolation of the country.

However, new outbreaks are becoming more difficult to control. In addition to Shanghai, five provinces are subject to partial lockdowns and the city of Guangzhou has closed schools. At least 150 million people suffer the hardships. After allowing Shanghai to independently manage the lockdown, Xi regained control. And there is no strategy to get out of it. The party failed to prepare the population to live with Covid-19 and failed to vaccinate enough vulnerable elderly people or use the most effective western vaccines. The choice is now between a more intense vaccination campaign, combined with an end to restrictions that, according to some models, would lead to two million deaths, and an endless lockdown, with ongoing curfews.

The lockdowns are hampering the country’s growth, amplifying problems caused by the government’s attempts to overhaul the economy. Xi Jinping called on Chinese capitalists to become less predatory and more self-sufficient. But in an effort to practice vague slogans like “common prosperity,” zealous officials reasserted state control and intimidated the most successful entrepreneurs. The once flamboyant tech sector is in intensive care, with the top 10 companies losing $1.7 trillion in share value due to a flurry of new rules. Alibaba and Tencent bosses are reduced to showing slavish obedience and cannot expand into some areas. In recent weeks, the party has tried to reverse course. But international investors are cautious. The country’s top ten tech companies are worth half the value of the US. In its place, China hopes to create a new generation of loyal startups that pursue the party’s austere goals. Registration practices indicate that tens of thousands of these companies were created in inner cities, claiming to be at the forefront of the cloud, robotics and artificial intelligence industries. For now, Chinese investors are rooting for them, but in many cases they are empty shipping containers or scams tolerated by officials eager to achieve local development goals. A technology sector where subsidies and fear are the incentives, isolated from an increasingly globalized system based on venture capital, may stray far from the frontiers of innovation.

The last question concerns Ukraine and foreign policy. Xi Jinping sided with Russia, in keeping with his belief that the West is in decline. But this position has costs. This will further strain relations with the United States and Europe, whose markets are critical to China. Beijing hopes it can drive Europe away from the United States, but the war has revitalized NATO and transatlantic energy cooperation. It is true that there are many countries that do not want to take sides between the West, China and Russia. But Beijing’s aggressive diplomacy is backfiring as foreigners resist insults and threats from so-called “warrior wolves”. In rich countries, the perception of China is the most negative in the last twenty years. The same is true in some developing countries, such as India, which fear aggression from Beijing.


the line doesn’t change

◆ On April 18 and 20, 2022, the Shanghai authorities recorded the first deaths from covid since the beginning of the confinement, on March 28. There are 17 unvaccinated people with various pre-existing diseases. The economy in Shanghai pays a heavy price for the lockdown, he writes caixin. With an annual GDP of four trillion dollars, Shanghai is a crucial economic and financial center for industries such as the automotive and semiconductor industries. In addition, the city has the largest container port in the world. On April 20, authorities began easing restrictions, allowing some factories to resume operations and 12 million people confined to their homes to leave. “The zero covid strategy is not sustainable in the long term,” wrote China’s top covid-19 expert Zhong Nanshan, adding that the country must reopen to bring social and economic development back to normal. A Chinese version of his article appeared online on April 18 but was quickly deleted, writes the South China morning mail.

Underestimating China is stupid. Its centralized governance system allows it to focus vast resources on precise strategic challenges, from building a navy to dominating the battery industry. Public opinion can be mobilized. In addition, the size of the domestic market allows companies to achieve economies of scale without crossing country borders. Possible gains will always lead to foreign companies being present in China and governments wanting to do business to support them.

Those strengths remain. However, the Chinese government system is developing new weaknesses as the concentration of power grows. Authoritarian states can do certain things well, but they hate to admit they were wrong. The more Xi’s status is officially enhanced ahead of the party congress, the more adulation will rise. When bureaucrats compete to prove their zeal, management loses efficiency; if employees are afraid to speak up, the problem reporting mechanism becomes flawed. One way to test China’s long-term prospects is to see if it can change course. For now, if you think his rise is inevitable, look at the deserted streets of his most populous city and ask yourself if Xi really has a monopoly on wisdom. ◆ ff

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