China reported about 28,000 new COVID cases on 22 November, triggering a new wave of lockdowns in parts of Beijing, the manufacturing center of Guangzhou, and the metro area of Chongqing, home to more than 31 million people.
President Xi Jinping’s rigid policy of shutting down entire regions if as few as one COVID case is detected has battered China’s economy, damaging the all-important export economy and driving away foreign investment, as we reported in “Data Shows How Badly China’s Lockdowns Have Hurt Economy” (17 May 2022).
Street protests, unusual in China, are spreading across the country to demand the extreme lockdown rules be loosened.
Government decrees have shuttered restaurants and entertainment sites throughout the capital city and battened down all non-essential businesses in its Chaoyang district, with 3.4 million residents.
The new strictures cover areas that produce 20 percent of China’s GDP, according to Ting Lu, Nomura’s chief China economist.
The “record level of lockdowns is even worse” than those last spring, which blanketed about 325 million people in 46 metro areas, Ting said.
The earlier closures held China’s second-quarter GDP increase to 0.4 percent. Industrial production has not yet returned to earlier levels. The country’s retail sales slipped by 0.5 percent in October.
The country’s CSI 300 stock index has given up about a quarter of its value this year.
Still, on claiming a third presidential term in October, Xi affirmed his commitment to the drastic zero-tolerance anti-COVID campaign.
“We must resolutely win the war” against the virus, “win the blockade battle, and the battle of annihilation,” Yin Li, Communist Party secretary for Beijing, said in a public statement.
Meanwhile, China’s central bank is intervening to prop up the country’s lockdown-plagued economy.
The Peoples Bank of China has said that, as of 5 December, it will shave a quarter-point from its reserve requirements for commercial banks, which is expected to loosen about 500 billion yuan, or about $70 billion, that banks then could lend to customers.
However, the extra cash is expected to have little impact: ongoing lockdowns across industrial centers, weakening demand for foreign exports, and China’s unresolved real estate crisis have curbed demand for new loans, The Wall Street Journal noted.
TREND FORECAST: If 1989’s Tiananmen Square freedom protests and Hong Kong street demonstrations in 2019 and 2020 offer a lesson, it is that China’s government will go to the lengths needed to crush public opposition to official policies.
As he began his third presidential term, Xi purged the Communist Party’s inner circle of anyone who might not bend to his will.
Therefore, the protests likely will not change policy directly.
If they do have an effect, it will be to call attention to the Zero-COVID policy’s damage to China’s economy and quality of life.
If the policy is to change, it will be through that venue and be made by insiders reaching consensus, not by any actions in the streets.