In this issue of the MERICS China Essentials we cover the following topics:
- Top Story: China’s dynamic zero strategy faces test with Omicron as Olympics loom
- Protests in Kazakhstan – Russian intervention gets tacit approval from Beijing
- China’s new algorithm rules break regulatory ground globally
- A not-so-happy New Year for China’s real estate developers
- Review: Shields of the Republic: The Triumph and Peril of America’s Alliances, by Mira Rapp-Hooper (Harvard University Press, 2020)
You can read a free excerpt of our latest MERICS China Essentials below.
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The lockdown of China’s megacity Xi’an enters its third week after daily Covid 19 cases in China hit 235 on New Year’s Eve, a record-high since March 2020. The authorities stepped in with a heavy hand to contain the outbreak, forbidding many citizens from going out of their houses altogether.
Earlier in 2021, Chinese authorities had already adapted their “zero covid” strategy to “dynamic zero” as a result of difficulties containing the Delta strain of the coronavirus. The goal now is no longer to maintain zero cases at all times, but to extinguish new clusters as quickly as possible.
But this policy has side effects: many citizens were unable to buy food due to tight restrictions. One woman suffered a miscarriage at a hospital’s gates when she was refused entry because her test had exceeded the four-hour timeframe. Though cases are now on the retreat, citizens have voiced heavy criticism online of the approach taken in Xi’an.
And despite these tough measures, scattered outbreaks continue to occur across China, following each other with ever more speed as the virus becomes increasingly difficult to contain. Other cities including Xuchang, Zhengzhou, and Ningbo now face new measures or local lockdowns. The upcoming Spring Festival, which starts on February 1, is likely to add further concerns as traditionally this is when workers return home to their families, creating the world’s largest human migration.
The restrictions will also seriously impact consumption and growth. Xi’an is a major inland economic hub, which means supply chains that run through the city will cause problems for downstream customers across China. The megacity Tianjin, which last weekend reported the first domestically-transmitted Omicron cases, is only half an hour away by train from the capital with frequent commuter traffic. Restrictions in Tianjin and Ningbo, the world’s ninth and third busiest ports, respectively, will further rattle the already precarious situation of global supply chains.
If Omicron continues to spread to other regions, the economic impact could be severe. Unpredictable rolling lockdowns will potentially strangle supply chains and seriously impact consumption, especially in services. This will create a further impediment to China’s push to expand consumption and rely less on exports as a driver of growth.
MERICS analysis: “China’s authorities are confident that its refined strategy will be able to beat Omicron, just as it has rather successfully done with other variants. On balance, dynamic zero is still the best choice for China compared with the high case numbers and loss of life throughout Europe. Yet, for China the social and economic costs of maintaining its strategy are constantly increasing. The timing of the outbreak in Tianjin must also have Beijing concerned. Any major outbreaks in the capital would certainly take away the shine surrounding the approaching Olympics,” says MERICS Analyst Vincent Brussee.
Media coverage and sources:
The number of pro-democracy media outlets in Hong Kong that shut down during the days after Christmas. The prominent media organization Stand News was forced to cease operations after the police arrested several members of its senior staff and raided their office. In reaction to the arrests the news website Citizen News announced it would close down as well, explaining that it had to ensure the safety of its staff. The closures come against the backdrop of a new wave of government action to contain dissent and sanitize history in line with the CCP’s doctrine. Three memorials for the 1989 Tiananmen protests were removed overnight during the Christmas break, while several activists were charged with sedition or sentenced for organizing vigils. (Sources: BBC, Reuters, NPR, Reuters, BBC)