IT HAS BEEN an eventful and direction-changing ten days in China, starting with the widespread protests last weekend against the zero-Covid policy, the most significant expression of public dissent since the events in Tiananmen Square in 1989.
Then came the announcement of the death of former Premier Jiang Zemin. There was a certain symbolic symmetry to be spotted by those looking for such things as it was Jiang who took over as China’s leader in the aftermath of the suppression of the Tiananmen protest and then oversaw two decades of double-didgit economic growth and opening to the outside world.
However, the death allowed for the reassertion of solemnity and control.
As the week ended, Vice-Premier Sun Chunlan, the Politburo member responsible for implementing President Xi Jinping’s signature zero-Covid policy, gave hints of further relaxations of the approach to come. These will be partly in response to the street protests and partially because the draconian restrictions of zero-Covid have failed to contain the virus’s spread this year while the economic costs are mounting.
Changes will be framed as improvement of current policies or adaptation to new circumstances; state media has already started to soften the official line on the deadliness of the threat of the virus. Officials lifted lockdowns in dozens of districts in big cities like Shanghai and Guangzhou in the second half of the week.
This is not the end of zero-Covid, at least not yet. That will require mass vaccination of the elderly (now being prioritised), higher booster vaccination rates among the broader population and a greater capacity within the hospital system to treat severe cases, which will take months at least.
Lifting restrictions too early would result in deaths running, it has been estimated, into the hundreds of thousands. That would be politically unacceptable, especially given that the narrative over the past three years about China’s approach has saved lives compared with the recklessness of the West in accepting ‘living with Covid’.
Yet Beijing is now contemplating doing the same for one of the same reasons as the West, the economic cost of shutting down daily and business life.
Combined with the global headwinds buffeting the economy, which are likely to stiffen as the world economy heads towards recession, a still deeply troubled real estate sector and continuing tensions with the United States, this will keep China’s GDP growth below potential for the foreseeable future.
The OECD is forecasting 3.3% growth this year, and 4.6% next, which may be optimistic, although the indications from Beijing are that there will be more attention paid to growth from now on, so more fiscal and monetary support is likely.
The forthcoming Politburo meeting is expected to confirm that, although details will likely not be known until the subsequent Central Economic Work Conference mid-month.