Category Archives: Politics & Society

No Going Back For China On Zero-Covid

Chart showing daily new confirmed COVID-19 cases in China, 7-day rolling average. Source: Our World in Data

EVEN THOUGH NEW Covid-19 infections have peaked, Shanghai city authorities are imposing stricter control measures, an indication of the intensifying political dimension to the zero-Covid policy on which President Xi Jinping yet again pinned his personal colours at the Politburo Standing Committee on May 6.

Shanghai is already under what is now more than a month’s-long lockdown that has seen deaths, caused economic disruption and kindled social unrest amid localised food shortages and disgruntlement about city authorities’ management of the situation.

More mass testing and stricter enforcement of mandatory quarantine for those testing positive or who have co-residents, not just family or close neighbours who test positive are on the way. Residents have reportedly received notices of the imposition of ‘quiet periods’ of three to seven days in which they will not be allowed outside and non-essential deliveries will be halted.

Beijing, too, is extending quarantine measures and making its lockdowns less ‘lite’ in a bid to avoid the capital becoming a second front in ‘the battle for Shanghai’.

As this Bystander has noted before, the top leadership is in a bind. Under- and ineffective vaccination has left it with little option but to persist with trying to achieve zero-Covid. Treating the pandemic as endemic now would likely trigger a wave of deaths that would undermine the narrative of China, unlike the heartless West, putting the lives of its citizens above economic considerations.

Yet the longer it persists with zero-Covid, the less choice it has but to continue it. Politically, Xi cannot make a U-turn, especially with a critical Party Congress coming up in the autumn. The messaging by state media and censorship of social media will negate public criticism of Xi, while local officials will be under pressure to fall into line.

The same may hold less true in elite circles, even if criticism remains muted. Few if any will take the gamble of speaking out loudly against Xi now, cognizant that his power may be far greater after the Party Congress.

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Omicron Continues To Challenge China’s Zero-Covid

Chart showing 7-day rolling average of daily new confirmed Covid-19 cases.

WORKD REACHES US of panic food buying in Guangdong. Residents are stripping supermarket shelves bare, fearing the possibility of a Shanghai-style citywide lockdown following the discovery of new Covid-19 cases in Guangdong’s provincial capital. Authorities are due to start mass testing. Given Beijing’s doubling down on its zero-Covid policy, restrictions on movement will surely follow.

Meanwhile, Shanghai authorities are suggesting some slight easing of the severe lockdown residents there have been under for more than a week. They will categorise districts into three types according to the level of risk from Covid. Once a section achieves the least risky status, some of the strict restrictions on movement may be eased locally.

That will still take some time to pass. All infectious cases will have to be moved to within centralised Winter Olympic-like ‘closed-loop’ central facilities first so the outbreak is contained there and cannot spread. Jilin in the northeast is only just coming out of its lockdown after 33-days.

China’s largest city and financial and commercial hub is still struggling to provide the locked-down with basic food supplies and medical care. However, reports say the situation has stopped getting worse and is improving in some districts as the logjams in distribution start to ease.

Shanghai has experienced China’s worst coronavirus outbreak since the early days of the pandemic. The under vaccination of the elderly and relative ineffectiveness of China’s vaccines — Sinovac cuts the death rate tenfold for over-80s but is roughly half as effective as the Pfizer-BioNTech vaccine — have painted Beijing into a corner.

It has little option but to stick with its zero-Covid policy despite its inability to deal with the rapid spread of the high-contagious but less fatal Omicron variant. Nonetheless, zero-Covid now no longer means zero local cases but zero local cases outside quarantine facilities.

Attempting to live with the virus as other countries are now doing would likely result in a politically unacceptable wave of deaths and hospitalisations until widespread vaccination with more effective vaccines could be achieved on a mass scale. That would require a national roll-out of an indigenous mRNA vaccine that would take months to administer the initial two shots.

It would also undercut the official narrative of how China’s success in keeping the death rate low by international standards stands in contrast with Western governments’ willingness to accept high death rates among their citizens in order to reopen economies.

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Shanghai Covid Surge Will Have Political Fallout

SHANGHAI’S COVID-19 OUTBREAK is becoming a political and medical emergency.

The country’s financial and commercial hub is struggling to contain the mainland’s worst outbreak of infection since the initial one in Wuhan in early 2020.

Officials reported 8,000 new cases on Saturday, a new daily record, and more than 13,000 on Monday as mass testing got into fuller swing.

The city tried to avoid a total lockdown because of Shanghai’s economic importance, opting for a two-phase policy that started on March 28. That has failed to contain the outbreak and become chaotic.

The city’s hospitals, short of beds and medical services, have struggled to cope. The mass testing programme has experienced delays in getting results. Feeding 25 million people in lockdown is proving to be a logistical challenge.

Nationally, China has reported no new deaths from Covid-19, although unofficial reports of deaths in Shanghai have been circulating for some days.

As in Hong Kong, low and ineffective vaccination rates among the elderly appear to have exacerbated the situation. The Donghai Elderly Care Hospital in eastern Pudong has reportedly suffered a severe outbreak of infections.

A senior Party official, Ma Chunlei, has said Shanghai was not sufficiently well prepared for the outbreak, a rare public admission of shortcomings in a city regarded for its administrative competence.

This has prompted a mobilisation of external assistance not seen since the pandemic’s early days. Vice Premier and Politburo member Sun Chunlan, who oversaw the strict anti-Covid regime at the recent Beijing Winter Olympics, was sent to the city at the weekend to provide political and administrative direction.

She stressed ‘unswerving adherence’ to the zero-COVID approach and told the city’s officials to improve their quarantine management. She also told police to guarantee social order in lockeddown areas and treatment facilities, a hint perhaps that residents’ exasperation is boiling over beyond social media.

The People’s Liberation Army has now mobilised 2,000 personnel and other provinces sent 36,000 people to help the city.

The first lockdown, covering everyone east of the Huangpu River, which includes the financial centre in Pudong, has been extended. With phase two, covering the city’s western side, still in effect, the whole city is now locked down.

It is unclear how long that will last, but it will likely stay in place until the medical situation stabilises, perhaps another week or more.

Shanghai’s mild experiment in easing back from the zero-Covid policy has backfired. That will have economic ramifications for an already slowing economy and how any further big-city outbreaks are handled.

Even more, it will have political ramifications ahead of the Party Congress in the autumn that will depend on how the top officials of the influential Shanghai party come out of the medical crisis.

There will be a new raft of Politburo leaders to accompany President Xi Jinping’s likely third term, over which the Shanghai faction would expect to have some sway. Local Party secretary, Li Qiang, had been tipped as a possible replacement for Li Keqiang as premier. He will look like a less safe pair of hands now.

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China Must Keep Workers Working Longer To Plug Pension Gaps

G.Tech Technology Factory in Zhuhai China, 2015. Photo credit: Chris Licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license.

THE OPTION TO defer retirement offered for the first time by Jiangsu province this month is the first step in what is an increasingly urgent need for China to raise the retirement age.

Chinese workers retire young by the standards of the upper-middle-income countries that China aspires to join. Retirement is based on gender and collar. Women in industrial and manual jobs retire at 50 and in white-collar employment at 55. Most men retire at 60 (special rules can apply to Party leaders). The average retirement age for workers in OECD countries is during their 64th year, ten years beyond the average in China.

With demographic pressures bearing down, China has an economic need to keep more people working longer. The announced goal is to raise the retirement age to 65 (for all workers) by 2030. That will not prove popular.

The retirement rules date back to the 1950s and have resisted several attempts at reform. When they were introduced, life expectancy was 35 years. It is now over 77. Meanwhile, the proportion of the working population and the replacement fertility rate have decreased significantly. All this has put the long-term viability of pension provision in doubt. 

Raising the retirement age will have complex social and economic impacts. 

Many white-collar women, who, like those in other countries, have growing career opportunities, will welcome the choice of working longer. However, it will limit the supply of family childcarers, given that grandparents currently act as primary carers for their grandchildren so that parents can work. Grandparents who retire later will no longer be available for the task.

Another challenge is that delaying retirement will limit job opportunities for young workers. The unemployment rate among workers under 24 years old is already 13%, compared to the overall labour force average of 5%.

Authorities will likely raise the retirement age gradually to mitigate those factors. However, the economic imperatives will require picking up the pace, which will likely occur during the next five-year plan (2026-30). The option to retire later will increasingly become a mandatory requirement.

China cannot afford to delay the reforms. It is not alone in facing a contracting workforce due to an ageing population and low birth rate. Yet, the scale of the country adds another level of challenge. China had 254 million retirees in 2019 and 300 million in 2021. The number is forecast to top 400 million by 2033.

The pensions of the swelling ranks of retirees will have to be paid by economically active 16-59-year-olds. Their share of the population has shrunk by five percentage points since 2011.

Between 2021 and 2025, the economically active population is forecast to decrease by about 35 million, while 40 million will retire. Combined with pensions indexed to salary increases and consumer price inflation, the imbalance increasingly makes the system unsustainable.

A recent study by the Chinese Academy of Social Sciences suggests that China’s state pension fund, which coordinates and tops up the fragmented system of local pension schemes, will be depleted by 2035. 

The state pension fund paid over $148 billion to local pension schemes in 2021, indicating the scale of the strain on the local funds. 

Almost a quarter of the support went to the less densely populated central and western regions and the northeastern ‘rust belt’ provinces, where the squeeze of labour outflows reducing pension inflows and greying populations increasing pension payments is the most acute.

In addition, $265 billion worth of state assets were transferred last year from centrally administered state-owned enterprises and agencies to bolster the pension funds. Raising the retirement age will provide further but temporary relief for the funds. However, it will not be a long-term cure unless pension fund reform and restructuring are carried through.

The financial implications of the current retirement system compound the impact of slowing growth on the government’s aspirations to deliver its other social policies. These include closing the wealth gap and improving living standards under the Common Prosperity rubric. The new national pension system that came into effect on January 1 is intended to top up local pensions where needed and narrow regional economic inequalities.

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Shanghai Goes Into Lockdown

Chart showing 7-day rolling average of daily new Covid-19 infections in China. Source: Our World in Data.

SHANGHAI IS NOT only the largest city to date to be locked down, but China’s financial and commercial hub.

Authorities, who have been battling an outbreak of Covid-19 for a month, had put off doing so for as long as possible because of the potential economic cost. However, a spike in cases has forced their hand.

The necessity of action will be a disappointment as the national surge in new cases is now falling following lockdowns to counter the outbreaks in Jilin province, Xi’an and Shenzhen, the last a spillover from the massive outbreak in Hong Kong.

However, the 3,500 new cases recorded in Shanghai on March 27 accounted for more than half the national total. 

From today, the city is being locked down in two phases for mass testing over the next nine days, starting with everyone east of the Huangpu River, which includes the city’s financial centre in Pudong. The city’s western side is due to go into lockdown from Friday.

Public transport has stopped. Firms have been instructed to suspend operations or work remotely. However, where workers can be confined on-site and follow ‘closed-loop’ testing protocols, factories can continue to operate to mitigate the economic damage. Similar steps are being taken to minimise supply-chain disruption.

Authorities are trying to avoid a larger-scale disruption to production in Shanghai than in Jilin, where the Toyota factory, among others, has been idle for more than two weeks.

Keeping half a city of 25 million people functioning during a lockdown is the furthest China has gone to ease its strict zero-Covid policy involving mass lockdowns and testing to contain surges of infection. However, the contagious Omicron variant is testing the approach severely.

Beijing will not readily abandon zero-Covid, as its willingness to lock down its most populous and wealthy city attests. Yet, it will aim to minimise the economic impact with continuous fine-tuning of the strategy.

Nonetheless, the knock-on effect on the national economy is likely to see the government introduce additional stimulus, including interest-rate cuts, in the near term.

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All 132 Aboard Flight MU5735 Confirmed Dead

Screen grab of TV report about the crash of China Eastern Airlines flight MU5735 showing one of the aircraft's recovered black boxes

AUTHORITIES SAY THAT none of the 123 passengers and nine crew aboard a China Eastern Airlines flight MU5735 that plunged into a Guangxi hillside on March 21 survived.

Rescue teams have identified 120 of the victims so far through DNA analysis. The search for human remains and plane wreckage continues in the steeply wooded and rain-sodden area.

The crash is China’s most deadly aviation disaster in nearly three decades.

State media report that the second ‘black box’, the flight data recorder, has been found. The first, the cockpit voice recorder, was recovered earlier. It was reportedly badly damaged, but aviation officials said on March 26 that data is being downloaded and analysed.

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China’s Strong Airline Safety Record Is Tragically Interrupted

Graphic showing sudden descent of China Eastern Airlines' Flight MU 5735 on March 21, 2022. Source: FlightRadar 24.

THERE ARE NO reports of survivors from the Kunming to Guangzhou flight that plunged into a forested hillside near Wuzhou in Guanxi on Monday afternoon with 123 passengers and nine crew on board. Nor, as of Tuesday, had any bodies been recovered, according to state media.

China’s first fatal civil aviation accident in more than a decade has understandably caused widespread shock.

Some 2,000 rescuers who have reached the mountainous district are searching for the aircraft’s flight-data cockpit-voice recorders, assisted by drones. Aviation experts hope the ‘black boxes’ will reveal the cause of the tragedy. However, the high speed of impact may have destroyed them. (Update: At least one of the black boxes has been found, authorities said on March 23.)

The airliner involved, a Boeing 737-800 that was less than seven years old, and the airline, China Eastern Airlines, have strong safety records.

It is too early to speculate on the cause of the accident. Yet, the aircraft essentially nosediving into the ground from a cruising altitude of around 9,000 metres, as shown in the graphic above from the flight-tracking website, FlightRadar 24, suggests an extraordinarily untoward incident, rather than the sort of design problem that caused the worldwide grounding of the Boeing 737 Max after two fatal crashes in 2018 and 2019.

The Civil Aviation Administration of China (CAAC) will handle the investigation. As the aircraft was US-made, the US National Transportation Safety Board has appointed an investigator for the crash. It will assist the CAAC, ‘if asked’.

China Eastern has grounded its Boeing 737-800s fleet. Of the more than 4,200 of the aircraft in service worldwide, Chinese airlines account for 1,177. The CAAC has urged an immediate two-week-long safety overhaul of civil aviation.

Since the unsafe flying days of the 1980s and 1990s, China’s civil aviation had become remarkably safe thanks to investment in new aircraft and strict safety rules imposed after two flights crashed within a month in 2002, with a combined loss of 234 lives.

Last month, the CAAC said that Chinese airlines had set a world record on February 19 by operating without a major accident for 100 million flying hours, stretching back to August 2010 when a Henan Airlines flight from Harbin crashed on approach to the airport in Yichun in Heilongjiang province.

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China’s Coronavirus Surge In Two Charts

Chart of 7-day rolling average of reported new Covid-19 infections in China. Source: Our World in Data. Licenced under CC-BY

THE CHART ABOVE is the latest rolling 7-day average of reported new cases, sourced from John Hopkins University and graphed by Our World in Data.

The one below shows the geographic distribution of the latest outbreaks, sourced from the National Health Commission and graphed by Bloomberg.

Map of China showing geographical distribution of Covid-19 surges. Source: National Health Commission via Bloomberg

Neither chart requires further commentary.

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China Battles Multiple Outbreaks As Omicron Variant Surges

Rolling 7-day average of new daily confirmed Covid-19 cases in China. Source: Our World in Data. Licenced under CC-BY

THE COVID OUTBREAKS across China are expanding. The National Health Commission on March 14 reported a daily total of 1,337 new locally transmitted cases, including 895 in the northeastern border province of Jilin.

Severe movement restrictions have been imposed on Jilin, the first provincial-wide sealing-off since much of Hubei was locked down in 2020 following the first outbreak in its provincial capital, Wuhan. This broadens the restrictions imposed last week on the provincial capital of Changchun, where most of Jilin’s infections have been reported. Emergency isolation hospitals are being erected. Toyota’s factory there has had to halt production. (Update: Jilin City mayor Wang Lu has been sacked due to ineffective epidemic prevention and control, Xinhua reports.)

In Shanghai, schools have reverted to online teaching, road transport to the city is being restricted. A ban on inbound international flights is reportedly being considered.

The lockdown in central Shenzhen has expanded to cover most of the city’s 17.5 million population, and three rounds of testing have been ordered. High-tech factories such as those of Apple supplier Hon Hai Precision Industry (Foxconn) and Huawei will temporarily stop production. However, the Shenzhen Yantian Port container terminal is still operating, but under strict Covid controls.

The Shenzhen outbreak is likely to be a spillover from the raging infection in neighbouring Hong Kong, where 26,908 new daily cases and 249 deaths were reported on Monday. New infections appear to have plateaued, but deaths are still rising, especially among the unvaccinated elderly.

New cases are also reported in Beijing, Tianjin and cities across Guangdong province.

As of March 9, 14 of China’s provinces had been declared high or medium-risk for the virus. The clusters of outbreaks caused by the fast-spreading Omicron sub-variant BA2 are proving a stiff test of Beijing’s zero-tolerance policy.

No death from the virus has been reported in China since January 2021. However, on Friday, National Health Commissioner Ma Xiaowei said strict controls need to be kept in place.

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Gu Ailing Nibbles At National Identity

Gold medalist Gu Ailing seen during the medal ceremony for the women's freeski big air at the Beijing Winter Olympics on Feb. 8, 2022. Photo credit: Xinhua/Ju Huanzong

THE BEIJING WINTER OLYMPICS is throwing a sideways spotlight on national identity. It is focused on Gu Ailing (above), the 18-year old Calfornia-born skier who has won a gold medal competing for China.

The issues it raises are complex. They concern the binariness of national identity, the intertwining of ethnicity and nationality as a basis for state, and state use of sport and athletes to project national power.

Gu was born, raised and still lives in the United States, where she goes by the given name Eileen. Her father is American; her mother is Chinese. Gu Yan came to the United States as a post-graduate biochemistry student and subsequently pursued a career there in finance. Her daughter switched her sporting affiliation from the United States to the country of her mother’s birth, at 15 years old by when she was already a rising star in US skiing.

Gu Ailing is far from unique among athletes in choosing to represent a country other than that of their birth. Elite sport finds it convenient to take a multigenerational view of nationality; eligibility can be derived from grandparents. Many of the Senegalese football team that recently won the Africa Cup of Nations, for example, were born in France, not Senegal, although they have family roots there.

Our man on the slopes tells us that Gu is among around a dozen foreign-born Chinese Winter Olympics team members, including US-born figure skaters (Beverly) Zhu Yi and (Ashley) Lin Shan, and at least five US-born ice hockey team members.

Gu’s nationality has been a matter of some speculation. As the daughter of a Chinese mother born in China, Gu would be a Chinese citizen regardless of where she was born. That she was born in San Francisco would also make her a US citizen.

The International Olympic Committee requires athletes to be nationals of the countries they represent and has said that Gu ‘acquired Chinese nationality in 2019’, and submitted a copy of her passport to it that year in connection with her change of affiliation.

The United States recognises dual nationality. China, however, does not, although not recognising it and turning a blind eye to it if needs be, are different matters.

Gu has been evasive about whether she has renounced her US citizenship. Instead, she portrays herself as a bi-national. She has repeated the line that ‘when I’m in the US, I’m American, but when I’m in China, I’m Chinese’ that she used at the 2020 Youth Winter Olympics in Lausanne, her first major competition in her new national colours.

That sentiment may strike a chord among many other biracial children and the sons and daughters of first-generation immigrants who find themselves shuttling between two heritages. However, most of those people will not be high-profile individuals. Gu is a model and a paid ‘face’ for several international brands, as well as an Olympian who chose to switch her affiliation to a nation the land of her birth considers a geopolitical rival.

There are plenty of reasons for Gu to have opted to represent China. There is strong cultural affinity: she was raised by the maternal side of her family (her grandmother was an engineer with the Ministry of Transport), speaks accentless Mandarin and spent time in China every year as a child. There may be commercial considerations: she also has multi-million dollar brand endorsements in China, where she is lauded as the country’s ‘Snow Princess’; at 18, she may be laying a long-term geopolitical and macroeconomic bet on the future.

One reason that can be ruled out is that it gave her an easier shot at getting to the Beijing Games. She is world-class in her sport, as her gold medal testifies, and would walk into any country’s Winter Olympics team.

She has said that her motivation is that she has a greater opportunity to be a role model to young skiers in China, where winter sports are just taking off, than in the United States. Winter sports are popular recreationally there, but professionally, they only really get their place in the sun once every four years when the Winter Olympics come round.

Gu is accomplished, self-assured and a person who wants to leave her mark on the world. Yet, going from US athlete to Chinese athlete is a path less skied, especially when US-China relations are cutting up rough. Gu has been vilified on US social media for her choice, although that can be a dark place at the best of times everywhere. Zhu Yi was vilified on Weibo for her error-ridden performances.

There is also no escaping that sport and politics are bedfellows whether the athletes like it or not or whether they choose to use their sporting celebrity as a political platform. Just as the 2008 Summer Games in Beijing were used by authorities to promote China’s arrival in the world, these Games are being used to promote the idea that this is the moment for President Xi Jinping and his vision of the new China revitalised.

Gu has been impressive in appearing to remain apolitical during the Games. Her deft deflections of questions about her citizenship were matched by that of a question about the presence of tennis star Peng Shuai — that she’s ‘grateful that [Peng] is happy and healthy and out here doing her thing again’.

While not an overtly political comment that would have opened her to criticism in one or other of her homelands, her answer was no less political than her decision to give her first post-gold medal-winning interview to the newspaper of the Central Commission for Disciplinary Inspection, the top anti-corruption agency.

The question is how sustainable will her stance be, especially once she is back in the United States. There is no indication that Gu will move her domicile to China. In the autumn, she will attend Stanford University, one of her mother’s almae matres (Gu Yan is also a graduate of Peking University).

Outside the Olympic bubble, it is a different world. It is also an increasingly nationalist one in which US attitudes towards China are hardening and vice versa. She will, for example, be pressed in the United States to explain why she endorses the sports apparel brand Anta, which is open in its use of cotton from Xinjiang, a region from which the United States now bans imports, citing human rights abuses.

Whether she likes it or not and no matter how much she dissembles about it, her sporting success for China has made her a prominent Chinese public figure.

Given the current reduction of personal contacts between China and the West at all levels, anyone who can bridge the two should be welcomed. After winning her gold medal, Gu said, ‘I definitely feel as though I’m just as American as I am Chinese … Both [countries] continue to be supportive of me because they understand my mission is to use sport as a force for unity.’

This Bystander hopes that she is not being Pollyannaish, especially given China’s ‘whole of society’ approach to countering foreign adversaries. The narrative of China as a force for global unity and the non-politicisation of sport is one that Beijing is currently advancing. State media has reported Gu’s comments about being Chinese in China but American in the United States yet still identifying her as ‘of China’.

However, China also strongly advances the primacy of the Chinese model of everything from governance to sovereignty and the rules of the international order.

Should the political imperative for the narrative that Gu currently embodies change, that nuanced distinction will be less useful to a country in which ethnic, national, state and Party identity are closely intertwined, and nationalism is rising. Divided loyalty might then become untenable and equal identity along with it for as long as there are nation states.

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