Getting Old Before China Gets Rich

CHINA WILL CEASE to be the most populous country sometime this week, according to a new estimate by a UN agency.

The UN’s Department of Economic and Social Affairs (DESA) says that India’s population is expected to surpass China’s 1,425,775,850 people by the end of this month.

China’s population peaked at 1.426 billion in 2022 and has started to fall. Projections are for it to drop below 1 billion before the end of the century.

By contrast, India’s population is forecast to grow for the next several decades.

DESA’s estimate is an advance on last week’s estimate by the UN Population Fund that India would have 2.9 million more people than China by the middle of this year.

Falling fertility

China’s birth rate has plunged, with its population shrinking last year for the first time since the end of the Great Famine in 1961. Last year, at 1.2 births per woman, China had one of the world’s lowest fertility rates and well below the ‘replacement’ rate of 2.1, which is the level required for populations to remain stable in the long term in the absence of migration.

In contrast, India’s population is expected to continue growing for several decades, although fertility rates there are also slowing.

China’s contingent problem is that its number of persons aged 65 or over is expected to double nearly, and the growth of the older population as a proportion of the total population will be much faster in China than in India.

Supporting an older population will become a growing burden on China’s resources. The government will have to provide more health and social care, which will have to be paid for by a relatively smaller cohort of those of working age. This will increase the need to extend working years.

Crucially for economic growth, the number of working-age adults in India is projected to continue increasing both in number and as a proportion of the total population until the middle of the century. However, the reverse will be true in China within a few years, as the percentage of the population aged 25-64 peaks, constraining growth over the next few decades.

For China, that raises the spectre that it will get old before it gets rich.

China Revamps Tech, Financial And Data Governance

THE NATIONAL PEOPLE’S CONGRESS will rubber-stamp sweeping reforms to China’s governance in the coming days.

New institutions will oversee the financial and technology sectors, which multiple state organisations currently regulate.

Most notably for this Bystander, a new Party central work commission for the technology sector will oversee the restructuring of the science and technology ministry, which is intended to channel more resources to achieving breakthroughs.

President Xi Jinping is likely to chair the new commission as the intent of the governance reform is to move faster toward self-reliance in the face of what the State Council said were “the severe situation of international scientific and technological competition as well as external containment and suppression”.

Hitherto, the development of an indigenous semiconductor industry, for example, has underwhelmed. However, putting tech development under high-level Party leadership that will impose top-down policymaking will be no guarantee of more successful outcomes, even if policy implementation is less bedevilled by bureaucratic in-fighting and more responsive to the top leadership’s direction.

A new national financial regulatory administration will replace the existing banking and insurance watchdogs and bring supervision of the industry, apart from the securities sector, into a body directly under the State Council. Some powers will be removed from the People’s Bank of China. Details are yet to be made public. The securities regulator will also be directly overseen by the State Council.

The Party’s central financial work commission will likely be revived to enable Party direction of the new financial regulatory architecture which appears to be separating macroprudential regulation from market supervision. The new premier would likely chair the work commission.

Data is the third area of sweeping governance reform. A new national data bureau will be responsible for coordinating the sharing and development of data resources and planning the digital economy. The country’s top state-planning agency, the National Development and Reform Commission, will oversee it.

New central party committees overseeing ministries have been a hallmark of Xi’s governance. Yet, the latest reforms are the most sweeping since the creation of the National Supervisory Commission in 2018 to oversee anti-corruption work.

They reflect what top leadership considers China’s priorities: scientific and technological self-reliance and development, reducing systemic risk in the financial system and tighter control over data collection by private companies and cross-border data transfers.

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Happy New Year

GUNG HEY FAT CHOI. This Bystander wishes you a felicitous Year of the Rabbit. We are told it will be a year of peace, hope and prosperity. May you find all, and the Year of the Tiger be well swept out.

China Reports Leap In Covid-Related Deaths

A senior health official says that nearly 60,000 people have died in hospitals from Covid-19-related illnesses since China abandoned its zero-Covid policy last month.

Some 5,500 deaths were caused by respiratory failure directly due to the virus, and the rest by underlying conditions combined with the virus, according to Jiao Yahui, head of the Bureau of Medical Administration under the National Health Commission (NHC).

Just over half the deaths were among those at least 80 years old, the least vaccinated section of society, and 90% were accounted for by those 65 years old and up..

Hitherto, Beijing has counted only directly caused deaths, a reporting practice that the World Health Organisation criticised as too narrow.

The latest number is thus a vast increase from previously reported figures, which total just over 5,000 deaths since the pandemic began, one of the lowest death rates in the world. Neither set includes deaths that may have occurred at home.

Jiao also said that emergency hospitalisations for Covid-19 have peaked, and the number of hospitalised patients continues to decline.

However, all the informal indications are that the virus is rampant across the country, particularly in rural areas. With travel around the Lunar New Year holiday due to start on January 21, infection rates could surge sharply in small towns and rural areas in the next couple of weeks.

Independent health forecasters expect at least 1 million Covid-related deaths in China this year.

Qin Gang Replaces Wang Yi As China’s Foreign Minister

QIN GANG, CHINA’S Ambassador to Washington, has been appointed the country’s Foreign Affairs Minister, succeeding Wang Yi.

Wang, 69, who has been foreign minister since 2013, was promoted to the Politburo in October and is expected to succeed Yang Jiechi as the Party’s top foreign policy official, a more senior role than foreign minister.

The 56-year-old Qin has only been in post in Washington since July 2021. However, he is liked by Xi Jinping, whose early dealings as President with other foreign leaders would have been facilitated by Qin when he was the foreign ministry’s head of protocol between 2014 and 2018.

His appointment signifies the importance Xi attaches to managing the relationship with the United States.

Qin was a proto-wolf warrior in two stints as the foreign ministry’s spokesman. However, as ambassador in Washington, where Beijing’s more assertive foreign policy has contributed to a hardening of elite and popular attitudes against China, he tried to straddle maintaining a hard line in defending Beijing’s interests and presenting a softer face to Chinese diplomacy.

That will likely be his brief as foreign minister, too. Yet, any change will be one of style more than substance.

China Lifting International Travel Ban Causes Concern

THE UNITED STATES is considering following Japan, Malaysia, Taiwan and India in imposing restrictions on arrivals from China now that Beijing is to allow its citizens to travel internationally again from January 7.

European countries such as Germany and the United Kingdom are monitoring the situation.

Traffic to web travel sites in China has sharply increased since authorities announced the coming lifting of the last of the zero-Covid restrictions earlier this week.

Searches for Hong Kong, which has now lifted all its Covid restrictions, Macau and neighbouring countries like South Korea, Japan and Thailand, were the most popular.

However, it will take some time for airlines to restore capacity on their China routes. Business travel is likely to rebound before tourist trips.

Nonetheless, foreign countries are concerned by the number of infected travellers arriving and the possibility that new virus mutations will occur within a population among which the infection rate is surging.

At this point, new mutations are a theoretical possibility more than an immediate threat.

Restrictions are likely to include a requirement for visitors to be fully vaccinated and to show a recent negative test.

The United States already requires the former of all arrivals, but not the latter. A mandatory negative test on arrival from China is one measure under consideration. Malaysia, Japan and Taiwan now require it.

Responding to a question about the prospect of restrictions, Foreign Ministry spokesperson Wang Wenbin highlighted the need for more international travel to maintain the stability of global supply chains and restore the growth of the world economy, underlying the economic imperatives currently driving China’s public health policy.

Updates:

• The United States is to require all arrivals from China to show a negative Covid test.
• Italy says it will test all arrivals from China after almost half of the passengers on two flights to Milan from China were found to have the virus. 
• However, the EU is saying that screening all arrivals from China is unjustified at this point as the BF7 omicron variant that is prevalent in China is already present in Europe but has failed to become dominant.

China Scraps Final Provisions Of Zero-Covid Policy

CHINA WILL OPEN its borders on January 8 after keeping them tightly closed for almost three years to prevent the spread of Covid-19.

Quarantine requirements for inbound travellers will end, and Chinese citizens will be able to apply to travel overseas again, the National Health Commission announced through the device of downgrading to a Class B infectious disease from that date.

This marks the end of the zero-Covid policy. It has happened more rapidly than this Bystander expected, but China has become the last major country to accept that Covid has to be lived with if any semblance of everyday life — economic and social — is to resume.

The cost of the under-preparation for the policy change has been a ferocious surge in infections and, in all probability, deaths. Officials have stopped releasing case number data and have reported few deaths. Estimates and anecdotal reports are all there are to go on.

Airfinity, a UK predictive health analytics firm, has put the potential death toll at between 1.3 million and 2.1 million, given China’s low vaccination and booster rates and a lack of hybrid immunity. It also estimates that case rates could peak at 3.7 million a day next month and then at 4.2 million a day in a second wave of infections in March.

One In Six In China Reportedly Infected With Covid

AN ESTIMATED 250 MILLION people in China, or 18% of the population, were infected with Covid-19 in the first 20 days of December, according to a report in the Financial Times.

The estimates of the spread of the virus in the wake of Beijing’s rapid relaxation of its zero-Covid policy are attributed to Sun Yang, a deputy director of the Chinese Center for Disease Control and Prevention, and sourced to two people said to be familiar with a closed-door briefing Sun gave to senior health officials on Wednesday.

Sun’s numbers, self-evidently, stand in stark contrast to the 62,592 symptomatic Covid cases over the same period reported by the National Health Commission.

However, to this Bystander, they correlate far more closely with the anecdotal evidence of widespread infection, overwhelmed hospitals and crematoriums struggling to handle a surge of corpses.

Covid-19 Spread Stresses China’s Health System As Restrictions Ease

The lifting of the most arduous restrictions under the zero-Covid policy has led to strains on China’s public health system that will get worse in the coming months.

Easing lockdown restrictions and shortening quarantine periods has led to a surge of infections. How many is uncertain due to the reduction in testing and changes to what is recorded as an infection.

Anecdotal evidence from around the country is that this surge is severe. Public health officials have warned that they expect another wave when people travel home for Lunar New Year and a third when they return to work after the holiday.

There is also circumstantial evidence that deaths from Covid-19 have spiked, such as reports of exceptionally high increases in the number of cremations.

This would be to be expected given the relatively rapid easing of restrictions and the relatively under-vaccinated status of the population, especially the elderly.

A drive to raise vaccination rates has got more shots administered of late, but getting a critical mass of the population double vaccinated and with a booster necessarily takes time, given the low starting point.

If the easing of zero-Covid was accelerated by the street protests, then authorities are taking a gamble that they would probably have preferred not to.

The true death rate is never likely to be known. One reason is that China has a narrow definition of Covid mortalities, excluding any deaths from underlying conditions that the virus made fatal. Other jurisdictions count these as Covid deaths, although China consistently has not.

Also, Beijing will not permit any challenge to its narrative that the Party has kept the people safe from Covid deaths — unlike those countries whose governments allowed hundreds of thousands to die. The published numbers will dutifully confirm that.

Meanwhile, the hospitals are filling up and intensive care units are in short supply. So are some medicines following panic buying.

Industry and supply chains are still being disrupted, with reports emerging around the country of staff missing work because of infection. Such disruptions to the economy are likely to continue through Lunar New Year.

The head of the World Health Organization, Tedros Adhanom Ghebreyesus, says he is ‘very concerned over the evolving situation in China’ and appealed to Beijing to be more transparent with the data.

China Further Eases Zero-Covid But Risks Abound

CHINA HAS ANNOUNCED several measures that ease the strict implementation of the zero-Covid policy, but implementing ‘living with Covid’ remains fraught with risk if mishandled.

The changes include:

• letting those infected with Covid-19 isolate at home rather than being forced into quarantine camps;
• removing the requirements to show negative tests for entering many public places;
• reducing mandatory testing and replacing PCR tests with lateral flow tests; and
• allowing greater freedom to travel.

There are also admonitions to local authorities to narrow the areas that they lock down and prohibitions on blocking emergency and fire exits in quarantined buildings.

The latest changes to zero-Covid follow the widespread street protests two weekends ago. However, they are a continuation of easing measures announced before then, implying that authorities were already moving towards a long-term exit from zero-Covid and its economic costs, even if the public unrest may have advanced the timing. 

Zero-Covid is being eased, not abandoned; the changes are being described as ‘optimisations’ of the policy, and local officials instructed to implement it so it is not so onerous.

Relevant departments in localities are required to rectify oversimplified or one-size-fits-all approaches and excessive policy steps, oppose and curb pointless formalities and bureaucratism, and faithfully implement prevention and control measures to maximize the protection of people’s lives and health and minimize the impact of the epidemic on economic and social development.

Lockdowns will continue to be the main means of prevention and control of new outbreaks. Just as central government delegated the implementation of strict zero-Covid to local officials, so will the easing. Different parts of the country will thus proceed at different paces, determined in part by local capacity to provide hospital care for the inevitable spike in cases that will occur. 

China’s public health system remains rudimentary in many places, with citizens using hospitals for primary care. One of the risks China faces is that its hospitals are overwhelmed by spikes in cases if it reopens too rapidly, especially as zero-Covid has meant that there has been less build-up of natural immunity than in other countries.

The ratio of four intensive care unit (ICU) beds per 100,000 people will be inadequate if China sees a rise in cases on the scale that other countries experienced when opening up. That is what happened in Hong Kong, where booster vaccination rates are higher than in the mainland.

China’s relatively low vaccination rates among the vulnerable population of the elderly will exacerbate that. Only 69% of those aged above 60 and 40% of those over 80 have had a booster shot. 

Raising those rates is a priority, with local authorities told to provide ‘incentives to mobilise the enthusiasm of the elderly to get vaccinated’. China’s elderly have deep scepticism of vaccinations, so the incentives will have to be strong, even forceful if their vaccination rates are to be raised.

A second round of booster vaccinations will also be launched to top up the effectiveness of those doses already administered, which are generally less long-lasting and effective than foreign vaccines. Front-line medical staff will be first in line for the second boosters. Reports say that a rise in infections among health workers in Shijiazhuang, the capital of Hebei province, was the cause of a reversal last month of a shortlived experiment with looser zero-Covid implementation.

State media is likely to go into overdrive to undo the demonisation of the dangers of Covid it had previously promoted, cheerlead for booster vaccinations and instruct people about how to deal with mild cases at home to keep them from overburdening the hospitals.

Lunar New Year next month, when there is traditionally extensive travel around the country, provides a deadline for raising vaccination levels. How many migrant workers are allowed to return to their hometowns will be a litmus test of how much improvement in vaccination rates has been achieved.