Aspen Security Forum Executive Director Anja Manuel joins Emily Chang to discuss the impact of China's lockdowns on its population, its economy, and its tech competitiveness, and how U.S./China relations will evolve as the war in Ukraine rages on. [Shanghai Lockdown Tests China's Zero Covid Policy -Bloomberg]
The longer Shanghai remains in isolation, the stronger the frustrations expressed by residents are becoming. Reports of food shortages and shortages of other essential goods for the 25 million people locked up at home, all in isolation, are increasing. It is one of the biggest crises President Xi Jinping has faced since taking office 10 years ago.
Practically China's economy is coming to a standstill. The growth rate was about 4%, it is not even that 5.5%, which was the minimum target that the Chinese government had set itself considering the problems of Covid-19. However, the Chinese continue to have this extreme approach of lockdown.
Obviously, the lockdown still affects all supply chains: many well-known companies, such as Tesla and Volkswagen have suspended work. This has an impact on China's ability to attract global companies. Maybe not in the long term, but certainly in the medium term, it is difficult to have a business in China.
Even Foxconn is still closed, all these large OEM suppliers and the American oriented companies for the fashion industry are still closed, which makes it difficult to export to the United States and you are already seeing decoupling with Western companies looking further and further west to reorganize their supply chains.
There is a great slowdown in China's international trade, caused by several factors together, not only brought about by lockdowns and which has a great impact in the direction of decoupling.
Among the causes other than the lockdown, there is the position on Russia. Obviously, China is under a lot of pressure from the international community, but these pressures are not positively affecting the West's relations with China and China's relationship with the rest of the world. Although Xi Jinping and his team are surprised to see how brutal the Russian invasion of Ukraine has been, after the first swings, now Chinese policy is solidly favorable to Russia. Internet censorship is increasing everything that is pro-Ukrainian is censored and all Russian propaganda is amplified. So, on the political side, the CCP is with the Russians. On the commercial side, however, this is not quite the case. In fact, all the big Chinese technical companies have complied with Western sanctions on China, as have the big Chinese banks, even though the government officially says it is doing what it can to support the Russians.
China as the factory of the world is the "status quo" in China's relationship with the rest of the world, but underneath it begins to see a change.
For now, this ambiguous game will continue. China will probably buy a little more oil from Russia. Then it will be seen in relation to the course of the war.
The Shanghai blockade risks becoming the biggest crisis of Xi's mandate, but the "Zero-COVID Dynamic Policy" is the only way out of the complex current situation, insists the Global Times editorial [‘Dynamic zero-COVID policy’ the only way out of current complex situation: Global Times editorial]: « ractice has proved that dynamic zero-COVID policy is the best choice for China to fight the epidemic. The severer the epidemic, the more important it is to fully and accurately adhere to the dynamic zero-COVID policy. It is worth emphasizing that some places are causing complexities to people's normal lives, precisely because they have not implemented the dynamic zero-COVID policy, resulting in a series of problems. We need to fully and accurately adhere to the zero-COVID policy. On the one hand, we need to achieve a rapid response and precise prevention and control. We should ramp up efforts at the initial stage, trying to wipe out every case when it is identified. On the other hand, we should strive to maximize the effect of prevention and control at minimal cost, resolutely breaking formalism and bureaucracy, and minimizing the impact of the epidemic on economic and social development. Over the past two years, it is just because of the firm adherence to the principle of people first and life first, and to the scientifically and precisely dynamic zero-COVID policy, that China has managed to maximize the protection of people's lives and health, while maintaining global leadership in economic development as well as epidemic prevention and control. In the face of the new round of severer tests, the Communist Party of China and the Chinese government have fully demonstrated their high degree of responsibility and pragmatic attitude by adhering to the dynamic zero-COVID policy. China's actions against the epidemic will surely stand the test of time and history.»
