China Confronts Looming COVID-19 Crisis

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The highlights this week: China struggles under its worst COVID-19 surge since the start of the pandemic, assessing Russia’s request for direct Chinese military aid , and Beijing signals a business policy shift .

Welcome to Foreign Policy’s China Brief.

The highlights this week: China struggles under its worst COVID-19 surge since the start of the pandemic, assessing Russia’s request for direct Chinese military aid, and Beijing signals a business policy shift.

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Major COVID-19 Outbreak Looms Large in China

China is struggling with by far its worst COVID-19 surge since the initial outbreak in 2020, recording more than 1,500 cases per day across multiple cities. The new outbreak is driven by the fast-spreading omicron variant, and many cases are asymptomatic and tricky to detect. Even if this doesn’t become a full-blown epidemic, it is already straining the system.

Authorities have already put Shenzhen, the giant manufacturing hub near Hong Kong, into full lockdown, along with Jilin province. In Shanghai, schools and businesses have already closed, and numerous Beijing and Tianjin compounds have shut down. With more than 50 million people already locked down across China, it seems likely that list will continue to grow in the coming weeks, along with case numbers.

As best can be judged, the Chinese public has reacted to the outbreak with both shock and complaints, similar to the Xian lockdown earlier this year. The mood contrasts with that of early 2020, when there was a sense of solidarity amid considerable fear. But COVID-19 restrictions, combined with the economic slowdown and increasing censorship, have frayed public goodwill. People living under lockdown have complained about poor coordination and sudden quarantine orders, along with deep uncertainty about what comes next.

It’s still possible that China will bring this outbreak under control, as it did in Wuhan in 2020, even with the additional burden of omicron’s high transmissibility. China’s lockdowns are thorough, and it is willing to conduct tests on a massive scale. But even if the control measures work this time, the country remains in danger of becoming stuck in a costly cycle of outbreak and lockdown. Chinese scientists have hinted at finding a way out, but a path away from the zero-COVID-19 policy doesn’t seem to be there yet.

Although a vital part of COVID-19 control, China’s centralized quarantine hospitals are also grim places: Businessman Carl Setzer recounts his experience inside one after an unexpected positive test. Furthermore, judging by comments in private message groups, some low-level corruption seems to have sprung up around the COVID-19 control system, with connected hotels, delivery groups, and catering enterprises securing effective monopolies.

China’s nightmare scenario is currently happening in Hong Kong, where after two years of pursuing a goal of no COVID-19 cases, omicron has spread like wildfire in the last three weeks, resulting in the world’s highest death rate per capita. That is in part because of Hong Kong’s density, but it’s also because of a very low vaccination rate among elderly residents, with just 15 percent of those in care homes fully vaccinated. New Zealand, which has also had a major outbreak after maintaining a zero-COVID-19 policy, has seen just 102 deaths thanks to universal vaccination.

China doesn’t have a politicized anti-vaccination movement like the United States. But while the overall vaccination rate is about 86 percent, it is much lower among the elderly, with only about 50 percent of those over 80 years old vaccinated. Elderly people are more likely to live in remote rural areas, are more nervous about vaccine side effects, and don’t face the pressures of showing vaccination permits to travel or go to work. Since China has also kept COVID-19 under control for nearly two years, there was—until now—not much sense of danger.

On top of that, although the Pfizer-BioNTech mRNA vaccine was widely available in Hong Kong, people in mainland China have only been vaccinated with Chinese-made vaccines, which are demonstrably less effective than the mRNA vaccines. China has the funds to acquire mRNA vaccines, but it has spent the last year sowing disinformation about Western vaccines. Distributing them now could be politically embarrassing or boost public distrust. There is a campaign to develop a domestic mRNA vaccine, but it is still a long way off.

An unmitigated outbreak in China could be a disaster for the political leadership. Hong Kong has already seen calls for its Chief Executive Carrie Lam to “resign in shame,” even from conservative, pro-mainland figures. Although the information environment on the mainland is more controlled, 2022 will be a difficult year for Chinese President Xi Jinping as he solidifies an unprecedented third term as party chairman and president.

The lockdowns in China will likely have a grievous effect on supply chains, especially given the cities already involved. Shanghai is China’s largest port, and Shenzhen is its main manufacturing hub for exported goods. To some degree, factories already have coronavirus lockdown plans in place that may allow production to continue without much impediment, but transport will be an issue given the scale of new controls.

Will China Offer Military Support to Russia?

In a series of recent leaks, U.S. officials have reported that Russia asked China for military aid, including drones, support vehicles, and meals ready-to-eat (MREs), and that China had responded positively to the requests. China’s position on Russia’s invasion of Ukraine seems like the major topic discussed by senior Chinese diplomat Yang Jiechi and U.S. National Security Advisor Jake Sullivan during a seven-hour meeting in Rome this week.

The odds of China providing direct military support to Russia still seem low, for a few reasons. China also has two ongoing crises: omicron and the economy. Taking on a third seems bold.

Beijing has ultimately nothing to gain from the war in Ukraine other than strengthening ties with Russia at the cost of its other relations. Any future Chinese diplomacy around conflict in East Asia will depend on splitting the European Union from the United States: Undermining relationships with the EU would be short-sighted. Chinese firms have been cautious about crossing the United States over Russia sanctions; they will continue to be unless Beijing instructs otherwise.

Moscow hasn’t even been able to get much closer allies on board, such as Kazakhstan—where the regime in part owes its survival to recent Russian intervention. Even Belarus, dependent on Russia for survival, is backing away from the war. It would be a strange time for Beijing to get involved. Any current enthusiasm shown by the Chinese side is likely deliberately exaggerated by U.S. leakers to add pressure, or there may be a misreading of the Chinese position.

Furthermore, the idea that Beijing can be persuaded to put pressure on Moscow to end the war in Ukraine or that it will directly participate in sanctioning Russia seems even more unlikely. Beijing has no desire to burn diplomatic capital with Moscow to aid Washington or the EU, and it is resistant to any pressure to bend its foreign or economic policy.

There is also some messy debate going on within Beijing. Chinese officialdom is keen to claim neutrality in the war, as Ambassador to the United States Qin Gang wrote in an indignant editorial in the Washington Post. The problem is that China’s own media is undercutting that position with pro-Russian content. Qin’s words were also clearly aimed at foreigners.

There appear to be three broad groups operating here. The first is China’s diplomatic establishment, which sees the conflict as a danger to steer clear of and to some degree is aware of China’s past pledges to Ukraine. The second is the nationalist entrepreneurs both in the media and inside the Ministry of Foreign Affairs, who have been rewarded in their careers for taking aggressive anti-U.S. positions.

Finally, there is the People’s Liberation Army (PLA) itself, from command staff to professors at military academies. In my experience, many of these people are convinced of their own insights and influenced by conspiracy theories and nationalism from their Russian counterparts, who are regularly invited to conferences and joint exercises through groups such as the Shanghai Cooperation Organization. I suspect that they may be the biggest advocates for Moscow inside the Chinese government.

Above all this sits Xi. As Russian President Vladimir Putin has shown, autocrats don’t necessarily make rational decisions. If Xi really sees the war in Ukraine as a moment to break with the West, China could make some radical choices. But I think the best bet is on Chinese official neutrality and possibly some backdoor deals for military supply through third parties.

As Russian political scientist Vassily Kashin argued recently, China could still be a long-term winner of the war economically, with Beijing able to set the tone of its new relationship with Moscow, which it still sees as a useful partner in opposing the West.

What We’re Following

What does the PLA eat anyway? One of the Russian requests for military aid that drew the most attention was for MREs: the self-heating rations pioneered by the U.S. Army in the early 1980s. In Ukraine’s still-freezing temperatures, heavy military activity would demand between 4,500 and 6,000 calories a day for troops to remain effective.

But it seems unlikely that China has the kind of stockpiles of MREs that Russia would need. Since its revolutionary days, the Chinese military has emphasized regular, hot food for its soldiers as part of the appeal to young rural recruits. The Chinese military graduates over 10,000 army chefs a year and maintains a massive field kitchen system, with state media praising its fresh-cooked food.

More importantly, the PLA has also not gone on a foreign expedition since 1979, when it invaded Vietnam. Its most active work is as garrison troops in territories such as Xinjiang and Tibet with an extensive supply system. The first Chinese MRE was only introduced in 2009, and it was famously inedible as well as amounting to fewer than 1,000 calories.

(For more, read about food writer Jonathan White’s attempt to eat only Chinese MREs for a week.)

Anti-Chinese gesture in Vietnam. Unusually, Vietnam has chosen to commemorate the 34th anniversary of its large military clash with China, the Johnson Reef South skirmish of 1988, when Chinese naval artillery killed dozens of Vietnamese marines. Unofficial commemorations have taken place in the past, but the Vietnamese government has usually remained quiet about it. But this time, the story took front page in state media in a piece that strongly condemned China. China’s increasing provocations in the South China Sea have led to a renewed emphasis on maritime sovereignty by Vietnam and other powers.

Tech and Business

Beijing signals policy change for market bounce. Chinese stocks declined sharply on Monday, only to see surges on Wednesday as Beijing signaled a shift away from the crackdowns of the last two years, including policies against foreign initial public offerings. The initial fall was generated both by the existing concerns after China’s assault on big technology firms and by concerns about COVID-19 and the war in Ukraine.

Vice Premier Liu He, Xi’s main economics czar, made comments at a State Council meeting about new policies “favorable to markets” and called upon departments to implement business-friendly policies; the readout gave an instant boost to investors sensitive to the government position. But bear in mind that this comes after the technology firms have abnegated themselves repeatedly before the Chinese Communist Party. The government has thus already achieved one of its main ideological goals: demonstrating its own total dominance.

At least in the case of IPOs, this also appears to be something of a compromise from Beijing, showing how much anxiety around the economy there is. The recently announced 5.5 percent GDP growth goal announced is relatively modest, but Chinese officials already show doubts about whether it can be achieved.

I’m not certain how accurate reports are that this shows a real challenge to Xi’s policies, but it certainly shows there are economists nervous enough to talk to the Wall Street Journal about it.

Real estate concerns. As the stock market somewhat rallies, the state of the Chinese property market remains dire. New house prices have fallen for six months straight and are down by 22 percent year over year. That presents a much bigger problem than the stock market, because real estate underpins the Chinese economy even more than in the United States before the 2008 financial crisis.

The government has just announced a major policy change to try to shore up the market: abandoning already watered-down plans to introduce a property tax nationwide. Even if this works, without a property tax and serious changes in local funding, the problems will simply cycle around again.

Desk Team