The down wave

In a gloomy article, an Axios analyst of global markets documents just how dire China’s economy is today.

New data out Monday showed retail sales activity [in China] collapsed in April, with unemployment rising and exports and industrial production slowing sharply.

Retail sales fell 11.1% in April, compared to the prior year, with considerable declines in major categories like restaurant spending and auto sales (a total of zero vehicles were sold in Shanghai).

China’s surveyed unemployment rate rose to 6.1%, just shy of the high of 6.2% reported during the early days of the COVID outbreak in 2020.

Industrial and export activity decelerated to 4% and 3.9%, as lockdowns in key industrial hubs such as the Yangtze River delta — home to Shanghai — took their toll.

The bottom line: “The April activity data shows that the temporary disruption from the zero-COVID policy is more severe than expected, raising significant downside risk,” JPMorgan analysts wrote in a research note.

This is bad news for everyone. Like it or not, the engine of China’s economy has helped power the world for decades. China’s role in maintaining global supply chains can’t be exaggerated. Western auto makers for years have counted on robust car sales in China, where Buicks and Teslas and Audis (to name a few) can be seen everywhere in Shanghai, and to a lesser extent in Beijing. Most of these auto makers’ China manufacturing facilities have closed due to Covid (Tesla’s giga-factory in Shanghai is open after the company agreed to house all its workers at its factory premises).

Chinese leaders say Shanghai is opening up incrementally and could be back to normal at the end of this month. But the lockdown, for all intents and purposes, remains. A BBC reporter in Shanghai writes:

Although state media has blithely reported that the “hustle and bustle” is returning, it’s difficult to verify that.

Despite claims that the majority of residents are free to roam, anecdotal reporting on the ground is very different.

I am still confined to my home. Other members of the BBC team here, in various places, face similar restrictions.

Access to food and healthcare remains limited for some. Some shops are opening, but only “offline” business will resume initially.

For three decades the Chinese people and the CCP have enjoyed a Faustian bargain: the government will let you get rich if you mind your own business and don’t meddle in government affairs. The government will make sure GDP keeps growing and citizens will remain loyal and content. A censored Internet and CCP repression in distant provinces is a small price to pay for soaring economic growth. But now it’s China’s moment of truth. The Chinese people are fed up, putting up angry social media posts criticizing the zero-Covid policy, and as soon as the censors delete them more spring up. This is what the CCP dreads most: a population that could lose its confidence with the Party and threatens the government’s obsession with “harmony” and “stability.”

We aren’t going to see the population rise up to overthrow the CCP. We aren’t going to see a revolution. But as the economy’s down wave continues, the government will have to deal with an increasingly disillusioned and bitter public. Where this may ultimately lead is anyone’s guess, but at the moment I see no cause for optimism. The government must keep its bargain with the Chinese people or face growing discontent. And just a couple of years ago it seemed double-digit growth would continue for years, maybe for decades. How the mighty have fallen. Can the government pick up the pieces and lead the country back to its pre-pandemic prosperity? In the short term I remain skeptical. The breadth of this breakdown is simply too huge. I hope there is a full recovery because I love China, home to many of my dearest friends. But they, too, are angry and disillusioned with the CCP. People have long memories and they won’t soon forget the nightmare of the past few months. It might take years before the Party has regained their trust. If ever.

China has entered a new phase, one in which the people no longer see its government as infallible and invincible. Can they recover and carry on as before? No one knows, but as I said, I’m not optimistic.


Shanghai, the next Xinjiang?

There is an absolutely must-read article in yesterday’s NY Times drawing parallels between China’s police state policies in Xinjiang and the brutality of the “Zero Covid” policies imposed on the people of Shanghai.

Let me say first that my dearest friend in China lives and works in Shanghai and has kept me apprised of the misery of day-to-day life in the age of Zero Covid. Thank god he works for one of the best multinational companies which has been supplying its employees with food. Someone in his building tested positive for covid a couple of weeks ago and the tenants are basically under house arrest. The psychological toll this takes on citizens, my friend said, is crushing. Can Shanghai ever be the same again? I was there just three years ago and never saw so much prosperity — Teslas and other luxury cars everywhere, shopping malls that felt like you were in Paris, a general mood of festivity and optimism.

Now, according to the NY Times article, Shanghai finds itself in a dark place.

Shanghai and Xinjiang used to be the two sides of the China coin.

Shanghai was the glamorous China, with skyscrapers, Art Deco apartments and a thriving middle class that shopped in Paris and strolled around Kyoto, Japan.

Xinjiang was the dark China. The western frontier region, which is twice the size of Texas, is home to more than 10 million Muslim ethnic minorities who have been subject to mass detentions, religious repression and intrusive digital and physical surveillance.

Since April, the 25 million residents of Shanghai have gotten a small taste of the Xinjiang treatment in a strict citywide lockdown. They have been lining up for rounds of Covid-19 tests to prove they are virus-free, a pandemic corollary to Uyghurs lining up at checkpoints to prove they don’t pose any security threat.

The political slogans in the government’s zero-Covid campaign echo those in the Xinjiang crackdowns. Residents in both places are subject to social control and surveillance. Instead of re-education camps in Xinjiang, about half a million Shanghai residents who tested positive were sent to quarantine camps.

What many Shanghai residents are experiencing doesn’t compare to the violence and cruelty that Uyghurs and Kazakhs have endured in Xinjiang since 2017. But they’re all victims of senseless political campaigns that are driven by paranoia, insecurity and authoritarian excess.

The CCP, one interviewee tells the reporter, has demonstrated in Shanghai its ability to impose “a digital totalitarian regime that surveils everyone, makes each neighborhood an on-site concentration camp and controls the society with the same iron fist in a future crisis, be it war, famine, climate disaster or economic meltdown.”

Fourteen years ago, around the time leading up to the Beijing Olympics I underwent a change of heart in regard to the Chinese government. I learned about programs to bring the Internet to people in remote parts of the country, of plans to build affordable housing for migrant workers, of a seemingly unending wave of prosperity and the continuous strides being made to lift the Chinese people out of poverty. I never forgot the sins of the CCP, its authoritarian tendencies, its censorship, it’s arrest of activists, its paranoia and deep insecurities. But I couldn’t deny the progress it had made in so little time; I had first moved to China briefly in 2002 and Beijing looked nothing the way it does now (although the gentrification took its toll on many of the city’s hutongs and other cultural icons, like the Bookworm and the sleazy bars along Sanlitun). For the Games, China opened its Internet, got half the cars off the Beijing roads to cut down on pollution and transformed Beijing into a gleaming first-class city. Beijing became a destination. I was awestruck.

Now I wonder if I can ever go back again. The iron fist with which Xi is ruling China has me terrified. Would I be safe there? Could I access the Internet? Would my critical blogging about China over the years make me a marked man? (I realize that is highly unlikely, but I have other friends who worry that they, too, might be targeted because of their past criticisms of the Party; one even writes under an alias, worrying if China knew their real name they might be harassed there). For nearly three years in Beijing I was happier than at any time of my life. I went back to see my friends twice a year; it was my home. And now, I can’t imagine going back for years, if and when China’s brutal Zero Covid madness has abated.

Back to the article. What we’re seeing play out in Xinjiang and Shanghai is not new, but rather an extension of the totalitarian noose the CCP has wrapped around its citizens’ necks for more than half a century.

Both the Xinjiang crackdown and the Shanghai lockdown are political campaigns that can be explained only through the governing rationale of the ruling Communist Party: Do whatever it takes to achieve the leadership’s goal.

That was why Mao’s Great Leap Forward resulted in the Great Famine, why the Cultural Revolution devolved into a decade of political chaos and economic destruction and why the one-child policy left many women traumatized and the country with a demographic crisis. In each case, the leadership mobilized the whole nation to chase after a goal at any expense. In each case, it resulted in a catastrophe.

The Shanghai lockdowns herald a new phase of governmental repression, and one that might linger for years. The CCP has always sought control over the minds of its people, thus the Great Firewall, the vast network of censors, the drivel you see nonstop on Chinese state television. In Shanghai it has shown just how far they are willing to go, and one must wonder if the repression represents a new milestone in the Party’s obsessive need to control the Chinese people’s bodies and minds.

Nazi comparisons can be alarmist and unfair, but Germany in 1933 comes inevitably to mind as I read about the Shanghai police battering down doors and forcing citizens into quarantine camps with ghastly living conditions. And there is no recourse for those mistakenly rounded up; you can’t fight a faceless bureaucracy as entrenched as the Chinese Communist Party.

The article continues:

Like the Muslims in Xinjiang, the people in Shanghai and many other cities lost their rights and the protection of law in lockdowns.

A city in northern Hebei Province made headlines when community workers demanded that residents surrender their keys so they could be locked up from outside. In Shanghai, community workers covered the insides of apartments with disinfectant after residents tested positive, even though there’s no scientific evidence that disinfectant can kill coronavirus. In a widely circulated video and a social media Weibo post, a woman documented how a group of police officers had broken the door of her apartment and taken her to a quarantine camp even though they couldn’t present a Covid test report. When her Covid test came back negative hours later, she was already in a camp, according to her posts.

It is sickening and painful to watch the asphyxiation of a once great city. It used to seem that CCP repression on a massive scale was largely limited to faraway places like Tibet and Xinjiang. Seeing it play out in China’s financial hub, one of the greatest cities on earth, liberal and urbane, is agonizing. No I won’t be going back for years, if ever. Weep for a China that has fallen victim to indescribable cruelty and inhumanity. I once believed that the misery Mao inflicted on his people could never be repeated, that after Deng’s reforms China could never go back to totalitarianism. I fear I may have been wrong, and that the country I so loved and considered to be my home, may not recover for generations. I kept waiting for years for the government to institute reforms and loosen its draconian control of what its people say and do. I thought in the early years under Hu Jintao, after SARS, that freedoms would expand. I was bitterly disappointed. Now, under Xi Jinping, the only emotion I feel is hopelessness. And outrage. Can I ever go back again? I just don’t know. All I know is that in this era of Xi Jinping Thought, we’re witnessing the brain death of a country I loved like no other. How tragic.