Saturday , September 30 2023

From the end of zero-Covid to the recovery of the economy: In 2023, what to watch in China

CNN in Hong Kong

China enters 2023 with a great deal of uncertainty – and possibly a glimmer of hope for the end of the pandemic – after a turbulent year’s end.

Large swaths of the country are facing an unprecedented Covid wave as a result of leader Xi Jinping’s abrupt and ill-prepared departure from zero-Covid.

However, the haphazard reopening also gives many people hope: As China joins the rest of the world in learning to live with the virus, life may finally return to normal after three years of stifling Covid restrictions and self-imposed global isolation.

In a New Year’s Eve speech that was broadcast nationally, Xi stated, “We have now entered a new phase of Covid response where tough challenges remain.” The glimmer of hope is right in front of us, and everyone is clinging on with incredible tenacity. Because perseverance and unity guarantee victory, let’s put in an extra effort to prevail.

Zero-Covid had previously been Xi’s primary political bet. Many people are now questioning his wisdom as his costly strategy is abruptly dismantled following nationwide protests against it. Although the protests, during which rare demands for Xi and the Communist Party to “step down” were made in some locations, have ended, the overwhelming sense of frustration has not yet subsided.His speech for the new year comes at a time when China’s economy, which has been hit hard by lockdowns, is under more immediate strain due to a spiraling outbreak that has hit factories and businesses. This comes before what is likely to be a long and complicated path to economic recovery.

China’s tightly sealed borders are gradually opening up, and Chinese tourists are eager to return to the world. However, some nations appear wary of receiving them, requiring a negative Covid test prior to travel. Another question is how quickly or keenly international visitors will return to China.

Xi, who just recently reemerged on the international stage after securing a third term in power, has indicated that he hopes to repair strained ties with the West. However, his nationalist agenda and his “no-limits friendship” with Russia are likely to make matters more complicated.

CNN looks at what to watch in China this year as 2023 gets underway.

Covid spread and the flurry of holiday travel

How to deal with the aftermath of China’s bungled exit from zero-Covid, in the midst of an outbreak that threatens to kill hundreds of thousands of people and damage Xi and his Communist Party’s credibility, is the most pressing and daunting challenge China will face in the new year.

The abrupt lifting of limitations last month prompted a blast of cases, with little arrangement set up to manage the flooding quantities of patients and passings.

The fragile health care system of the nation is struggling to cope: Medicines for a fever and a cold are hard to come by, hospitals are overcrowded, and crematoriums are having trouble keeping up with the influx of bodies.

Furthermore, experts warn that the worst is yet to come. Although the outbreak may have reached its peak in some major metropolises like Beijing, less developed cities and the vast rural hinterland are still anticipating additional infections.

Hundreds of millions of people are anticipated to return to their hometowns from big cities this week as the travel rush for the Lunar New Year, the most important festival for family reunion in China, begins. This will bring the virus to the vulnerable countryside, where vaccination rates are lower and medical resources are even more scarce.

The prospects are bleak. If China does not rapidly roll out booster shots and antiviral medications, the death toll could rise to more than a million, according to some studies.

A booster campaign for the elderly has been launched by the government, but many people still don’t want to take it because they worry about side effects. When the country’s medical staff is already stretched thin, fighting vaccine reluctance will take a lot of time and effort.

Recovery and strain on the economy

China is out of sync with the rest of the world as a result of Beijing’s restrictions on Covid. Supply chains have been disrupted, international businesses have suffered, and trade and investment flows between China and other nations have been hampered by lockdowns and border restrictions for three years.

The global economy may suffer greatly as China joins the rest of the world in being affected by Covid.

Economies that rely on Chinese demand will benefit greatly from any increase in China’s growth. Production and international travel will increase. However, rising demand will also increase energy and raw material costs, thereby increasing global inflation pressure.

“For a straightforward reason, I believe that China’s economy will likely experience chaos rather than progress in the short term: Bo Zhuang, senior sovereign analyst at Loomis, Sayles & Company, a Boston-based investment firm, stated, “China is poorly prepared to deal with Covid.”

Capital Economics analysts anticipate that China’s economy will shrink by 0.8% in the first quarter of 2023 before recovering in the second.

The economy will also recover after March, according to other experts. Economists at HSBC predicted a contraction of 0.5% in the first quarter and growth of 5% in 2023 in a recent study.

re-opening to the world

After the end of the quarantine for international arrivals and the resumption of outbound travel, Chinese citizens are celebrating the partial reopening of the border despite all of this uncertainty.

Even though some residents expressed concern online about the rapid loosening of restrictions during the outbreak, many more are eagerly planning trips abroad. Within minutes of the announcement on December 26, travel websites saw massive spikes in traffic.

CNN heard from a number of Chinese expatriates who said they had been unable or unwilling to return home over the past few years while the prolonged quarantine was in place. That stretch implied significant life minutes missed and spent separated: deaths, births, marriages, graduations, and so on.

Chinese travelers have been invited to return by foreign embassies and tourism departments who have posted invitations on Chinese social media sites. Some countries, on the other hand, are more cautious, imposing new testing requirements on travelers from China and its territories.

Although numerous health professionals have criticized the targeted travel restrictions as scientifically ineffective and alarmist, with the potential to incite further racism and xenophobia, officials from these nations have pointed to the risk of new variants emerging from the outbreak in China.

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