Topic Analyses

Country Roundup: China and Zero Covid

To serve as a starting point for many IX’ers, Akshita Krishnan embarks on a “Country Roundup,” beginning with a topic analysis on China, specifically narrowing into the post Zero-Covid economy.

If there’s one thing that the current President of China, Xi Jinping, is known for is his unique decisions that seem just a little bit off. Not only has he banned Winnie the Pooh in the country after internet trolls remarked that he resembled the character just a little too much (which, if we’re being honest, Mr. Jinping is more like the horror movie version of the lovable cartoon character), but he also set the country under severe COVID-19 protocol that slowed the economic activity by degrading consumer spending and investments from foreign companies. 

While Mr. Jinping continues to justify his actions in promoting Zero-COVID by arguing that it reduced the impact of the spread of the virus, it’s clear that the brunt of the problems with this policy is borne by the people of China. 

An article by the Economist predicted back in November how repealing the policy would “unleash chaos,” especially if the government doesn’t intervene. There are two key reasons why this would happen, as the article outlines: first, because of the fact that consumer confidence and activity outside of the home has decreased sharply, and second, because of how the policy rocked the ability for investors to trust in Chinese manufacturing. The damage done to the economy in insisting on unnecessary policies can be felt everywhere, but especially in how the positive economic effects of ending zero-COVID won’t be felt until 2024. 

But, these are just predictions…right?


More than two full months after zero-COVID was pulled back on, China is in a rocky state, partly because the consequences of the policy I outlined earlier weren’t targeted by the government as important things to fix. (I mean to be fair, China has had a lot on their plate by playing spy balloons with the world, but I think they could spare a few minutes from spying to fix their derailing economy.)

At the very start of the repeal, as the NY Times tells us, most businesses and shops continued to keep their door closed, and a lack of activity meant that people like Tony Tang, a clothing shop owner, needed to reduce his prices to below what it actually took for him to manufacture a jacket, a desperate effort to get products off of his shelves. 

Since people were forced to stay inside their homes for the past few years, just because the policy was repealed, consumers haven’t been rushing to resume their consumption, which effectively means that many industries have declined directly due to a lack of money people are willing to pour into the economy. 

Until and unless the government works to proactively promote consumer spending, China will continue to stay in a state of slow economic growth in terms of consumer spending, a problem that will definitely curtail China’s ability to reestablish itself as an economic powerhouse, and GDP growth will continue to be below the expected average. 

Additionally, the lack of investor confidence in China’s public policy will severely impede the country’s ability to “bounce back” from the times of Zero-COVID. As the South China Morning Post remarks, China’s decisions with Zero-COVID demotivated foreigners, especially those investing and participating in China’s international business industry because there was a lack of security associated with continuing to keep industry up in China. 

This lack of confidence, inturn, has caused major companies like Tesla to pull out of their factories in China and look to other countries, namely Mexico and Cambodia, to build new sites, even though China is the greatest manufacturing site for these companies.

And again, while this problem has been outlined by many leading economist’s, the Chinese government has stayed mum on actually working to draw these investors back in, which leaves a significant portion of China’s international economy desolate. 

Both of these things, when combined with the fact that the housing market is nearing the edge with consistent interest rate cuts, pose a unique problem in China’s road to economic recovery, making the journey much harder than it needs to be. 

Not all is grim, however. Other than peddling international data and scrambling to get elected for another unprecedented term, Xi Jinping, along with the rest of the Chinese government, definitely has some good news to look forward to, especially in the manufacturing sector. 

Not only has the official index for manufacturing activity seen an increase, but the service sector faced heightened traffic meaning that businesses are seeing growth after years of desertion under Zero-COVID. The importance of this is mostly couched in the fact that this increased economic expansion means that China is on the right path, regardless of how the government has failed in working ardently to promote growth. 

That, the consumer inflation index dropped, shows uneven recovery, signaling that demand is still low. Exports are also lower, and for an economy that relies heavily on what it sends out, a trend like this continuing could be catastrophic. 

The bounce back is something to be appreciated though for it depicts China’s perseverance through particular tough times, but also highlights Mr. Jinping’s (and the Chinese government’s) weaknesses—while his peculiar decisions might be humorous in the terms of Winnie the Pooh, it’s clear he cannot choose silence when it comes to rectifying his mistakes during zero-COVID by understanding his consequences. Mr. Jinping must push for policies that rejuvenate post zero-COVID China. 

For further reading on China, Akshita recommends the following articles:

China making recovery a priority: 

China’s economy in considering the world:

Quick stats and potential solutions:

A more detailed view of zero-covid stuff on the economy:

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