China faces a double disaster between COVID and Putin

“If the Russia-China declaration was supposed to make the world safe for autocracy, it didn’t last very long. The autocrats have overplayed their game,” said George Magnus of the China Center at the University of Oxford.

Dead end COVID

Xi faces a parallel setback on COVID, having pushed his country into a disastrous dead end. Some 43 cities representing two-fifths of China’s GDP are in some form of lockdown as the rest of the world returns to normal.

Much of Xilin has been a prison for nearly seven weeks. The financial capital Shanghai is in its fourth week and Beijing is again on the razor’s edge. Communist Party cyber-censors are scrambling to quell netizen fury akin to riotous rumblings two years ago over the treatment of Wuhan whistleblower Dr Li Wenliang.

“The grand totalitarian lockdown is failing, but there are no signs that Xi intends to undo it. The loss of face would be too great. I see no way out,” said Roger Garside, a former British diplomat and author of Coup in China: the great leap to freedom.

To persist with “dynamic zero-COVID” against Omicron borders on madness, but President Xi is trapped by his own triumphalism. State media has passed the point of no return by weaponizing China’s low death toll for propaganda purposes, viewing it as a dazzling vindication of its leadership.

He can’t let go either. The population has no antibodies beyond the modest protection of their faulty vaccines, and Xi refuses to let Western vaccines in. Some 40% of people over the age of 60 have not been bitten completely.

Relaxing would involve the kind of deaths seen in Hong Kong, where fatalities reached nearly 300 a day in March. Multiply that by 200 for China and the numbers get dizzying. Xi is doomed to persist with zero-COVID at least until his – more so certain – coronation at the 20th Party Congress in October.

perpetual nightmare

What looked like a Chinese triumph in mid-2020 has turned into a perpetual nightmare, with ever-worsening consequences for the economy.


Capital Economics says output contracted 3.2% in March according to its proxy measure of GDP. The fall in services matches the Delta shock of last year. Long-distance travel is once again approaching the nadir of two years ago. New housing starts fell by a quarter and sales of construction machinery fell by a third.

By this proxy measure, China’s economic output is only marginally higher today than at the end of 2019, while the United States has surged. This reversal of fortune seemed unthinkable two years ago, when many believed the pandemic would advance China’s sorpasso, the supposedly inevitable moment when China overtakes the United States to become the economic master of the world.

Chinese leaders have drawn a dubious conclusion from the West’s COVID difficulties. They believed that it validated the organizing principle of the communist state as such. “That convinced them their model was better, so they doubled down,” said Mark Williams, Asia manager at Capital Economics.

They have launched a corrective Maoist purge of the tech sector and the unruly private companies that generate most of China’s economic growth, portraying these attacks as a form of breach of trust in the tradition of Teddy Roosevelt’s Square Deal. The real goal was to bring all rival power centers under Xi’s tight control.

“Based on current trends, Beijing is now less likely to advance in global power by the end of the decade. There is nothing inevitable about China’s rise in the world.

Lowy Institute

Xi is alert to the danger of another recession. He ordered a burst of infrastructure investment, telling the Central Committee that Chinese growth must outpace US growth this year.

Bill Bishop of Sinocism says it echoes Chairman Mao’s call to “overtake Britain, catch up with America” ​​in 1958, at the start of the catastrophic Great Leap Forward and the starvation of some 35 million people – cataloged in Yang Jisheng’s harrowing book tomb stone.

Easing debt controls and returning to business-as-usual stimulus could lead to another short-term boom and a few better months for struggling Chinese stocks. But that does nothing to address the Leninist-capitalist model of top-down credit control that is causing China’s economic stagnation.

Premier Li Keqiang warned a decade ago that China had already reaped the low-hanging fruit of catch-up growth and dizzying industrial expansion. It would remain stuck in the middle-income trap if it clung to this outdated development strategy for too long.


Xi picked up on some of his points: mainly the quest for high-tech ascendancy. He ignored the deeper political point: that it takes a certain degree of pluralistic freethinking to compete at the technological frontier, where the air is thinner.

A recent study published in China: An International Journal concluded that China’s total factor productivity growth rate – the benchmark measure of real performance – has plummeted from 3.1% in the 2000s to 1.1% over the period 2010-2019. The profile of China no longer resembles that of Japan and the Asian tigers that have emerged from the trap.

He converged with Western productivity levels before he was rich. Looking back, we can see that China suffered the greatest damage from the 2008 global financial crisis, not the United States as the communist leaders assumed.

The window is closing on China’s bid for world domination. Its workforce is decreasing by 3 million per year. Time is running out before the aging crisis hits in the late 2020s. Zero COVID has flattened the economic trajectory so much that China is no longer closing the economic gap with the United States at all.

“Based on current trends, Beijing is now less likely to advance in global power by the end of the decade. There is nothing inevitable about China’s rise in the world,” says Australia’s Lowy Institute.

China is in an economic and diplomatic stalemate.

He may be the colossus of the global superpower, but not under that model and not in a wolf warrior conflict with the West, chained to Putin. And not as long as Xi does what he wants.

The Daily Telegraph, London

Leave a Comment