The politics of Covid in China

CHINA ADVISORY - Report 07 Dec 2022 by Andrew Collier

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China’s current management of Covid measures points to a leadership vacuum, narrow thinking, and general bad management. More broadly, as the country’s medical and economic problems mount, the shortcomings of the Xi Jinping regime’s political management style are going to become more apparent, with negative implications for global integration, domestic growth, and political stability. Another important point is that a gradual opening will lead to geographically uneven resumption of economic activity and death rates. Geographically wealthier provinces in export zones will fare better than industrial heartland regions that have less available funding for Covid measures.

Economically, this scenario could lead to several outcomes:

1) Economic growth in regions where ample funding accelerates vaccinations, with rolling lockdowns in poorer, less well-funded areas.

2) Disparity in health care possibly playing into the hands of Xi Jinping as he rolls out an uneven Covid opening plan. He can concentrate health expenditure in the wealthier cities — where the majority of the political power and Party backing lies — while delivering less expensive and poorer treatment for the less wealthy areas. The T3 and below cities also provide easier methods for control of Covid messaging due to the lower access to domestic (and international) internet news. Higher death rates will be easier to tolerate among a more docile regional polity.

3) Tighter control of communication to prevent areas with high death rates from “infecting” the attitudes in regions where vaccinations have kept death rates to a minimum. Xi’s consolidation of power at the 20th Party Congress makes this goal easier to achieve.

4) Healthy exports as many of these businesses are located in the wealthier, eastern provinces, with stronger healthcare.

5) Problematic reopening in inner provinces where infrastructure and heavy industry are important growth drivers.

6) The possibility that consumption may revive faster than rising Covid deaths may indicate. We estimate that 9 percent of the population in the major cities account for 43 percent of consumption. If these wealthier cities are able to spend heavily on healthcare — vaccinations, ICU facilities, and prevention — they will recover quickly from Covid problems.