By Sulaimon Jamiu
China is beset by severe economic problems in recent weeks, and this had resulted in stalled growth, high record of youth unemployment, collapse of housing market, and companies struggling with recurring supply chain headaches.
The world’s second biggest economy is grappling with the impact of severe drought and its vast real estate sector is suffering the consequences of running up too much debt, but the situation is being made much worse by Bejing’s adherence to a rigid zero-Covid policy, and there’s no sign that’s going to change this year.
Within the past two weeks, eight megacities have gone into full or partial lockdowns, together these vital centers of manufacturing and transport are home to 127 million people.
Nationwide, at least 74 cities had been closed off since late August, affecting more than 313 million residents, according to Reuters calculations based on government statistics.
Goldman Sachs last week estimated that cities impacted by lockdowns account for 35% of China’s gross domestic product (GDP).
However, Xi now expects Chinese GDP to grow by just 3% this year, missing Beijing’s official target of 5.5% by a wide margin. Other analysts are even more bearish, as Nomura cut its forecast to 2.7% this week.
The latest restrictions demonstrate China’s uncompromising attitude to stamping out the virus with the strictest control measures, despite the damage.
“Beijing appears willing to absorb the economic and social costs that stem from its zero-Covid policy because the alternative — widespread infections along with corresponding hospitalizations and deaths — represents an even greater threat to the government’s legitimacy,” said Craig Singleton, senior China fellow at the Foundation for Defense of Democracies.
For Chinese leader Xi Jinping, maintaining that legitimacy is more vital than ever, as he seeks to be selected for an unprecedented third term when the Communist Party meets for its most important congress in a decade, next month.
