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Monday, December 5, 2022

CHINA – COVID AND THE ECONOMY #389

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Mr Graham Perry
Graham Perry
Experienced Arbitration Lawyer | China & Chinese Business Affairs | Public Speaker/Lecturer.

GOOD MORNING FROM LONDON

China’s economic activity is reported by the SCMP to have contracted in April as lockdowns across the country have challenged growth prospects for the first time since Covid-19 emerged more than two years ago.

Retail sales fell last month by 11.1% year on year. Industrial production, which has underpinned China’s rapid economic recovery from the initial Covid shock in early 2020 has dropped 2.9 per cent. The data indicate the economic toll from China’s approach to Covid, which it has sought to quash through city-wide lockdowns, mass testing and quarantine centres.

The elimination of infections is a priority for President Xi Jinping, who has reaffirmed his commitment to the strategy this year ahead of the expected commencement of his third term in power. The zero-Covid approach did largely contain the virus over the past two years but authorities have escalated their hardline measures in 2022 following the outbreak of the highly infectious Omicron variant.

Hitherto China has managed to restrict its Covid deaths to 4,500. In the UK it is 170,000 deaths + rising and US deaths is at the 1m+ figure. The comparison is stark. China’s hardline approach has allowed significantly more people to live in China whereas the soft line approach of the US + UK has facilitated the deaths of close to 1.2m people.

These are health questions but they are also political questions. The prime responsibility of government is the protection of the health and safety of its people. And here, clearly, China has protected its people more effectively than the US/UK. At what cost? Hitherto little or no cost but perhaps in the months ahead there will be an economic contraction. Isn’t that an acceptable cost? Perhaps the question should be put to the Chinese families of the 4,500 dead and then to the US/UK families of the 1.2m dead?

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