Spanish expatriates in China observe with skepticism that no popular upheaval has coincided with such rapid shifts in scientific messaging. On Thursday, after two years of warning about the virus’s deadly potential, the regime’s official press began portraying covid as a mild illness during breakfast news cycles.
“Exclusive: A team of Chinese scientists confirms the Omicron variant’s pathogenicity is markedly reduced compared to the original strain and other variants,” announced Global Times. The piece circulated as credible proof among observers that the regime had decided to ease restrictions after recent protests against the “zero covid” policy, which demands strict limits on daily life and imposes substantial economic costs.
The authoritarian leadership under Xi Jinping appears to be drafting a new narrative to “preserve its reputation,” a move that risks eroding authority in the eyes of citizens. Where yesterday there was fear of a covid crisis, today, following simultaneous demonstrations across multiple cities that challenged incompetent governance, the party’s messaging has been tempered by what is framed as new scientific evidence.
Most observers anticipate a gradual lifting of restrictions (some cities have already begun this process). Many wonder whether the zero covid policy has reached a tipping point. The central question becomes the pace of loosening: move too quickly and there could be fatalities due to gaps in vaccination and questions about vaccine efficacy manufactured domestically; move too slowly and the economy may strain under the burden. The consequences would ripple outward, affecting the West through supply chains and inflation. The argument unfolds as a delicate balancing act.
China is estimated to have lost about 2.3% of GDP growth in 2022 due to covid-related restrictions, according to Alicia Garcia Herrero, chief economist at Natixis, cited by Prensa Ibérica through EL PERIÓDICO DE ESPAÑA. Airports sit nearly empty, tourism wanes, exports slow, domestic movement shrinks, sick leave rises, street commerce falters, and dining out declines. The country now aims for around 3% growth, which is viewed as insufficient for a population of 1.4 billion to maintain job creation and stability without stronger expansion.
How fast should growth rebound? The answer hinges on the acceptable loss of life and the number of elderly people who remain unvaccinated or distrust vaccines due to traditional beliefs or skepticism toward vaccines in general.
The forecast from economists is that Beijing will ease restrictions gradually. In the first half of the year, the global economic impact should be modest, but by the second half, higher energy demand may push energy prices and inflation higher. What does this portend for Europe? If the war in Ukraine and Russia’s gas cuts persist, could a harsh winter unfold, escalating demand from the Asian giant?
Markets rally on every sign of movement in China, and even reports of a cautious approach to zero covid are greeted as relief.
iPhone factory disruptions
A case in point is the flagship iPhone 14, produced at Apple and Foxconn facilities in China. There, public frustration with government restrictions converges with pressure from multinational corporations seeking relief from the CCP’s tight grip.
“We want to go home,” shouted workers as riot police arrived at the scene in Zhengzhou, the iPhone city. Reports from late 2022 recount clashes between workers and security personnel clad in covid safety gear. A factory layoff wave and a covid outbreak fueled resignations among substantial numbers of employees, and some workers left town in scenes of panic stoked by government messaging. Factory managers reportedly offered raises to retain staff, but tensions persisted, and protests ensued.
Industry analysts note the cost of production disruption: weekly production cuts and protests could cost Apple billions in sales, and some estimates suggest up to five percent of iPhone 14 sales might be lost due to the lockdown. Foxconn subsequently reduced output commitments, delaying orders into January and disrupting the holiday season. Apple acknowledged a temporary shock as the plant operated at a substantially reduced rate, and its stock price reflected the impact of the disruption.
These episodes of economic disarray push Beijing to consider investment shifts, though moving large-scale manufacturing to other regions remains a sensitive proposition. The geopolitical context remains delicate: China positions itself against Western pressures while maintaining ties to Russia. At the NATO summit, Beijing’s alignment with Western security and values was scrutinized, and voices within China push for diversification away from Western dependencies so as not to repeat Russia’s energy vulnerability. Simultaneously, renewed nationalism under Xi Jinping, who secured another five-year term, surfaces with China’s population expressing fatigue over mobility restrictions and closed venues, while global players watch closely and weigh future investment decisions.
In this climate, the balance between domestic satisfaction and global economic responsibility shapes policy choices. The interplay of public sentiment, corporate interests, and international diplomacy will likely determine both the tempo of reforms and the broader ripple effects on global markets and supply chains.