Xi doubles down on Covid-Zero despite economic risks, “Simmering animosity” in Europe imperils EU-China relations & Beijing delivers missiles to Russia ally Serbia -- China Boss News 4.18.22
Newsletter
The Big Story in China Business
Xi doubles down on Covid-Zero despite risk to economy
“President Xi Jinping says his government will stick to its zero-tolerance approach to Covid even as public anger simmers in Shanghai and economic costs mount,” Bloomberg has reported.
Bloomberg
“Prevention and control work cannot be relaxed,” Xi said during a trip to the island province of Hainan, the official Xinhua News Agency reported late Wednesday, the same day the financial hub saw a record 27,719 new cases.
Officials implementing Covid Zero need to adhere to the principle of “people first and life first,” Xi said. “Persistence is victory,” he added.
But the strain is showing as officials struggle to adapt policy to meet the additional “downward economic pressure” China is facing at the same time there are global supply chain challenges and the risk of secondary sanctions for supporting Russia’s war in Ukraine. The latter seems to have given China investors the jitters and may be driving “significant capital flight” from China’s bonds and equities market, according to Global Finance’s Andrew Singer who cited an Institute of Institutional Finance report.
Singer, Global Finance:
“Something very unusual is happening in global [capital] flows,” the Institute of Institutional Finance (IIF) noted recently in its Global Macro Views report. China is experiencing capital outflows of an “unprecedented” scale and intensity, and while the IIF can’t say for sure that this is connected to the war, circumstantial evidence is mounting.
For one thing, the strong outflows began only after Russia invaded Ukraine toward late February. Secondly, “we are not seeing similar outflows from the rest of emerging markets,” said IIF. Indeed, the current circumstance where China has gone “negative” while other emerging markets' capital flows remain positive or neutral is unparalleled over the past 10 years.
One of the leading figures overseeing China’s economy and No. 2 in command, Premier Li Keqiang has been busy putting local officials on “high alert” for “‘unexpected changes’ both domestically and externally,” the South China Morning Post said.
SCMP:
“[We must] strengthen the sense of urgency,” Li Keqiang said at a symposium with multiple provincial heads on Monday, in the southeastern province of Jiangxi, according to the official Xinhua News Agency.
The premier called on the local authorities to keep employment and prices stable, to help shore up the Chinese economy.
“We need to be highly vigilant for unexpected changes in the international and domestic situations, and downward economic pressure has further mounted,” he cautioned at the sort of quarterly symposium, which aims to assess the economic situation across China and discuss what needs to be done next.
But the uncertainty of China’s Covid outbreaks and harsh management strategies “casts doubt on the ruling Chinese Communist Party’s ability to reach its target of 5.5 percent economic growth in 2022,” analysts told Aljazeera.
Aljazeera:
If COVID-19 cannot be quickly brought under control – which seems increasingly unlikely – then either Beijing’s zero-tolerance pandemic strategy or the growth target will have to go, said Carsten Holz, an expert on the Chinese economy and professor at the Hong Kong University of Science and Technology (HKUST).
Meanwhile, reports flooding out of Shanghai show residents under severe stress and taking to social media to vent their anger over Xi’s Covid-zero policy, according to AFP (FranceVideo): “Videos of a pet dog killed in the name of Covid controls, expletive-strewn songs aimed at Communist authorities and scuffles with hazmat-suited officials –- seething, locked-down Shanghai residents are pouring scorn on China's hardline virus measures via social media.”
Shanghai-based correspondent David Culver told CNN viewers: “You'd never expect to see people in Shanghai, China's most affluent and cosmopolitan city, screaming for food."
For the rest of Bloomberg’s update, Xi Says China Must Stick to Covid Zero Even as Costs Mount (1), click here. For Singer’s article in Global Finance, Capital Flight: Foreign Investors Exit China, click here.
For SCMP’s update on Premier Li’s “call to action,” China’s premier flags ‘sense of urgency’ to provincial leaders in call to action, click here. For Aljazeera’s report, As ‘zero COVID’ bites, China’s leadership sounds alarm on economy, click here. For AFP’s report, Shanghai social media unpicks China's virus lockdown story, click here.
Law and International Xi
MOFA’s spokesman Zhao Lijian accuses U.S. of “weaponizing” Shanghai lockdown after State Dept orders evacuation of non-essential staff
"China's Foreign Ministry has notified the US it 'firmly opposes'“ the decision to order non-emergency staff and their families to leave Shanghai due to the Covid outbreak and the government's pandemic measures, CNN reported.
MOFA spokesman Zhao Lijian criticized the decision in a press conference, saying the U.S. was “weaponizing” Shanghai’s lockdown and “smearing” China. Zhao also “defended China's Covid prevention and control policies as ‘scientific and effective,’” despite rising case numbers and persistent challenges in getting basic essentials to the city’s 26 million people.
CNN:
On Monday, Shanghai officials began easing measures in neighborhoods that had not reported any positive cases in 14 days. However, authorities warned those residents should only be going out if necessary, get tested twice a week, and that lockdown would be re-imposed if any new cases were detected in the neighborhood. That still leaves the vast majority of the city's 25 million residents under lockdown.
For the rest of CNN’s report, China accuses US of 'weaponizing' extended Shanghai lockdown, click here.
Former Xinjiang prisoner to give “rare firsthand account” of China’s surveillance technology to U.S. lawmakers
Ovalbek Turdakun, an ethnic Kyrgyz - one of the Muslim minorities incarcerated alongside Uighurs in detention camps across Xinjiang - arrived in Washington D.C. last week to give testimony that “will provide vital evidence” of China’s surveillance technology to Congress, according to a letter from Rep. Chris Smith (NJ) seen by Techcrunch.
Techcrunch:
As a former prisoner, Turdakun is one of only a few people with a firsthand account of the inside of China’s detention camps, including rare knowledge of how the Chinese government uses technology, surveillance and facial recognition to oppress millions of Xinjiang residents, which U.S. lawmakers will use to investigate human rights abuses in China and the Chinese companies that supply surveillance technology to the camps.
U.S. officials maintain that "Beijing relies heavily on companies like Hikvision, but also Dahua, Huawei, SenseTime and others, to supply the surveillance technology it uses to monitor the Xinjiang population both across the region," Techcrunch news staff said. “Ahead of arriving in the United States, Turdakun described the conditions of his detention, brutal interrogations and forced medical procedures in a series of video interviews recorded by Conor Healy, government director at video surveillance news site IPVM,” they added.
Techcrunch:
In one of the video interviews shared with TechCrunch, Healy showed Turdakun a photo of Hikvision’s logo, which the former prisoner immediately recognized, saying that it was the same logo on the cameras in the cells in the detention camp and littered throughout the city.
Speaking with TechCrunch on Tuesday, Turdakun described the cells where he would be held with two dozen other prisoners for months at a time and how the cameras, all branded with Hikvision logos, were “always on and watching,” he said.
For the rest of Techcrunch’s report, ‘Always on and watching’: A former Xinjiang prisoner describes life inside China’s detention camps, click here.
PRC state oil refiners avoid new Russia contracts while independent “teapots” keep things under wraps, Reuters
Keep reading with a 7-day free trial
Subscribe to China Boss News to keep reading this post and get 7 days of free access to the full post archives.