Chinese-style Communism: “Soviet power less electrification”?
This column was first published in L’Opinion on 8th October 2021
Although China was first in finding its way out of the Covid crisis, the prolonged lockdown of the country and poor economic performance suggest that China is seeing its fortunes reversed.
In 2020, China seemed to be the country that had come off best from the Covid crisis. Having dealt so well with testing and tracing, its GDP was growing whilst Western GDP was plummeting. In 2021, there came a surprising reversal of circumstances — in the West’s favor for once! Now that the pandemic had become endemic, deliverance came from treatment by means of a disruptive vaccination technology — Messenger RNA — that was only mastered by Europe and the USA. The result is that China has found itself obliged to follow its ineffective “zero Covid” policy, closing some of its main ports and imposing a new lockdown on part of the population, at the expense of its GDP, which is expected to remain stable this coming quarter. At the same time, the Federal Reserve has finally been able to announce a slowdown in its purchase of Treasury Bonds, because the US recovery has been so strong.
Beijing, instead of contributing to global research into the health problem, has chosen to throw itself into closing the country up. The new law that obliges local authorities to allocate 20 rooms per 10,000 inhabitants for the purposes of quarantine, as well as the recent trumpeted announcement that 5,000 quarantine rooms for travelers have been built in record time in Guangdong, seem to confirm fears that the Mainland will still remain closed during the whole of 2022. At the same time, the USA has announced the reopening of its borders in November to travelers who have been vaccinated.
A prolonged lockdown. However, this prolonged lockdown in China clashes with the surprising transparency of the avalanche of bad news that has reached us over the last few weeks: a collapsing demography with only 12 million births as compared to the predicted 20 million, lackluster consumption at only +2.5% in August as compared to the expected 7%; stagflation fatal for companies’ profit margins with cost inflation up by 9% whereas price inflation is only up by 1%; the near bankruptcy of the real estate giant Evergrande (the timing of which could not have been accidental); and, in geostrategy, Australia switching over to the American camp… Finally, power cuts affecting almost half of manufacturing industry, making it necessary for the coal mines to intensify production — only a few weeks away from COP26!
This prolonged lockdown in China clashes with the surprising transparency of the avalanche of bad news that has reached us over the last few weeks
The real issue is therefore to know when the bad news will turn into good news — when the various Chinese counter-balances — within the Party, in the business community and in civil society — will be allowed to bring their common-sense arguments to bear and counter the government decisions made this summer.
Young people in China don’t seem to want to wait. A record number of them — 75 million — followed the MONDOGENIUS live streaming of the Italian luxury goods group Moncler last week. It was a grand “metaverse” tour, visiting Shanghai, Tokyo, New York, Milan and Seoul. A perception of “common prosperity” significantly different from the Party’s perception. It would seem that the Party will undoubtedly have trouble bringing Millennials and Generation Z back into the fold, for they are used to living in a hybrid world in which social media have replaced the family ties that have been loosened by three decades of the single child policy. It is a little as if Chinese youth were demanding that the electrical power should be restored more quickly, before the power of the “Soviets”.