This is an interdisciplinary research project carried out by UWC Political review and Anthropy. Raina Lath, Vivi Li, Gwyneth Garlinghouse, and others contributed to this article. Some authors prefer to remain anonymous.
Barbed wires outside people's homes, nucleic acid tests every few hours, and banging pots and pans in the hope of receiving some food are just a small number of events happening in Shanghai at the moment. To halt the spread of Covid, the Chinese government has confined over 26 million people to their homes over two months. And it was just nearing an end.
Shanghai's latest Covid outbreak has been the most devastating one in two years, starting in late March, when daily cases rose from near-zero to more than 10,000. With the city having prided itself on its comparatively lax Covid restrictions, the failure of current measures to control the spread of the virus led many to view this as an opportunity for China to embrace coexistence with the virus. The attitude was confirmed by local health expert Wu Fan, who, in a press conference on March 26, emphasised the "indispensable role in the Chinese and global economy." At the time, many deemed the prospects of a lockdown an impossibility.
Just a week later, the tides have turned. What was supposed to be 4 days of "mass testing" dragged on to a month-long city-wide lockdown. Without any warnings, chains and barriers have been attached throughout Shanghai's residential complexes. Workers are unable to go to work, students are transitioned to remote learning, and all of the city's health care resources are devoted to discovering and treating Covid patients.
The main reason for the Shanghai lockdown is undeniably a political one. "清零政策", or the "Zero-Covid Policy" has been a constant in Chinese governmental response towards the virus since its emergence in Wuhan in December 2019, as seen in the city's subsequent lockdown. However, China's clean record with covid infection rates is becoming increasingly important to its leader Xi Jinping as the 20th triennial Communist Party elections, set to occur in the autumn of 2022, nears. President Xi has benched his political reputation on the country's past success of containing the virus under the "Zero-Covid," and to revert that policy would come at a considerable humiliation.
Furthermore, while the Chinese government strives to present China as a leading producer of vaccines, they have been less effective than those used elsewhere. If there were to be higher mortality amongst the vaccinated Chinese population in comparison to those elsewhere, China may face public embarrassment. It is estimated that more than 3 million elder people may die if China relaxes its Covid regulation, many of whom are unvaccinated or have only received one dose.
At this point in time, Shanghai is gradually reopening and getting out of lockdown, however the events occurring during lockdown have had severe political and economic implications.
Firstly, the lockdown within Shanghai has severely impacted the relationships between the ruling Chinese Communist Party and its citizens. The shutting down of the city had stripped citizens of their human rights all in order to contain covid even with a small number of infections. Many people struggled to attain basic needs such as food. Since April — and for some residents, late March —, Shanghainese people have been unable to maintain sufficient access to food while being confined to their homes. Food supplies are monopolised by a few government agencies who are not held to account. Therefore, any food delivered by the government is of poor quality, if it can be delivered in the first place. Among the most severely affected were the elderly, who do not know how to use the internet and hence cannot access food delivery services online.
The lockdown has also been marked by rampant human rights violations. Some residents were denied entry to complexes because they were unable to prove they tested negative for Covid, while others were not let out for the exact same reason. In some scenarios even, residents were forced outside of their apartments so that it could be converted into a lockdown facility. Those who dare to speak out against the authority saw their posts removed and their accounts suspended. Ironically, just three days before the lockdown was announced, two men were arrested for spreading "fake news and misinformation" on social media — the rumour that Shanghai might be placed under a lockdown! "My faith in the country has completely evaporated.." said Coco Yu, a Shanghainese resident, "I now realise that this country might at any time revert to the state it was in 50 years ago."
Additionally, due to Shanghai being China's 'economic' and 'financial' capital, the economic consequences have been extremely severe. Trucks carrying in raw materials and taking out finished products have been unable to maintain a regular shipment schedule. This means that not only factories in the city have been forced to halt production, but there were also ripple effects in parts of China. For example, Nio, an automotive company based in Hefei, Anhui province (which is not currently under restrictions), had to suspend production in the second week of April due to a lack of parts. Similarly, there have been severe supply chain disruptions to manufacturing hubs in the Yangtze River delta where many multinationals such as Apple and Walmart are situated.
In terms of the market, initial public offerings are no longer able to proceed due to the requirement for an official stamp from administrative offices which are currently closed. This has led to low liquidity in the market and high borrowing costs as the work from home situation has resulted in less productive traders. This amongst the other negative economic indicators has led to the central bank announcing a cut in reserve ratios for banks.
As for the Chinese economy, estimations based on the road vehicle freight flow index (volume of truck and truck traffic on roads), which has fallen by almost 70% since the most recent lockdown, suggest that Shanghai's monthly real income may drop by over 50%. It is also predicted that the lockdown will cost Shanghai at least 3.7% of its annual GDP, destroying hopes of reaching the government's target of a 5.5% increase in GDP.
Continuing on, as well as being the busiest shipping port globally, Shanghai is a hub for semiconductor, electronics and car manufacturing. This means that the supply issue caused by the strict measures in Shanghai impacts all companies around the world. According to a European Union Chamber of Commerce review in China, an estimated 30% of European firms have been negatively impacted since the lockdown began. A similar survey approved by the American Chamber of Commerce in China, 57.3% of firms have been negatively affected by the supply chain difficulties .
The world is sure to see the impact that Covid decision-making has had on Shanghai and the wider China in the future. It has demonstrated the benefits and drawbacks of a highly centralised and authoritarian government which is able to implement any policy at its will without any checks and balances. While the national lockdown policy was in place back in 2020, Shanghai took a more flexible approach with individual blocks being locked down in lieu of the entire city. However,
Beijing eventually overruled the Shanghai leadership as seen in the most recent lockdown, can be viewed as an assertion of power. It is hard to say who will carry the blame for the extensive economic and social costs that have resulted from the lockdown. However, it will be a sure indicator of the future of China's political structure.
References:
https://thediplomat.com/2022/04/political-tensions-simmer-over-shanghais-covid-19-crisis/ (really good article for political effects)
https://theaseanpost.com/geopolitics/2022/apr/05/economic-impact-shanghai-lockdown
https://www.aa.com.tr/en/asia-pacific/covid-lockdowns-in-shanghai-choke-lifeblood-of-economy/2569933
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