Factories close, subways empty: China suffers from zero Covid mace

State propaganda celebrates zero-Covid strategy enacted by President Xi.

Factories close, subways empty: China suffers from zero Covid mace

State propaganda celebrates zero-Covid strategy enacted by President Xi. But the tough lockdowns are not only getting on the nerves of more and more Chinese, the effects are also severe for the economy.

China's strict zero-Covid policy is reaching its limits. Even if there are only a few corona cases, blocks of flats or even entire districts are cordoned off and factories are closed. While the frustration among the Chinese increases and there are protests, the economy suffers enormously.

The freedom of movement of millions of Chinese is currently restricted - and across the country it is possible at any time that a tough lockdown will suddenly be imposed without warning. Many cannot go to work. They don't go to restaurants, to the bakery or to the hairdresser. Factories limit production or shut down completely.

This slows down economic growth enormously. For context: In January, the International Monetary Fund was still assuming that the Chinese economy would grow by 4.8 percent this year. The forecast is now well below this at 3.2 percent. That slower growth of 1.6 percent means gross domestic product will be a whopping $284 billion lower than projected earlier in the year. According to official figures, almost a fifth of young Chinese have no job.

The weaker growth is not only due to the strict zero-Covid policy. The Russian war of aggression in Ukraine and the global economic weakness due to rising interest rates are contributing significantly to this. But zero-Covid is having a significant impact.

Expressed in figures: In the past week, according to the “Economist”, there were almost half fewer domestic flights in China than a year earlier. In the first nine months of the year, the three largest airlines in China have flown a combined loss of around ten billion dollars. In the ten largest cities in China, the subways have carried about a third fewer people than last year. Movie ticket revenue, a powerful predictor of going out, fell 64 percent. More than half of the cinemas in China are currently closed.

This shows the downside of the zero Covid policy. It has prevented high death rates in China like in the US and Europe. While large parts of the world were struggling with the spread of new Covid variants in 2021 and restrictions were imposed in Germany, for example, normal everyday life was largely possible in China due to mass tests and tough local restrictions. But with the now highly contagious virus variants, the zero-Covid strategy is working less and less. While the rest of us can now live with the virus, China is stuck in a lockdown loop.

State and party leader Xi Jinping has made zero-Covid a pillar of his policy. State propaganda praises the strategy as a huge success. But this is not the only reason why there is currently no way out in China. The majority of people - especially old people - are unvaccinated. Only a small proportion of the population has been exposed to the virus so far. That means: A loose Covid policy should lead to numerous deaths and bring the health system to the limit – or even beyond.

In the past few weeks there have been repeated reports that the Communist Party could relax the strict Covid line. But now it looks as if the government should only allow a few minor reliefs to expect the population to have a few more hard zero-Covid months. As soon as authorities discover corona infections, the lockdown hammer falls.

This is not only painful for China's economy. One example is Foxconn's massive iPhone factory in the central Chinese city of Zhengzhou. In October, migrant workers fled the site after 200,000 workers were sealed off from the outside world and forced to live and work on the site after outbreaks of the coronavirus were reported in the metropolis.

A corona curfew is currently in force again for around six million people in Zhengzhou: All residents of eight districts around the country's largest iPhone factory are no longer allowed to leave their quarters. Blocks of flats classified as "high risk" have been cordoned off with barricades. There are checkpoints on the roads. According to the financial news agency Bloomberg, Apple is expected to be able to produce six million fewer iPhones than planned due to the corona restrictions in the plant.