Zero-COVID criticism | Canada's Indo-Pacific Strategy | Charles Michel in Beijing
Zero-COVID criticism | Canada's Indo-Pacific Strategy | Charles Michel in Beijing
Dear All,
China continues to gradually reopen with Beijing announcing yesterday a wide-ranging relaxation of its zero-Covid rules. This weeks’s edition of Sinification departs somewhat from its habitual focus on foreign affairs as viewed from China and takes a look at two recent commentaries that were published during and just after the anti-lockdown/zero-covid protests, which erupted in multiple cities across China towards the end of last month. They are symbolic of the mounting pressure that Beijing has been faced with to ease restrictions both before and just after the protests took place.
This week’s topics:
Zero-COVID: Peking University economist Yao Yang criticises Beijing’s recent COVID policies and discusses the key challenges facing China's economy.
Zero-COVID: CUHK scholar Zheng Yongnian discusses the recent “public outcry” in China and calls for a “gradual” easing of restrictions.
Canada-China: CASS researcher Xu Yanzhuo analyses Canada's Indo-Pacific Strategy and its implications for Canada-China relations.
EU-China: Fudan University academics react to European Council president Charles Michel’s visit to Beijing.
Zero-COVID: Peking University economist Yao Yang criticises Beijing’s recent COVID policies and discusses the key challenges facing China's economy
Yao Yang (姚洋) is a distinguished professor of economics and director of the National School of Development at Peking University. The following excerpts are from an edited transcript of a speech Yao made during the 62nd edition of Peking University’s “China Economic Watch Report” (中国经济观察报告会) on November 13. The edited version of his speech was published by several Chinese outlets at the height of China’s recent protests ten days ago. Such timing could simply have been coincidental but, given his criticism of China’s recent COVID policies, I would like to believe that it was not. The full version of Yao’s speech is available on YouTube and includes a number of caustic comments that have been removed from the “edited” text, the only version currently available in China. For those of you who can understand Chinese, I would recommend listening to minutes 1:04:00 to 1:11:00:
Yao Yang: Key challenges facing China's economy and how to respond to them
Challenge number 1: Consumption
“With the Chinese economy currently facing such downward pressure, the most important issue remains insufficient domestic demand. Why is there insufficient domestic demand? The main culprit is still [China’s] epidemic prevention and control policy. In the early days of the Delta variant, China's policy towards the epidemic was extremely successful. After the emergence of the Omicron strain, we continued to implement a dynamic zero-COVID policy at an increasingly high cost.”
Challenge number 2: Real estate
“Between 2020 and 2021, real estate contributed to at least a third [至少在三分之一以上] of economic growth. Its contribution to [China's] economic recovery was possibly even higher than that of exports. With this came a rise in house prices. So in early 2021 several ministries jointly introduced the ‘Three Red Lines’ [policy], which classified real estate companies into four categories: red, orange, yellow and green. This basically meant that real estate companies could no longer raise new loans.”
“The government then realised that the above policy was having too much of an impact [对房地产打压过度] on the real estate sector and started to revise its policy with, for example, ‘city-specific policies’ [因城施策]. This year, the [Chinese] government has continued to roll back its [Three Red Lines] policy, but the effect of doing so does not seem to be very obvious, with real estate [prices] still falling and related investments tumbling further. This is a big problem. For the first time in China, consumers have been affected by a large number of real estate companies failing to deliver their properties. This has caused consumers to lose confidence in buying homes. This is a completely different situation from the past, when a little encouragement by the state was all that was needed for consumers to buy property, or at least to have the confidence to do so. There are many reasons contributing to this phenomenon, the risk of [non-]delivery being just one and the expected fall in house prices another.”
“I hope that such a policy [i.e. the 'joint policy document #254', which effectively calls on banks to provide greater support to ‘sound’ real estate companies] can really take hold and boost the confidence of those working in the real-estate industry. As the saying goes, confidence is more precious than gold.”
“I think there will have to be some very significant signals or indicators to make people feel that the government still has confidence in the real-estate sector. That is the only way that people's confidence will return.”
Challenge number 3: Exports
“Exports remain a key pillar of [China’s] economic recovery and economic growth this year … However, since October, the growth rate of our exports has started to drop [-0.3% in October YoY in dollar terms] … There has been much speculation as to whether the US and European economies will fall into a real recession next year. If this were to be the case, our exports would also be affected. Should exports continue their negative trend or grow minimally, our economic growth would face even greater challenges next year. Our Consumer Prix Index (CPI) is similarly problematic. If we exclude the price of pork, our CPI is already negative, meaning that China has already entered a deflationary trajectory … If we do not adopt appropriate measures, our economy could be met with deflation. When combined with the adverse factors described above, China's economic recovery could face significant challenges.”
Necessary policy adjustments:
“Regarding the epidemic, the central government recently issued 20 measures to combat COVID-19, which I think is very encouraging. This is what I have been calling for in the past, that epidemic prevention and control must be done with precision, ideally right down to the individual … This means that the central government as a whole has now realised that the cost of [China’s COVID-19] prevention and control measures is currently too high and that necessary improvements need to be made.”
“In my opinion, some parts of the latest 20 measures on epidemic prevention still have not been fully explained. Although these specific provisions appear, to some extent, to be relaxing [current] controls, the principle underlying their implementation continues to emphasise that this is not about relaxing controls but about strengthening epidemic prevention. For local authorities, the conventional mindset is that epidemic prevention must still come first. If epidemic prevention is not carried out properly, they will have to take on the responsibility and their responsibility will be apparent [to all]. However, if the economy falters, their responsibility will not [be seen to] be so great. Furthermore, revitalising the economy must be a nationwide effort. It is not something that can be done by one city alone. On balance, local governments will inevitably continue to choose epidemic prevention as their priority.”
“Given this backdrop, I believe that the central government should state clearly that it cannot be ‘both one thing and another at the same time’ [既要又要] and should clarify the differing priorities involved in these efforts. So far, we have lost three percentage points of economic growth. This is equivalent to approximately three trillion RMB.”
“Beijing has not allowed weddings to be held for almost a year. According to Chinese people, a couple cannot be considered married without a wedding. The lack of a marriage ceremony also makes having children more complicated. Our country's population is already approaching negative growth. This situation is also detrimental to [China’s] fertility rate.”
“We often talk about the need to hold politics accountable for epidemic prevention [我们经常讲防疫要算政治账]. Our country's development is centred on the people and the lives of the people are the responsibility of politics. As the Omicron virus is highly contagious but less virulent [than the Delta variant], the focus of epidemic prevention should be on averting serious illness and death, not on preventing infection, let alone simply and brutally [粗暴地] sealing off whole cities to prevent infection at any cost. It has been estimated that with the current number of ICUs [intensive care units] in China, together with the number of ‘fangcang hospitals’ [China’s recently-built makeshift hospitals] built over the past few years, we are fully capable of dealing with severe cases.”
“I am by no means advocating ‘lying down’ and doing nothing [躺平] like in the US. Lateral flow tests should still be done, once every three days or once every seven days, to facilitate the screening of those infected. However, we must allow people to move around. Many people are now afraid to travel out of their place of residence because once they are out of town, returning back home is difficult or at least very uncertain. I also hope that Beijing will lead the way and that epidemic prevention will become increasingly rational. If the capital, Beijing, takes the lead, other cities will naturally follow.”
“Beijing is a city that has signalling [power] [具有信号意义] and acts as an economic hub. If [the situation in] Beijing remains unchanged, overall economic activity will not be able to be revitalised.”
“Finally, despite the banality of this comment and my having already been saying this for the past two years or more, I still want to propose providing cash handouts to the people. The purpose of handing out cash is not just to make people happy and help restore [China’s] severely shrinking consumer confidence, it is also to come to the rescue of the unemployed who have slipped into debt. We should pay more attention to this group. We could help them get through their difficulties by issuing consumption vouchers. This would go a long way to help boost and stabilise confidence.”
“I would like to appeal, here again, to the government to give more consideration [to this]. I hope that local governments will align themselves more closely with the latest 20 measures on epidemic prevention, that they will conduct epidemic prevention and control with more precision [更精准地防控疫情] and give more consideration to the feelings of ordinary people. Only by doing so can we hope for a rapid recovery of our economy in the coming months.”
Zero-COVID: CUHK scholar Zheng Yongnian discusses the recent “public outcry” in China and calls for a “gradual” easing of restrictions
To complement Yao’s speech, I am also including a recent article by Zheng Yongnian (郑永年), a well-known Chinese scholar and prolific political commentator. Zheng is the current director of the Institute for International Affairs at the Chinese University of Hong Kong (CUHK). His piece was published last week in the wake of the protests. In it, Zheng argues strongly in favour of a gradual easing of restrictions and mentions how the recent “public outcry” (社会舆论闹得沸沸扬扬) and “social tensions” (社会矛盾问题) have been a challenge for Beijing.
East-Asian collectivism vs Western individualism:
“[People] believe that it is the systemic and ideological differences between the East and the West that have led to [their] differing responses to the epidemic. While it is true that both systemic and ideological factors are important, the role that cultural values have played in [determining the type of responses adopted to] control the epidemic has been greatly underestimated.”
“In the early stages of the COVID-19 outbreak, Western people widely displayed their individualistic character with such common behaviours as not wearing masks and refusing to be vaccinated.”
“It was only after a huge price had been paid that ‘spontaneous’ [“自发”] behaviours to prevent and control the epidemic emerged. The heavy toll made people realise that they should take the virus more seriously. There was therefore a spontaneous shift from initially refusing [to comply] to a gradual willingness to wear masks and get vaccinated. One should acknowledge that, after paying a heavy price in the early days [of the epidemic], many Western countries have become more scientific in their approach to managing it [很多西方国家的疫情管控趋于科学化]. In the language used by the West, their approach to controlling the epidemic has been a bottom-up and spontaneous type of process.”
“In contrast to the individualism displayed by Western societies, East Asian societies, whether China, Japan, Vietnam or Singapore, have displayed collectivist behaviours in the face of the management of the epidemic.”
“This collectivist culture is difficult to understand for Westerners. Western scholars often see this phenomenon as a product of authoritarian power within the Confucian cultural sphere, but this is clearly a misinterpretation.”
“It is difficult to judge which culture is good and which is not. Judgements on whether a culture is good or bad need to be made on the basis of specific circumstances. For example, in the case of controlling the COVID-19 epidemic, the Confucian cultural sphere’s collectivism helped protect the lives of the vast majority of the population and prevented unnecessary sacrifices. It was [in this particular case] better [优于] than the West’s individualistic culture.”
“The collectivist nature of East Asian cultures has enabled governments to adopt a centralised approach to epidemic control. Such a centralised approach was very effective in the early stages of the epidemic, when countries did not have a good understanding of the virus and when the mortality rate and the proportion of severe cases were high. [Such an approach helped] control the spread of the virus and protect people's lives. However, as the virus continued to mutate, this ‘government-led + collectivist’ model [“政府主导+集体主义”的模式] became less flexible in its implementation of policies and some problems [began to] emerge.”
“The root of the problem lies in the relationship between government and society. If centralised government controls and collectivism reinforce each other, then the rigidity of [policy] adjustments will be high; but if the government is able to guide the forces emanating from collectivism in a scientific and rational manner, then the flexibility of [such policy] adjustments will increase.”
“Empirically, in the third year since the outbreak of the epidemic, economies within the Asian Confucian cultural sphere, such as Japan, South Korea, Singapore, Vietnam, Taiwan and Hong Kong of China, all chose to gradually open up and, in so doing, discovered new methods of prevention and control.”
Social tensions in China are rising:
“In China, although the collectivist model is still in place, differing views have emerged regarding the handling of the epidemic. While some social groups consider the existing controls to be too strict and demand that lockdowns be lifted, others are still fearful of the virus and believe that controls need to be maintained.”
“The central government recently announced twenty measures to further optimise the management [of the epidemic], put forward ‘precision’ in the prevention and control of the virus [提出精准防控] and signalled a gradual easing [of controls]. However, the transfer of powers to the local level has led to neighbourhood and street committees increasing their COVID controls.”
“An interesting phenomenon is that the West's past failures have now helped them find a suitable path. Conversely, the success of China's early collectivist COVID controls have had a somewhat negative effect on the implementation of the new control measures. This has resulted in a situation where it is difficult to ease [restrictions] despite wanting to. Particularly in light of the recent public outcry [社会舆论闹得沸沸扬扬], how to overcome social tensions [如何解决社会矛盾问题] is becoming a challenge for the government.”
“Epidemic control policies need to keep up with the times”
“As the epidemic continues, the nature of the virus is constantly changing. [Thus,] COVID-19 policies should change according to the changing characteristics of the virus. On the one hand, an unchanging epidemic prevention policy at the grassroots level that disregards objective changes will [inevitably] lead to many social conflicts. On the other hand, changes to [China’s] COVID-19 policy should not involve a radical lifting of lockdowns [不能是激进地解封], as they must take into account the fact that some groups are still fearful of the virus [对病毒仍存恐惧心理], and a radical easing [of restrictions] could lead to the emergence of bottom-up lockdowns.”
“In fact, since the release of the ‘20 measures’, China's handling of the epidemic has transformed rapidly from the centralised lockdowns of the early days to [more] self-initiated and decentralised lockdowns. Controls by the upper levels of government have been loosened, while powers and responsibilities have been delegated to the local levels.”
“Fear [by local cadres] of being held accountable has led to additional and stricter controls being introduced at the grassroots level. This is a very dangerous and alarming situation. Top-down transfers of power and responsibility often lead to misuse of power at the grassroots level … We therefore need to rethink whether we should transfer powers [back] to the upper echelons of government or not. Only with stricter controls emanating from the higher levels of government will the lower levels be able to relax a little and normal socio-economic activities [be able] to a resume in an orderly manner.”
Policy recommendations:
“Finding a rational approach to lifting lockdowns is crucial. The following points could be considered:”
“First, we need to practice gradualism [渐进主义] and avoid radicalism in the easing of controls. For example, Shijiazhuang's sudden easing of controls [躺平] resulted in people being afraid to leave their homes for fear of catching the virus. The ‘20 measures’ issued by the central government absolutely do not imply the complete easing of controls [完全躺平] as some individuals have understood it, nor do they imply stricter controls as reflected by their current implementation, but rather require more precision [精准] in the management of the epidemic.”
“Second, we should learn from the policy changes that other societies in East Asia’s Confucian cultural sphere [have implemented] … We should humbly summarise and learn from the respective experiences in epidemic management of these economies and use these as reference points for the future transformation of our own approach to dealing with the epidemic.”
“Third, we should provide the public with relevant knowledge about the virus and guide them towards a [more] scientific understanding of it. Culture and values can change. Nowadays, some people hold the extreme view that a complete easing of rules should happen immediately, while others remain extremely afraid of the virus. In a situation where two social forces are at odds with each other, it is important to find an approach that is acceptable to both forces and avoid mutual fear between the two social groups. [Only by doing so] will the management of the epidemic be able to do be done smoothly.”
“The Book of Changes in Chinese culture speaks of seeking balance between change and no change. The doctrine of the (golden) mean is the core value of the everlasting Confucian culture. Chinese culture has never been a culture of extremes and this holds true in the current prevention and control of COVID-19. Faced with two different social forces, how to strike [the right] balance between centralised control and decentralised control is a question we must reflect on in the days to come.”
Canada-China: CASS researcher Xu Yanzhuo analyses Canada's Indo-Pacific Strategy and its implications for Canada-China relations
On November 27, Canada launched its long-awaited Indo-Pacific Strategy. I have yet to come across any high-profile reactions to its content. The following is nevertheless of note and comes from a recent piece by Xu Yanzhuo (徐晏卓), an early career researcher at the Institute of World Economics and Politics (IWEP), which is part of the Chinese Academy of Social Sciences (CASS):
“Most notable are the 53 references to China in this 26-page document, which directly describes China as an ‘increasingly disruptive global power’. This language is far stronger than [that used by other US allies].”
“It is true that it is not particularly surprising that Canada, one of the US's closest allies, has issued an Indo-Pacific strategy that follows in the US’s footsteps on foreign policy. However, if we take a longer and broader view, it is not hard to see that Canada's Indo-Pacific strategy has not just been an overnight exercise, but one that has been subject to repeated trade-offs and considerations. The current text of the strategy is more declarative than substantive and will continue to be adjusted in response to resistance met in the real world [现实阻力].”
“The Canadian government had long been cautious about using the term "Indo-Pacific … Unlike Australia, Britain and other US allies, Canada has been reluctant to join the US-led trilateral security partnership (AUKUS), the Quadrilateral Security Dialogue (QUAD), the Indo-Pacific Economic Framework (IPEF) and other [Western] initiatives in the Indo-Pacific region. At the diplomatic level it kept a low profile and avoided offending China by not talking about the ‘Indo-Pacific’ or matters relating to China.”
“The outbreak of the Russo-Ukrainian conflict was the turning point in Canada's Indo-Pacific strategy’s tilt towards the United States. Canada believes that Russia's attack on the sovereign state of Ukraine is testing NATO’s and the alliance of democracies’ bottom line, and is a threat caused by the rise of authoritarianism to democracies. Essentially, [the war] reflects both the US's declining leadership and the changing regional order. The threat to the regional/global order exceeds that of the war itself. For Canada, the US-led initiatives in the Indo-Pacific are no longer about vague and distant local hot spots, but about the future world order.”
“Some of its content is highly ‘performative’ (‘表演性’强). Canada's Indo-Pacific Strategy goes to great lengths to portray China as a ‘disruptor’ (破坏者) of the regional order … However, this assertion is essentially [akin to] the ‘China threat theory’ that China cannot and will not rise peacefully.”
“As a country that is geographically so far removed from the Indo-Pacific region and that does not have any territorial disputes with other countries in the region, Canada does not have the same practical needs on security issues as core Indo-Pacific countries such as Australia and Japan. Yet, it is investing significant military resources in the region. This is merely a symbolic posture but hardly an effective diplomatic move.”
“Its economic development and trade growth does not depend on maritime traffic in the Indian Ocean … Its interests in the Indo-Pacific region, such as combating piracy, rely on cooperation with China, but such cooperation has been blocked under this new Indo-Pacific framework.”
“It can be argued that this expenditure by Canada’s government, other than helping contribute to the US's military spending, provides no benefits whatsoever to the countries in the region nor even to Canada’s own security interests.”
“On the economic front, while Canada cites China as an Indo-Pacific country in order to demonstrate the region's crucial importance to the global economy, it implicitly targets China through its Investment Canada Act, which erects barriers against investments by Chinese state-owned enterprises and undermines the country's ties with the largest economy in the Indo-Pacific region [破坏本国与印太地区最大经济体的联系].”
“Not only will Canada's Indo-Pacific framework not help it achieve its strategic goal of reducing its dependence on the US market and diversifying its trade, but it could also damage Canada's trade ties with Asia.”
“Canada's Indo-Pacific strategy in Southeast Asia focuses on developing ties with Indonesia and Vietnam with the intention of filling the [future] manufacturing gap left by its decoupling from Chinese supply chains … Even if part of its supply chains were to be transferred to the aforementioned countries, they would not be able to replace China's position [as the world’s factory] and their products would not be able to do without the Chinese market.”
EU-China: Fudan University academics react to European Council president Charles Michel’s visit to Beijing
Charles Michel, the president of the European Council, met with Xi Jinping in Beijing last Thursday. Nothing significant came out of their discussion. Unsurprisingly perhaps, Michel’s visit garnered relatively little attention in China, especially when compared with German Chancellor Olaf Scholz’s trip to Beijing last month. The following excerpts are from a recent debate organised by Fudan University’s China-Europe Watch entitled “The breadth, depth and difficulty of China-EU cooperation in the wake of Michel's visit to China”, which just about sums up its main talking points:
Jian Junbo (简军波) – Deputy director of the Centre for China-Europe Relations at Fudan University:
“The fact that he [Charles Michel] has set foot on Chinese soil is a symbol of the EU's strong desire to strengthen China-EU relations … This visit was all the more remarkable given that he was also subject to some pressures and questioning about his trip to China from within the EU and by member states.”
“For China, it is imperative to foster a positive relationship with the EU [推进中欧关系良好发展是当务之急]. There is a view that Europe is already tied to the US and that it is [therefore] not worth putting in a lot of effort to develop relations with it. [As the saying goes,] a melon picked using force will not be sweet [强扭的瓜不甜]. Such a view is too pessimistic … There is deep friction between the US and the EU in the economic sphere and Europe is continuing to pursue its strategic autonomy … Thus, Europe has its own independent strategic thinking when it comes to foreign affairs and is not entirely dependent on the United States. This means that Europe can play an independent and unique role within the international community and in some respects can form a cooperative relationship with China.”
“In view of this, China should continue to support Europe's strategic autonomy, respect its unique role in the international community and seek opportunities to shape a more just and reasonable international order together with it. In order to deepen our cooperation with Europe, we need to clearly define Europe’s position in our foreign strategy based on objective realities. Is Europe a partner in our quest for a multipolar world? Is it a companion in promoting the diversity of civilizations? Is it a comrade in opposing American hegemony? Or a friend in advancing international economic liberalism? Or is it all of these?”
“There is considerable room for cooperation not only in functional areas, but also at the strategic level. Cooperation in functional areas has already been discussed at length. This includes market opening, new energy, climate change, health, finance, nuclear proliferation etc. … Cooperation in strategic areas needs to be discussed in [greater] depth … Of course, cooperation is not always about charting a common course of action and devoting oneself to a common agenda. The ability to refrain from undermining one another on a number of international issues and to meet each other halfway are both important aspects of achieving cooperation between the EU and China. The fact that heroes value [other] heroes [英雄惜英雄] without the need for mutual support may after all be accepted as a realm of cooperation [in and of itself].”
“A single visit will not solve the many problems that exist between China and the EU … [Furthermore,] we should not overestimate Europe's role in achieving our foreign strategic objectives. Europe has two faces: it can be both friendly and particularly hostile towards us. Perhaps the most objective assessment is that Europe remains a ‘Second World’ seeking to break away from the US’s hegemonic control, but that it also increasingly has geopolitical ambitions to compete for what has traditionally been considered as the ‘Third World’. Such a Europe will be a highly contradictory compound in its relations with China: both seeking to develop political and economic ties with China in order to obtain economic benefits and to free itself from US hegemonic control; while at the same time partly achieving its ‘independence’ by displaying its toughness towards China in the geopolitical and ideological spheres.”
Peng Chongzhou (彭重周) – Postdoctoral researcher at Fudan University’s School of International Relations and Public Affairs.
“Before the Russo-Ukrainian conflict, the EU's focus in its relations with China was on China being a 'rival'. However, in the aftermath of the Russo-Ukrainian conflict, the EU has gradually toned down the ‘rival’ dimension and started to give more weight to the ‘partner’ and ‘competitor’ aspects. [It did so] out of a strategic need to prevent China from completely siding with Russia.”
Wei Zongyou (韦宗友) – Researcher at Fudan University’s Centre for American Studies:
“Michel's visit to China was also about developing relations with China in order to [help] strengthen Europe's strategic autonomy and to counteract the US’s economic ‘exploitation’ of the EU [在经贸上’盘剥’欧盟].”
“The EU is generally of the view that, on the one hand, the Biden administration is asking the EU to ‘align itself with the US’ [‘向美国看齐’] on strategic issues such as Russia and China; but, on the other, that it is ‘taking advantage of Europe’ on economic issues, and even attacking the EU when it is already in such a vulnerable state [the idiom ‘落井下石’ in its literal sense means throwing stones at someone who has fallen down a well], thereby causing damage to the EU. The EU is deeply dissatisfied with this situation and sees the need to balance economic pressures coming from the US and protect the EU's economic interests through the development of economic relations with China.”