Lessons from Shanghai
The lockdown in China’s financial hub shows stubbornness is not a good government policy
By Hari Kumar
The outcome of the weeks-long Covid-19 lockdown in Shanghai could, perhaps, show the Chinese leadership a valuable lesson: Stubbornness is not a good strategy in policymaking.
As Shanghai began reporting more than 20,000 new cases a day, the Chinese authorities, vigorously pursuing a Zero-Covid policy, ordered almost all Shanghai residents to stay within their homes or workplace and take swab tests practically every day.
Zero-Covid is Beijing’s policy throughout the country and its special administrative regions, Hong Kong and Macau.
An ex-pat locked up in his Shanghai apartment for three weeks, spoke of his situation last week (April 16-17): “In my younger days, my cousins made fun of me, saying my nose looked like a pumpkin. Now, I think it is now like a watermelon with this never-ending series of nasal swabs I have been taking.”
His confinement is set to continue for at least two more weeks as more cases are being detected in his apartment complex. Some of his colleagues who volunteered to stay in the office to keep the work going are also facing the similar situation.
The capacity of the Chinese state machinery to isolate the entire population of the country’s most populous city (27.8 million in 2021, according to the UN World Population Report) and pull off millions of tests daily is impressive indeed. Unfortunately, however, the effect of this mammoth operation, locally and globally, is not as heartening.
The lockdown is causing insurmountable supply chain problems and putting extra strain on the markets, which are already feeling the pressure of a disrupted global shipping, uncertain truck delivery schedules and rising freight costs due to the impact of Covid in different countries.
Watching the Covid surge in Shanghai, other Chinese cities have started imposing partial closedown. If that trend continued, widespread lockdowns could have a telling effect on China to the detriment of the global economy.
A study that researchers from the Chinese University of Hong Kong, Tsinghua University, Zhejiang University, and Princeton University made has concluded that a lockdown of over 30 days in just four leading cities – Shanghai, Beijing, Guangzhou, and Shenzhen – could shrink the country’s GDP by 8.6 per cent. It will, then, make a knock-on impact on the global economy.
Still, President Xi Jinping is determined to continue with the Zero-Covid policy. He is, perhaps, enthralled by the policy’s initial success two years ago.
When Beijing decided to lock down Wuhan, where the Covid-19 outbreak started, it could also get a reasonably efficient delivery system within a few weeks. Then, as the virus spread to other cities, the state machinery honed its operations and began isolating entire cities with ruthless efficiency.
China then trumpeted the success as an example of the Chinese Communist Party’s virtue and ridiculed the democratic governments that descended into chaos over lockdowns and other issues like the compulsory use of facemasks.
But now, as China continues to adhere to its Zero Covid policy, the situation in Shanghai has become a challenge for the Communist Party. The logistics part of the operation particularly, has become a nightmare.
To feed a city of 27.8 million requires an army of people to help with the supply of food, medicine, and other essential items. The authorities had flown in over 38,000 medical workers to keep the testing and isolation part running. The problem is to get enough volunteers to package and deliver things that people need.
The Covid protocol mandates that people stay home for 14 days and undergo daily tests if a positive case is detected in their building. With some 20,000 cases recorded every day in the city, many apartments had to be in lockdown for weeks.
As authorities put severe restrictions on the movement of people, truck drivers and delivery workers find it impossible to do their job.
Trucking has dropped 40 per cent nationwide since mid-March, while truck movement in and around Shanghai is down to about 15 per cent of its average level, wrote Ernan Cui, an analyst at the Hong Kong-based research firm Gavekal, in a note earlier this month.
“There are fewer and fewer truck drivers available who do not have a travel history that comes with some kind of Covid exposure risks,” Cui wrote. “The time to complete deliveries has been greatly extended, and the cost of trucking has risen significantly.”
Shanghai’s problem is not food shortage; but the restriction on movements has crippled the delivery system. Stories of delivery workers sleeping under the bridge to escape confinement to their homes and the older people begging for medicines have appeared on social media.
Like during the Delta surge in India, it is the people’s resilience that is helping Shanghai now. Getting small individual orders of supplies delivered to the doorstep isn’t easy. So, residents in every apartment have organised WeChat groups to consolidate orders as a group.
Once the delivery is made to the apartment complex, volunteers from the building sort out the goods and deliver them to those ordered. The supply is placed outside the door to avoid personal contact. Under the lockdown, most people have run out of physical cash. So, payments are made online.
This arrangement is also creaking under pressure. The fear of running out of food makes many Shanghai residents wake up at six in the morning to place orders on grocery shopping apps before everything sells out.
While these creative options have kept the life ticking for most, some fall through the cracks. Even the super-rich find it hard to procure essentials at times. For example, venture capitalist and billionaire Kathy Xu had to go on a group chat asking for bread and milk. It went viral and triggered a discussion about the plight of the less privileged.
Numerous stories have appeared on the Chinese social media about elderly people who do not own smartphones to join chat groups being left to fend for themselves. Neighbours reach out and help them, but such helping hands are not always reliable given the restrictions on stepping out of the apartments.
The frustration is not limited to locked-up residents. Leaked audio of a conversation went viral as a government employee revealed his helplessness.
“I can’t believe our country is like this,” said the elderly man seeking to see a doctor said at one point, to which the government employee replied, “I also don’t know why Shanghai has become like this.”
The authorities reacted in their typical manner – by censoring all such social media posts. That response angered more people, and some openly started blaming CCP and officials, though it is dangerous in a country where leaders brook no dissent. (Click on the pic below to see video)
The censors are now working around the clock and even a hashtag with words of the national anthem has been banned as it referred to people rising up.
The government meanwhile is desperately trying to fix the supply chain and delivery platforms have send more people to help their regional offices. However, restrictions continue to limit their capacity.
The situation has evoked criticism about the Zero Covid policy – mainly because the Omicron variant is apparently milder than previous variants and does not necessarily warrant hospitalisation.
Almost 80 percent of those infected in Shanghai have shown no symptoms but were detected only through regular testing.
The city has set up a temporary hospital to accommodate thousands of Covid-19 patients. But people resist taking tests as they are reluctant to get isolated. The condition at the new Covid hospital has redoubled this reluctance. Garbage is piling up, and videos of clogged toilets have surfaced on the social media.
Nevertheless, Beijing’s policy says all positive cases should be moved to isolation centres for two weeks and release them only after they test negative. However, some experts have raised doubts about this policy, but their comments get deleted from the internet.
There is no room for alternative ideas when stubborn leaders head governments, adhering to top-down delivery as their policy. So, only what the leader wants to hear can be spoken.
“Zero-Covid is not just a Party policy, but … a Xi policy”, Steve Tsang, director of the SOAS China Institute in London, told AFP. “As such, it cannot be wrong and cannot be abandoned – at least not until Xi sees its continuation will harm himself or his hold on power.”
For the Communist Party, Shanghai is a crucial city as many of its top leaders had deep roots in the city, notably former President Jiang Zemin. Former Prime Minister Zhu Rongji had a stint in the city while Xi himself was the party secretary there for seven months in 2007.
It has almost become an unwritten rule that those who aim for the top leadership of the party should have a stint in the financial hub to further their credentials.
Those who get top posts in Shanghai are seen as able administrators and generally given key roles later on. When Covid outbreak crippled Wuhan in 2020, Beijing had sent in then-mayor of Shanghai, Ying Yong, to bring the situation under control.
The current municipal party chief Li Qiang, who is considered as an ally of Xi, was regarded as rising star by many analysts and even a future prime minister. But the current Shanghai situation may have dimmed his star a bit.
Analysts say China is unlikely to review its policies until after the party congress in the autumn and Xi gets his third term. While this situation might project a sense of calm and stability to the domestic audience, there is a price to pay.
Videos of people protesting over lockdowns are surfacing on social media. However, a survey shows people’s trust in the Beijing government is still at 80 percent, though it is down from more than 90 percent a few months back.
So, a wave of discontent washing over the entire country is unlikely. But the situation could give enough fodder to factions within the party that are jostling for power behind the calm exterior it projects.
What the rest of the world should worry about is not the problems within the CCP but what awaits the world if China continues this way.
As per Lanzhou University’s “Global Forecasting System for New Coronary Pneumonia Epidemic,” the current virus surge in Shanghai will be brought under control by early May.
Only 13 of China’s top 100 cities have no public health-related restrictions – such as lockdowns and quarantines – in place, while 73 cities that account for 53 per cent of the national GDP have imposed limits on movement and activities, according to Gavekal.
The commodities market is already jittery as Russia and Ukraine, two prominent suppliers of wheat and edible oils, continue their war. A sluggish Chinese growth is something that the global economy can do without right now.