Xi’s Costly Obsession With Security
How a Quest for Control Threatens China’s Economic Growth
With COVID-19 increasingly tamed, governments across Asia have been winding down some of the world’s strictest control measures. In September, Taiwan announced that it was reopening its borders and phasing out its quarantine policies; South Korea lifted its outdoor mask mandate and scrapped mandatory COVID-19 testing for inbound travelers. On October 11, Japan will end a pre-departure test requirement for travelers who have received at least one vaccine booster and fully reopen its borders for the first time since 2020. Even Hong Kong, which for more than two years had emulated mainland China in maintaining stringent border controls, has decided to end all hotel quarantine requirements for international arrivals. For all these countries and territories, the pivot to a lighter, more flexible approach has been driven by the growing recognition that COVID-19 is now a manageable endemic disease and that harsh population-level containment has come at a very high price.
Amid this rapid normalization, however, China has instead doubled down on its all-encompassing “zero COVID” strategy. In contrast to almost every other country in the world, China continues to pursue stringent border controls, aggressive isolation of close contacts, sudden closures of airports and public spaces, and snap lockdowns of neighborhoods and even entire municipalities. Having staked enormous political capital on zero COVID, China’s leadership is loath to change course—particularly on the eve of the all-important 20th National Congress of the Chinese Communist Party this month, where President Xi Jinping is set to have his 10-year rule extended. In city after city, officials are pursuing excessively harsh measures in an effort to avoid any outbreaks that might embarrass the government.
Beijing’s intransigence has come at an escalating cost. Prolonged lockdowns of millions of people in major cities such as Shanghai have not only devastated China’s economy—which is now expected to significantly fall short of growth targets—but also provoked rising social discontent. The Chinese government’s failures to implement more effective health policies, meanwhile, such as authorizing the use of mRNA vaccines and prioritizing the elderly in its vaccination campaign, have meant that the population remains needlessly vulnerable to future outbreaks. So the government faces a growing dilemma. On the one hand, its zero-COVID strategy is sufficiently unpopular that few government officials are prepared to publicly endorse its long-term existence, and international pressure to abandon the policy is mounting. On the other hand, political considerations and the lack of a clear alternative have prevented Beijing from moving away from it.
Beijing’s stubbornness is puzzling. Rather than reaffirming an increasingly untenable policy, the Party Congress presents China with a crucial opportunity to rein in its excesses. Once the congress has taken place and political optics are no longer directly in play, Beijing could begin to change its narrative about COVID-19 and choose science over politics. By making effective vaccines and treatments more widely available, it could bring its anti-COVID policies in line with those of its Asian neighbors and help the population resume a normal social and economic life. At the same time, local officials, if under less pressure to impress higher-ups, would no longer have to rely on needlessly aggressive lockdowns and other interventions that come at the expense of economic growth and basic social freedoms. If China’s leaders fail to change their approach, however, it may not only leave the country exposed to an unending cycle of outbreaks and lockdowns; it could also threaten its long-term social, economic, and even political stability.
Despite growing evidence that zero COVID is doing far more harm than good, the Chinese government has important motives for clinging to it. First and foremost is the potential health crisis that relaxing the approach could entail. After two and a half years of zero-tolerance policies, Beijing has created a situation in which a very high percentage of its population has never been exposed to the virus. According to official figures, China thus far has accumulated 996,000 infections. Even taking into account the potential problem of underreporting—which is not a major concern in view of China’s centralized PCR testing system—this figure shows that only a very small fraction of its population has been infected and therefore carries some natural immunity. In fact, the Chinese Center for Disease Control and Prevention (CDC) itself has acknowledged what it calls, “China’s nearly unique situation of having only vaccine-induced immunity.”
But the vaccine picture is equally concerning. Although as of March 2022, nearly 90 percent of the Chinese population had received two doses of China’s non-mRNA vaccines, studies now estimate that about six months after the administration of the second dose, the antibodies triggered by these vaccines drop to a level that is considered low or even undetectable. Because of this immunity gap, Chinese officials have reason to fear that a policy relaxation could be followed by a surge of COVID-19 cases that would quickly overwhelm the country’s health-care system. At the extreme, this could lead to large numbers of deaths and consequent societal instability.
Although such a worst-case scenario may be unlikely, it cannot be ruled out, especially because the health-care system remains fragile in rural areas, and China has a relatively large percentage of elderly people who are not fully vaccinated. (Perhaps because of the false sense of security that zero-COVID policies have created, the elderly have not been prioritized for vaccines and boosters. Notably, among Chinese who are 60 or older, the two-dose vaccination rate is now 85.6 percent, and the booster rate is just 67.8 percent—both admittedly lower than figures for the same cohort in the United States.)
China’s population may be unique in having almost no natural immunity to the virus.
To understand just how devastating a late-pandemic surge could be for an immunologically naïve population, consider the fate of the Austro-Hungarian Empire at the end of the Spanish flu pandemic. In his 2009 book Contagion and Chaos, the late political scientist Andrew Price-Smith noted that the Austro-Hungarian Empire was largely spared from the initial waves of the “Great Influenza” in the spring and summer of 1918. But it was devastated by the third wave, which appeared in the fall of 1918 and, he argued, helped precipitate the defeat of Germany and Austria in World War I and ultimately the collapse of the empire. According to Price-Smith, this devastating third wave, coming after a relative dearth of cases in the first two waves, delivered a profound shock to the social and economic system, becoming the proverbial “straw that broke the camel’s back.” Although there are many differences between Austria-Hungary and China today, it is easy to understand the extent to which officials in Beijing may fear the consequences of a sudden unbridled spread of the disease after keeping it at bay for so long.
Second, despite rising discontent, Beijing understands that a significant portion of the public—especially in smaller towns and rural areas—still strongly supports the zero-COVID policies. People do so in part as a result of relentless state propaganda and their lack of access to independent information. For example, the Chinese media frequently contrast the number of infections and deaths in China with that in the West and contend that China is achieving the best results in balancing economic growth and COVID prevention and control.
But social adaptation has also played a role: many people have come to rely on zero COVID to protect them from the ravages they are told have taken place elsewhere in the world. Indeed, hundreds of millions of elderly Chinese (and their family members) appear to believe that Beijing’s harsh policies have effectively shielded them from the virus—even though many of them are still not fully vaccinated or have failed to obtain booster shots. As a result, if Beijing begins to scale back the policies without being able to guarantee the safety of the elderly, it could risk undermining the support it has so carefully built up over the past two and a half years.
A third reason that Beijing is reluctant to abandon zero COVID is that important interests close to the regime are benefitting from it. Hundreds of Chinese companies, for example, have reaped enormous profits from providing rapid PCR testing services, which China has implemented on a massive scale. According to one report, in the first half of 2022, China’s top ten testing companies raked in a combined 48.52 billion yuan ($6.8 billion) in revenue, with total net profits of 16.3 billion yuan ($2.3 billion). And China’s political leaders themselves, having put so much political and economic capital into the strategy, have an incentive to stick with it. As Xi told officials in June, “Persistence is victory.”
Changes of policy can also provoke a backlash from China’s own elite. Consider what happened in Beijing in July 2022, when the city’s health administration attempted to impose a new vaccine mandate. Under its plan, older citizens who live in retirement homes or elder-care facilities would have to be vaccinated, and anyone who was unvaccinated would be denied access to public facilities such as libraries, museums, and movie theaters. Within hours, however, there was intense pushback on social media—one reason was a lack of confidence in the safety and effectiveness of the Chinese vaccines—and by the next day, the policy was rescinded. In fact, the abrupt reversal was likely the result of pressure from retired officials in Beijing, some of whom are vaccine skeptics and who may have used their influence with the top leadership. Certainly, Xi had every reason to avoid friction with party elders on the eve of the Party Congress.
Indeed, a final motive for Beijing’s attachment to zero COVID is the political calendar: because of the Party Congress, China’s leaders have made no attempt to prepare the state bureaucracy or Chinese society for the major policy pivot that ending the strategy would require. To the contrary, in the run-up to the meeting, Xi has sought to send a clear and consistent message that his current top domestic priority, the fight against COVID-19, has gone according to plan and has been a resounding success. Any effort to rewrite the script might have muddied the waters, creating doubts about China’s policy direction and making a smooth transition less likely. As a result, despite ever-increasing social and economic costs, the regime has done nothing to change the key components of its signature policy initiative. All of these rationales have further raised the stakes on what will happen after the Party Congress is finished.
Once Xi has been confirmed for a new term in office, his government will finally have to confront its pandemic management problem. For the moment, the regime appears unlikely to change its strategy. In part, this is because Xi’s personal stature is directly and inextricably bound up with the success of the zero-COVID policy. A sudden policy shift is tantamount to admitting failure, which would risk undermining his political authority within the party.
But China’s deteriorating economic outlook may leave Beijing with little choice. Combined with the worst real estate crisis in a generation, zero COVID has inflicted lasting damage on China’s growth model. According to data compiled by Zheng Yuhuang of Tsinghua University, 460,000 Chinese companies went out of business in the first half of 2022 and 3.1 million private businesses closed down, many of them as a result of lockdown restrictions. In the second quarter of 2022, China’s economic growth fell to just 0.4 percent. Already, major international financial institutions have significantly lowered their growth expectations for China this year.
All but one of China’s 31 provinces are running deficits related to zero-COVID measures.
Even the state-owned Bank of China recently forecast GDP growth of just 3.5 percent, far below the 5.5 percent target the government set earlier in the year. The economic downturn has also squeezed the finances of local governments. With the exception of Shanghai, all of China’s 31 provincial regions posted a deficit in the first seven months of 2022, dangerous shortfalls that raise questions about whether zero-COVID programs can continue to be financed. The Bank of China has estimated that routine PCR testing alone, covering just two-thirds of China’s population, could generate annual expenses of 700 billion yuan (nearly $100 billion).
For now, the Chinese economy stays afloat largely because of strong growth in exports and the fact that some parts of the country have been less affected by zero COVID. Despite the draconian measures taken in Shanghai and other cities, the number of jurisdictions that have been disrupted by lockdowns remains relatively small overall. But this could soon change. External demand for goods from China is in decline, and Chinese companies are already reporting falling orders. At the same time, with small numbers of cases surfacing in many parts of the country, an ever-increasing number of areas have been subject to snap lockdowns. Chinese state media reported that in early September, COVID-19 infections were reported in more than 100 cities, “the most extensive resurgence of the virus in the past two years.” Accordingly, China recorded more than 3,500 high- or intermediate-risk areas, the highest number since its risk classification system was launched in February 2020. These outbreaks underscore the diminishing effectiveness of Beijing’s total containment strategy.
If the government persists in shutting down entire urban areas whenever a few cases arise, China’s economic slowdown could become an economic crisis, in which an extraordinary decline in domestic demand is compounded by a large exodus of foreign capital and near zero economic growth. Already, China’s stumbling economy has led to a youth unemployment of 20 percent, the highest since the government began to release such data in January 2018 and a potentially significant threat to social stability. As the government faces these mounting challenges, a question arises: How can it end zero COVID without undermining its support?
Having held to their strategy for so long, China’s leaders face a hard choice. They know they will need to wind down the policy to put the country on a better economic footing, but they fear it could lead to a larger public health breakdown. Armed with a well-planned exit strategy, however, this dire outcome can be avoided. First, the government can prepare the public for a pivot by changing the way it talks about the pandemic. China’s leaders would have to tell the truth about the severity of the virus and the treatments available for it and allow the media to encourage coexistence with COVID-19. This transition could be made easier if the World Health Organization announces that it no longer considers the disease a “public health emergency of international concern.” By recognizing that the acute phase of the pandemic is over, such a declaration would offer Beijing an indisputable scientific rationale for shifting its approach.
To prevent the Chinese health-care system from being overwhelmed, the government can and should enforce triage measures that have worked in many other countries. These would include ensuring that only the most severe cases are treated in hospitals while people with minor or asymptomatic cases recover at home, or if conditions do not allow that, in makeshift quarantine centers. The government should also phase out its COVID-19 health QR code, which is used to demonstrate a person’s risk of infection in real time. This would entail abolishing the centralized, state-controlled mass PCR testing and encouraging the use of at-home rapid-test kits.
To minimize fear and panic whenever there is a spike in cases, the government could stop providing daily updates on the number of new infections and deaths. In addition, rather than spending billions of dollars on enforcing its zero-COVID policies, Beijing should scale up access to more effective Omicron-specific vaccines and therapeutic treatments. A nationwide vaccination campaign should be introduced as soon as possible to ensure that more than 90 percent of the people over 65 and a majority of the country’s population receive an mRNA booster shot. (As the October 16 opening of the Party Congress draws near, the government has begun to show signs that it is taking the vaccination problem more seriously: In early October, China CDC Weekly published an article calling for the immediate vaccination of the remaining 10 percent of the population.)
The 20th Party Congress will not make COVID-19 magically go away.
With such measures in place, a relaxation of policy by the Chinese government would lead to a significant increase of COVID cases. But a well-designed exit strategy can prevent the viral wave from leading to a mass die-off. Assuming 10 percent of the population is infected in a short period, with a 0.1 percent case fatality ratio, about 140,000 people, most of them elderly people with a chronic condition, might succumb to COVID. That would be less than twice the annual deaths from seasonal influenza, and China’s health-care system would be able to withstand the outbreak. The economy would be able to get back on track, and Chinese people would learn to coexist with the virus, like their counterparts in the rest of the world.
But a successful U-turn on zero COVID is out of the question until the top leadership stops portraying the virus as an existential threat. Although Chinese leaders themselves have been vaccinated, they have until now only received China’s ineffective home-grown vaccines. So far, there has been no indication that Xi has changed his mind about the need for mRNA vaccines in view of the dangers posed by the Omicron variant. And yet he seems convinced of the virus’s severity: he was perhaps the only foreign leader to send formal sympathy messages to U.S. President Joe Biden and Japanese Prime Minister Fumio Kishida over the summer when each of them had mild cases of COVID-19. In mid-September, citing concerns about the pandemic, Xi skipped a dinner with 11 heads of state at a summit of the Shanghai Cooperation Organization, the economic and security organization of Asian states that China took the lead in founding in 2001.
The 20th Party Congress may place Xi in a more secure position to pursue his favored policy agenda, but it will not make COVID-19 magically go away. Without a deliberate change of course, China may soon be contending with a policy whose consequences may be as far-reaching—for Beijing as well as for the Chinese people—as the pandemic itself.