[China Watch]Xi Jinping closed the city and Li Keqiang “fighting fire”? | Shanghai Epidemic | Clear | Zhongnanhai

[Epoch Times, April 9, 2022](Reported by Epoch Times reporters Ning Haizhong and Yi Ru) After the new wave of the new crown epidemic hit, the CCP authorities once again took strict zero-clearing measures. Among them, the largest city, Shanghai, has been closed. For more than a week, there has been no sign of relaxation. In addition to causing secondary disasters in people’s livelihood, the negative impact on China’s economy has initially appeared.

Official information shows that Zhongnanhai is already preparing a plan for economic deterioration. But experts believe that it is difficult for the authorities to make an effective remedy for the huge economic cost.

The huge economic cost of closing the city and preventing the epidemic is beginning to appear

There have been outbreaks in many places in China and cities have been closed to prevent the epidemic. Data released on April 6 showed that the Caixin service industry PMI fell to 42 in March from 50.2 in February, the largest decline since the epidemic, indicating that service industry activities have resumed contraction, and The shrinkage rate is significant.

The Caixin Purchasing Managers’ Index (PMI) released on April 1 showed that China’s manufacturing activity in March fell to its lowest level in two years to 48.1.

PMI is seen as an economy’s “medical checklist”. The PMI line of prosperity and decline is 50. Above 50 means expansion and development, and below 50 means recession.

Beijing’s previous target of 5.5 percent growth in gross domestic product is in jeopardy.

Shanghai, China’s largest city and the economic and financial center, has been under lockdown for more than a week. According to official data from the Communist Party of China, Shanghai contributes 3.8% to China’s GDP.

ING Greater China chief economist Iris Pang said in a note that if Shanghai’s lockdown continues through April, the city will suffer a 6 percent loss of GDP, meaning a 2 percent loss of China’s GDP as a whole, Reuters reported. .

Nomura estimated this week that 23 Chinese cities have imposed full or partial lockdowns. Together, these cities have about 193 million people and account for 22 percent of China’s GDP.

Among them, Changchun, a major manufacturing hub, has been locked down for more than a month.

UBS said continued nationwide lockdowns could slow growth to 4% this year.

Su Ziyun, director of Taiwan’s National Defense Strategy and Resources Institute, told The Epoch Times that the CCP’s dynamic clearing is an over-imagination of the epidemic, but it is actually anti-science and anti-humanity. In particular, the outbreak in Shanghai has not only had a serious impact on people’s livelihood, but also on the Chinese economy.

He said that the closure of the city has had a structural impact on bases such as Shanghai and Shenzhen. “We have seen some manufacturers in Shanghai have set up tents in sports centers and convention and exhibition centers, so that employees do not go home, but work in the factory. , I sleep here after get off work, isolate myself from the outside world, and barely maintain production, but the surrounding industrial chain, upstream and downstream manufacturers cannot produce, which will have a knock-on effect on the entire economy.”

Davy Jun Huang, an economist based in the United States, told The Epoch Times: “The Omicron outbreak areas in China are all cities with a core economic share, such as Hong Kong, Shenzhen, Dongguan, Shanghai, etc. China has therefore The economic loss of China is considerable, and because, unlike two years ago, developed economies and Southeast Asian countries have taken liberalization measures, mainland China does not have the previous competitive advantage to make up for the losses caused by the closure of the city.”

Huang Jun said that since Shenzhen and Shanghai are very important freight ports in China, especially Shanghai, which is the largest freight port in the world, even if the production in other parts of the country can continue and finally be sent to Shanghai for export, it will lead to serious delays and huge costs. Expenditure, which is a rather decisive factor, will seriously affect the import and export trade, and it is global, not limited to Shanghai.

Zhongnanhai preparing for economic deterioration?

On April 6, Chinese Premier Li Keqiang presided over an executive meeting of the State Council, saying that “the complexity and uncertainty of the domestic and foreign environments have increased”, “some exceeded expectations”, and “new downward pressure has further increased.”

Earlier, on March 30, Li Keqiang convened an executive meeting of the State Council, emphasizing that “policies to stabilize the economy should be released sooner rather than later, and measures that are not conducive to stabilizing market expectations should not be taken, and a plan to deal with greater uncertainty may be formulated.”

Li Keqiang confirmed at a press conference last month that he was in the last year of his term as prime minister. He said that China is still facing a complex and severe situation. But he immediately claimed that under the leadership of the Central Committee of Xi Jinping, China’s economy will be able to “climb over the hurdles”.

On April 2, the second day of Shanghai’s closure, Vice Premier Hu Chunhua hosted a symposium on the foreign trade situation in Beijing. He mentioned that in accordance with Xi Jinping’s important instructions, the study and judgment of the foreign trade situation should be strengthened. Good”, but mentioned that it “faces many risks and challenges” and said that every effort should be made to stabilize foreign trade.

It is worth noting that at the two sessions this year, the CCP’s “Government Work Report” set “maintaining stability and improving quality” as the expected goal of import and export development, indicating that the authorities believed that the foreign trade situation was optimistic at the time.

On April 6, the CCP media “People’s Daily” published an article boasting “maintaining stability and improving quality, and having confidence in the development of foreign trade”, claiming “a smooth start, and the report card is very eye-catching”, but citing data from the first two months of this year ( The total value of imports and exports was 6.2 trillion yuan, a year-on-year increase of 13.3%).

Epidemic control affects farming and employment Li Keqiang Hu Chunhua “fighting fire”

Due to the overall lockdown and control of the epidemic, farming has also been affected. Spring is the most important season for planting. The strict zero-clearing policy implemented by the Chinese authorities has further exacerbated the shortage of fertilizer, labor and seeds.

The British “Financial Times” (FT) reported on the 6th that official data showed that as many as one-third of farmers in Jilin, Liaoning and Heilongjiang provinces did not have enough seeds, seedlings, fertilizers and other raw materials to use in the closure of villages to fight the epidemic. produce agricultural products. These three provinces account for more than 20% of China’s overall grain production.

The report quoted an unnamed central government agricultural policy adviser in Beijing as warning that China could face “food shortages”.

Beijing held two meetings for this purpose: on March 18, a teleconference on the promotion of soybean oil plant expansion was held; on April 1, a teleconference on the promotion of national corn and rice production was held.

Li Keqiang inspected the Ministry of Agriculture and Rural Affairs on March 23 and acknowledged that the current international situation is complex and severe, with rising prices and increasing volatility in the agricultural product market and other unstable factors, and domestic development and agricultural production are also facing new challenges.

According to a report by Hong Kong’s “Economic Daily” on April 5, there are rumors in the economic circle that Li Keqiang is very anxious. Recently, he went to Jilin quietly to make arrangements to control the epidemic on the spot. Chinese state media did not report on Li Keqiang’s “secret” trip.

In 2021, the total grain output of Jilin Province will be 80.784 billion catties, ranking fifth in the country.

In addition to the fact that Changchun has been closed for more than a month, the Jilin provincial authorities have prohibited the movement of people from the province across provinces, cities and prefectures.

The reset policy has made the unemployment problem even more severe. Vice Premier Hu Chunhua presided over a symposium on the employment situation on April 7. He emphasized that currently affected by the epidemic and other factors, the employment situation is complex and severe, and it is necessary to place more importance on stabilizing employment.

Li Keqiang re-emphasized the employment issue at the State Council executive meeting on April 6. Official reports stated that “some market entities are currently severely impacted, and some even suspend production and business“, and proposed “five extremely difficult industries”, including “catering, Retail, tourism, civil aviation, road, water and rail transportation, etc.”

Li Linyi, a current affairs commentator, said that this means of closing the city has a huge lethal effect on small and medium-sized enterprises, not to mention that the effect of this city closure in Shanghai will spill over to other places. As we all know, small and medium-sized enterprises contribute most of the employment to China, so there is a reason for the CCP to “stabilize employment” in the future.

Su Ziyun, director of Taiwan’s National Defense Strategy and Resources Institute, believes that the CCP’s political simplification and dictatorial leadership system will have serious adverse effects on the mainland’s economy and society. And Li Keqiang and Hu Chunhua’s efforts to remedy the economy are also limited.

The “minimum cost” of closing the city and the “biggest variable” of China’s economy

On March 26, Shanghai officials also said that Shanghai would not take stricter epidemic prevention measures like the rest of China. But on the evening of the 27th, the official suddenly announced a two-stage zoning control. By April 1, Pudong, Punan and adjacent areas will be controlled in a step-by-step manner.

Vice Premier Sun Chunlan of the Communist Party of China went to Shanghai on April 2 to supervise the epidemic prevention work, and conveyed Xi Jinping’s tough order – “dynamic clearing”, which was not shaken.

Recently, it has been wildly rumored in Shanghai that the central authorities demanded to achieve “social zero” within 10 days (new cases are all quarantined people) on the 5th, otherwise officials will be held accountable. That is to say, it may be gradually lifted until April 15. However, a netizen also said in the revelation that, according to the news from the Shanghai Municipal Government meeting, the closure of Shanghai will not be lifted in the short term. The city will “be closed until May 1st, and it will be decided on the 1st whether to continue the closure after that.”

The whole of Shanghai is currently under lockdown. As in Wuhan in 2020, medical teams from all over the country flocked. At least 38,000 medical staff arrived in Shanghai, including 2,000 military personnel. Some analysts believe that Shanghai has become a military administration in disguise.

On March 17, Xi Jinping gave instructions to the Standing Committee of the Politburo, emphasizing adherence to dynamic clearing to control the epidemic. But he also called for “strive to achieve the greatest prevention and control effect at the least cost, and minimize the impact of the epidemic on economic and social development.”

Lockdowns will hit businesses hard, especially those that depend on household consumption. Before Shanghai, Shenzhen was closed for a week, and the closure was lifted within a short period of time. Is this the embodiment of the so-called minimum cost by the authorities?

Current affairs commentator Li Linyi said that in the short term, if this method can really achieve the so-called “social clearing”, then the economic impact will be somewhat in the short term. But this also caused another problem, that is, once the virus appeared again, it would have to be sealed and controlled again, so this method would actually cause a long-term sequelae.

“This kind of business environment that will be closed and controlled at any time is not suitable for investment. The problem is that it is a long-term process for foreign capital to leave. Because of many supply chain problems, it is not possible to leave China immediately. “

According to Hong Kong’s “Economic Daily”, in response to the epidemic, the central authorities in Beijing put forward the latest general line of “long-term struggle” without giving in to the old strategy of “dynamic clearing”. The report said that this may be the biggest variable in China’s economy this year.

Responsible editor: Sun Yun#