The new crown epidemic in Shanghai, a successful model of China’s epidemic prevention, continues to heat up. This week, it announced the closure of the city without warning, saying that it will “realize the social dynamic clearing as soon as possible”. Shanghai is China’s economic, financial, aviation, port and logistics center, as well as the global financial and trade center. Since the outbreak of the epidemic, Shanghai officials have always emphasized that “the city will not be closed.” So, when the city was suddenly closed this week, is Shanghai’s precise epidemic prevention being broken by Omikron, or is “Shanghai State” being crushed by politics? What impact will the closure of Shanghai have on the Chinese economy and even the global supply chain? Under the impact of the epidemic, how should Xi Jinping deal with the pressure of economic downturn?
How much does it cost to shut down the economic engine
The day before Shanghai announced the closure of the city, that is, on the morning of March 26, Wu Fan, deputy dean of Shanghai Medical College of Fudan University, said at a press conference on epidemic prevention and control work that Shanghai cannot be closed, because Shanghai is not only a city of Shanghai people Its own Shanghai also carries important functions in the national economic and social development, and even has an impact on the global economy. As soon as the words fell, Shanghai suddenly announced the closure of Pudong No. 28 on the evening of the 27th.
Xie Tian, chair professor at the Aiken School of Business at the University of South Carolina, said that Shanghai’s annual gross domestic product accounts for about 4% of the country’s total, and the closure of Shanghai may bring heavy losses to China’s economy.
He said: “Shanghai is the top city in mainland China, and we know that only Shanghai’s fiscal revenue and its expenditures in the past year are black, that is, there is no deficit, it can be said that its revenue can meet its expenditure needs, while the whole of China The other 30 provinces, municipalities and autonomous regions in China are all in deficit, as if they are unable to make ends meet and their fiscal revenue is not enough. In other words, Shanghai plays a role of helping or supporting other provinces, municipalities and autonomous regions.”
Xie Tian said that Shanghai’s port throughput ranks first in the world and occupies a very important position in the international supply chain. The closure of the city will cause the supply chain to break.
The Wall Street Journal reported that as of March 24, foreign investors had sold shares of Chinese domestic companies worth $9.5 billion, which may be the largest monthly outflow of foreign capital since the first round of the new crown epidemic in March 2020. Zheng Xuguang said that the closure of Shanghai confirms that the epidemic in China is out of control, but the main reason is the Russian-Ukrainian war, and the outside world is afraid that China will be subject to economic sanctions.
He said: “Russian Foreign Affairs and Defense Council Director Karaganov told Nikkei Asia that in any difficult situation, we can rely on China for military, political and economic support. This is what Xi Jinping and Putin signed during the Olympics. At the time of the joint statement, the so-called cooperation with no ceiling, no limit and no forbidden zone created the impression on the Russians.”
The “Shanghai Gang” is being crushed by politics
Zheng Xuguang, an independent commentator, said that the economic impact of Shanghai’s closure may be temporary, which more deeply reflects the political crushing of the “Shanghai Gang”. He said that the fatal problem of China’s epidemic prevention is politics in command. So far, Pfizer’s vaccine, which is represented by Shanghai Fosun, has not been approved, causing man-made disasters.
Zheng Xuguang said: “I look at it this way. The so-called ‘Shanghai Gang’ should not be said to be people like Jiang Zenghu. These aspects should refer to the management system of the whole Shanghai. They should say that in the whole of China In this city, compared with Hong Kong, they may be the two largest cities that are closest to the concept of modern management of the city. Then, Shanghai has always adopted a strategy of not closing the city. Well, as I said earlier, Xi Jinping It has never given up the word clearing, so Shanghai has never said the word closure, this time it is called zoning closure, and zoning closure is still a compromise.”
He said that one of the most serious problems in China’s epidemic prevention politics is not importing advanced Pfizer vaccines. Zheng Xuguang pointed out that China’s State Food and Drug Administration has not approved Pfizer’s vaccine and should be held criminally responsible.
He said: “Actually, they released it last year, saying that it will be approved before June last year, and this arrangement of Pfizer’s vaccine production can produce 1 billion doses per year, and so far it has not been approved. So you say that if advanced vaccines are not approved, If it is produced, if it is not produced, then at that time, there was a concept of closing the city, and the whole world was locked down. Of course, the difference at that time was that China was staying at home, and foreign countries were maintaining social distance. It has a weight. But when there are vaccines, you don’t need them. I think it’s almost a crime, because compared with the mRNA vaccine, the mRNA vaccine’s antibody-producing efficiency is 10%. More than twice, which means that the inactivated vaccine is backward.”
Xi Jinping faces the unsolved problem of economic downturn and clearing political needs
Nomura Holdings, Japan’s largest investment bank, said it lowered its forecast for China’s economic growth from April to December due to the worsening coronavirus outbreak. While Nomura raised its growth forecast for the January-March period this year to 4.2 percent, it believes its current forecast of 2.9 percent may reflect “a more accurate picture of the true economic situation.”
Xie Tian, chair professor at the University of South Carolina’s Aiken School of Business, said the reduction to 2.9% means that China’s economy is truly in recession. Xi Jinping will face the unsolvable problem of economic downturn and zero political needs.
He said: “We know that its zero-zero policy shows that the CCP is ready to take the blame on this plague issue, throw the blame on the whole world, get rid of its own, shirk its responsibilities, and at the same time maintain what the regime has done. So now It is very difficult for Xi Jinping to relax restrictions, and it is also difficult to solve the downward pressure on the economy and the need to clear politics. Because if he wants to maintain economic growth and open up the economy, it means the failure of the clearing policy. For Xi Jinping, the policy failure is actually a political suicide. If he means to give up economic growth and insist on his policy of closing the city, we have seen that it has already caused an economic rebound, and may also cause Political and civil backlash.”
On March 29, Premier Li Keqiang of the State Council chaired an executive meeting of the State Council. He said that the goal should not be relaxed, and stable growth should be placed in a more prominent position. The policy to stabilize the economy will be released sooner and sooner, and the formulation of responses may encounter greater uncertainty. ‘s plan. Xie Tian said that this reflects that there are also different opinions within the CCP. Li Keqiang is about to leave office, and his political life will “die”, and his words are also good.
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