Expert Speak Raisina Debates
Published on Apr 16, 2020
Economic recovery and recurring lockdown in China after Covid19 crisis

The Chinese model for post Covid-19 economic recovery has evolved within a month. Over March, the purchasing managers index rose 17 points, moving out of the range marking “recession”, and half of industry was back at work. In a process that has not been smooth, results have been achieved rapidly. Now faced with possible recurrence of the epidemic in early April in north east China, via the Russian border, the PRC government has decided on containment through “lockdown" as before. This thwart the pace of uninterrupted recovery. It is also an indication of an embedded commitment to full lockdown as the prime strategy against Covid19; of a refusal to think beyond, to acknowledge that Covid 19 is here to stay and to be dealt with, maybe, after initial drastic containment, through strategies of public health, hygiene and circumspection. If recourse to sudden peremptory lockdowns becomes standard, recovery will be marked by precipitous variations. Today, the casualty is Sino-Russian trade, even as the economy kicks into place. Others will follow.

In developing its own future strategies, India must closely observe what takes place. For Chinese is the closest global model to what India has followed. Here, questions are not being raised about the Chinese confidence in what “lockdown” has done to contain Covid 19: what is doubtful is its value when Covid ebbs. In China, the strategy was the focus of large social and political inputs and successful apparently when it was the cornerstone of an aggressive and all-pervasive regimen during January end-early March, to handle the virus. The outcome is a Chinese product – recognizable and easily applicable in the PRC.

The strategy, associated globally with the industrial city of Wuhan, and Hubei province, was ubiquitous in the PRC for about six weeks, the experience of Wuhan being more extended. What happened did not formally obey a central fiat. The sound of alarm in January by President Xi was followed by orchestrated wholesale support in provinces and municipalities in China. Beijing, Tianjin and Shanghai, along with Wuhan, shut down, and many other cities and provinces from Harbin to Kunming. Everything took place within the structures of Chinese federalism and decentralization. An illusion of normalcy was maintained. Subway services operated, but subways were deserted. While major trains were cancelled, as were international flights, domestic flights and some trains ran; but operations were reduced to a fraction and travellers were a handful. Restrictions applied in country districts, and in autonomous regions (Tibet/Xinjiang).

Under the direction of the Communist Party, offices, schools and universities were closed, stores had to be delivered to gates of residential complexes, Communist party committees sat at buildings and zonal entrances regulating entrance and exit. Streets were deserted, police with thermometers checked and questioned passers by. The “national “character of what took place was evidenced by the consequences in the economy; the Chinese link in all global value chains ceased to function in February 2020. China did not depend on intensive testing and disinfection, like South Korea and Taiwan; nor the advantage of personal hygiene and pneumonia vaccine like Japan; though both were not discounted in policy. High profile was given to digital applications to monitor, avoid, isolate and quarantine with massive Communist party and government involvement.

“Lockdown" of this type was a unique Chinese process for epidemic management. It generated employment (the supervisory staff); it generated production (100 million masks per day were produced at one time). It also generated heroism, commitment and fear. The measures were effective apparently. Infection and fatalities were reduced. There were no complications owing to dislocation and displacement. But when “lockdown” was relaxed, even as the West moved into chaos, the strategy cast a long shadow over the economic recovery program. Lockdown was the natural recourse if recurrence were to take place – no alternative means to handle Covid 19 were engaged.

Hence a chequered experience as economic recovery has gathered momentum. Domestic airlines expanded bookings by mid March. Offices worked. The source of the epidemic, Wuhan and Hubei, “reopened” for business the last, in April. Local consumer goods, food supplies and trade and medical services attracted financial support. Employment picked up. But the process was not easy and is still fragile. Difficulties were caused by an obsession with lockdown as solution to Covid 19.  Panic over sporadic cases led to partial lockdowns in localities and confusion. Violence greeted arrival of residents of infection zones such as Wuhan in other cities/provinces in resistance to relaxation of lockdown for such “suspects" of contagion.

Up to a point, this affected only recovery in internal markets. But larger issues threatened. Foreign trade was crucial to restoring value chains; and in February itself efforts were made in the PRC to link up to east and south east Asia. Imported cases of Corona were inevitable, especially given “push" factors to migration in Covid 19/depression hit regions of Europe and the USA. Engaging with global China (i.e, Chinese and co-workers abroad) was part of recovery and bore with it possibilities of corona “import”. An implicit question has been what would happen when the unsteady recovery process confronted these issues?

The answer has come in early April at the town of Suifanhe, in the north east China province of Heilongjiang on the Russian border, an old industrial province pivotal in Sino-Russian trade. The 111 odd infections (25 spread over China, 86 still local) are returnees from Russia. The town is the main link with Russia. Trains of the Far Eastern railway arrive from Vladivostok, crossing the border at Pogranichny, bringing passengers by air and rail to the port city, with a quick transfer to Suifenhe by road or rail. On China's vast border with Siberia and the Russian Far East, there is no more convenient point for large scale crossing.

Owing to the cases linked to the town, a “lockdown" has been formally ordered in Suifenhe. The full range of restrictions on movement within the small town of 100000 has been established. As a generous gesture each family is allowed to send one member of the household for provisions once every three days. The apparatus of lockdown has been set up; a large temporary hospital with special piping, systems of supervision etc. Passenger traffic from Pogranichny has been barred. Other points of crossing, by river or on foot from Chita province eastwards (Heihe-Blagoveshchensk, Manzhuriia- Zabaikalsk, Khunchun- Kraskino), have been sealed. In a scenario of special trans-border trade, centred on these points and developed from the 90s, a regime of overwhelming restraint has been introduced.

As in all cases of lockdown, this heavy hand lacks circumspection. It is relatively certain that Suifenhe is not the virus source. Infection occurred in Moscow or the commercial and mining centres of the Russian Far East. But Suifenhe must be locked down. There is reason here, but it is insufficient. Elsewhere, trade in essentials will continue, and the travel of maintenance teams (for the Russia China electric grid and pipelines) as well as cargo traffic on the Pogranichny-Suifenhe route. There will be cargo traffic by sea, now the winter freezing is over and the thaw has set in. A lockdown has been ordered, but what purpose it will serve is unclear. Meanwhile, the future of Sino-Russian trade is in question.

In question also is much else. What if imported virus strikes from Iran via Xinjiang? Or it manifests by sea in the coastal cities that are China's pride? Or Tibet by way of Pakistan or India? Or Yunnan via the Myanmar border? The only answer to date in China is “lockdown" with all its implications; a sad answer for a systematic program of economic recovery.

In fact, recurring lockdown, varying in time and location is likely to be an essential part of the PRC way forward, with all the problems it entails for citizens, trade partners etc. Going further, this approach may also determine the country's reaction to the way international rules are framed to give Corona its space but to reorient globally to standard concerns – trade, sustainable development etc. A standoff may come to mark a rules-based system based on regimes of hygiene and testing and one directed by prioritization of “lockdown". China’s way in the circumstances would be unique and problematic.

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Andrey Ignatyev

Andrey Ignatyev

Andrey Ignatyev Head of Analytics Center for Global IT Cooperation Moscow

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