At the beginning of 2020, the sudden outbreak of COVID-19 has brought unprecedented challenges to the world, testing the governance capabilities of all countries. On May 22, 2020, Chinese President Xi Jinping said at the National People’s Congress that the Chinese authorities vow to protect the people’s life and health “at all costs.”
An objective evaluation reveals an important reason why China has achieved remarkable results in the fight against the pandemic in the past two years. It is that it adheres to the “People First, Life First” principle. This evaluation is particularly true during the country’s struggle against the then-unknown novel coronavirus in Wuhan. If the central government’s leadership did not mobilize its national resources, the situation in China could very well be unimaginable. It should be recognized that the “Life First” principle and other corresponding policies have played an important role.
While the world enters 2022, the COVID-19 pandemic has eased significantly, it has not been completely brought under control. The novel coronavirus is also constantly mutating. There was the Delta variant with a higher fatality rate in the past. Then there is the more infectious but much less lethal Omicron variant now. Since March this year, the measures against the pandemic and the overall situation seem to have changed. There are several factors that have caused Europe, the United States, and some Southeast Asian countries to have significantly eased or even completely lifted their previous restrictive measures. The factors include the countries’ low hospitalization rates and their policy indicators based on a low fatality rate. Additionally, it is coupled with a higher “herd immunity” ratio (which paid a higher cost in terms of human life during the early stage) and higher vaccination rates. Looking at the Easter festival in West this year, it appears that tourism, consumption, and the majority of the service industries have rebounded substantially.
Adhering to “Dynamic Clearing” and the purported “Life First” principles, China still adopts the strict preventive policy that has been successful in the past. Since the year began, all local authorities, such as Jilin province, Shenzhen, Shanghai, and now Beijing have adopted strict control measures based on large-scale testing and urban area lockdown and isolation. This situation is in stark contrast with the relaxed policies adopted by Western and Southeast Asian countries. Such differences stem not only from different perceptions of the pandemic but also from differences in the importance of personal life and its impact on society. Some Chinese officials fear that, given China’s national circumstances, a big-scale of mortality, similar to what has occurred in other nations, would be an unbearable calamity for Chinese society. This catastrophe will become the biggest political problem. Therefore, in order to minimize the number of deaths, China opts for strict control measures with high social and economic costs.
However, China is not oblivious to the issue of prevention and control costs. Official statements have repeatedly mentioned the need to obtain the maximum effectiveness of prevention and control at the minimum cost. However, when implementing strict control policies based on large-area closures (known as “static management” in China), the desire to exchange the “minimum cost” for the “maximum effectiveness of control” is contradictory. This is because strict control measures often freeze economic and social activities and do not achieve the “maximum effectiveness of control”.
Using Shanghai as an example, from the end of March to the beginning of May, the city-wide “static management” in Shanghai has lasted more than a month, with certain areas shuttered for more than two months. Judging from the publicly reported information, the measures implemented in Shanghai and the Yangtze River Delta region has a huge economic cost. According to the economics standard of 2021, the average daily GDP of Shanghai is RMB 11.8 billion, and the average monthly value is RMB 300 billion. Economic operations will surely be impacted by the city’s “static management.” The Yangtze River Delta region is one of China’s most developed manufacturing zones. Ports in this region, such as Shanghai and Ningbo, are critical for China’s overseas trade. Many enterprises, industrial and supply chains, foreign financial entities, and other markets will be harmed if the pandemic persists. Shanghai’s GDP in the first quarter of this year was RMB 10 trillion, with a year-on-year growth rate of 3.1 percent, notwithstanding the pandemic. The impact is expected to be bigger in the second quarter.
When it comes to the actual implementation of these policies, the intensity appears multifold in many places in China. Although the country’s central government formulates control policies, the different superior levels of authorities implement the measures, and these measures are frequently upgraded during their executions. Several communities allege that “partial lockdown zones” are routinely and falsely upgraded to “lockdown zones”. Meanwhile, the “restricted zones” are sometimes unnecessarily converted to “partial lockdown zones”. The layer-by-layer “upgrades” do not only distort the central government’s policies and ideals; but also impact the economy, the market, and the people’s livelihood. “People First, Life First” should genuinely mean “people-oriented”. On the contrary, some areas have twisted specific prevention and control measures, affecting the real outcome of the policy’s principle.
When evaluating COVID-19 control policies in China, economically developed regions should not be the sole measuring tool. This is because the impact on economically underdeveloped regions cannot be ignored either. Taking the country’s northeastern region as an example, since the beginning of this year, many regions in the provinces of Jilin and Heilongjiang have experienced a rebound of the outbreaks to varying degrees. In these regions, the control policies are more stringent than in developed regions. Furthermore, there is also the problem of measures being upgraded when passing through different layers of the administration. Although the effect of COVID-19 on the economy of underdeveloped regions is smaller than that of developed regions, considering that the local economy and society are relatively fragile, the negative impact of the pandemic cannot be ignored.
Another issue to analyze is the impact of China’s pandemic control measures on foreign trade. On May 5, the European Union Chamber of Commerce in China and Roland Berger jointly released an investigation report. This particular report explains how China’s COVID-19 prevention and control policies and the Russia-Ukraine war on Europe impact companies in China. The results show that both factors pose serious challenges to European companies’ commercial operations. As such, the logistics sector has suffered the most overall impact. It is worth noting that China’s strict measures to contain the virus have led to one finding. 23% of the surveyed companies considering to relocate their existing or planned investment in China to other markets. This results in more than doubling the number of companies with the same consideration in early 2022. It is also the highest figure reached in the past decade.
The report also stated that in 2022, with stricter measures implemented against COVID-19 across the country, at least 45 cities in China have launched comprehensive or partial lockdowns. These measures have brought huge uncertainty to the operation of enterprises. Three-quarters of the companies surveyed had notified that their overall operations were severely affected. They are mainly in logistics and warehousing, business travel, and offline meetings due to cancellations. The affected operations accounted for 94%, 97%, and 94%, respectively. China’s port closures, declining road freight volumes, and soaring sea freight prices have led to severe challenges upstream and downstream of the supply chain, with 92% of the companies surveyed being severely affected. Under China’s strict measures, more than a quarter of European companies have experienced a brain drain, with the highest attrition rates concentrated in education at 80%, law at 46%, retail at 43%, and cosmetics at 40% respectively.
China needs to view the outbreak-control policies and practices in the context of changes, such as the latest development of the novel coronavirus and the beginning of global economic recovery. These views must be based on the pandemic’s impact on China’s economy, foreign investors’ perceptions, and judgments of the country’s efforts. This initiative should then be followed by suitable adjustments and optimizations accordingly. It is undoubted that China’s adherence to the principle of “People First, Life First” is correct. Under this principle, however, it needs to locate a balance between COVID-19 control and economic development in order to take more scientific and effective measures. Does such a balance truly exist? Can these measures and policies that balance the both be achieved? According to researchers at ANBOUND, the answer is an affirmative yes, so long as the issue is understood correctly.
Final analysis conclusion:
The COVID-19 pandemic is a common challenge faced by all humankind, not a unique situation of a certain country. In essence, the method to deal with it is a public policy issue based on scientific research and analysis. We believe that China’s public policy will remain sufficiently open in response to the COVID-19 outbreak. Under the principle of “People First, Life First,” China should also advocate “Science First.” With the emphasis being given to science, the principle of “People First, Life First” will be realized in a more effective way.
Writer by Wei Hongxu
A researcher at ANBOUND, graduated from the School of Mathematics at Peking University and has a PhD in economics from the University of Birmingham, UK
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