Growth in China is the slowest it’s been for decades, and that comes at an inopportune moment for Xi Jinping. It looks as if the transition from the world’s boiler room to a self-sufficient economy is not taking place. The property market is in crisis, the younger generation is confronting a lack of job opportunities that offer social progress, corruption is still rampant, and, finally, government-supported borrowing is slowing down. Actually, many local budgets were drained by the strict lockdown measures such as testing, surveillance, and the distribution of food.
In fact, ever since the outbreak of COVID, China has abandoned its pro-business stance; this was confirmed in Xi’s last New Year’s address where he praised for a short period the Chinese economy but no announcements were made with an objective to reduce taxes, fees, and other administrative burdens.
We believe that the overall restructuring of the Chinese economy is just starting. We note that companies like Apple, amongst others, are looking with a great urgency to become less Chinese-dependent for their production. The impact of delocalization will truly become visible once a full cycle without COVID restrictions has taken place.
As for now, the public health crisis has pushed millions of workers across China out of a job, reinforcing the trend of working people moving back to their home villages, thereby eliminating work know-how and competencies.
Finally, Beijing stopped updating daily COVID virus cases, adding additional concerns that the government is letting the virus run rampant. Research obtained suggests, based on declining mobile subscriptions, that over 1 million people in China have died as a result of COVID; yet, and obviously, an actual result will never be available!