Nothing can stop China’s relentless laughed

Shenzhen first started locking down in January. By March, Shanghai had gone into a total lockdown, with travel into and out of the city severely restricted, a strict quarantine regime, mass testing, and the closure of offices, schools and factories.

Beijing has already started mass testing alongside selective lockdowns, and it would hardly be a surprise if the whole city was sealed off over the next couple of weeks. Many other mega-cities may follow. After all, as we already know, the omicron variant rips through countries at lightning speed.

That is hardly a minor matter. New Zealand and Australia’s zero Covid strategies were interesting experiments for public health officials. But neither country makes much difference to the global economy one way or another.

By contrast, China is the second largest economy in the world, and was set to overtake the US this decade. Its manufacturers are crucial to supply chains globally, and with container ships backing up in Shanghai’s massive harbors, those were already creaking.

Its money and investment drives the world’s markets. What happens in China determines what happens in the rest of the world.

Its zero Covid strategy has brought out the bears in force. Lockdowns will hammer an economy that still relies heavily on manufacturing; you can’t make microchips, cars or phones working from home. It will provoke social unrest, the bears argue.

And it will expose the limitations of China’s top-down, controlled management of society, potentially even provoking a challenge to President Xi’s rule (hardly helped by his backing of Vladimir Putin’s catastrophic invasion of Ukraine).

The benchmark Shanghai index is down from 3,600 to 3,000 so far this year as investors take flight, and surveys show foreign companies are increasingly weighing up whether they should pull out of the country.

True, Covid has hardly been well-handled, and that is even before we get into the question of how the virus originated. China has been too arrogant to buy the superior Western vaccines, and too slow to vaccinate, especially among the elderly.

When the hyper-infectious omicron variant hit, China was caught unprepared, and left with little option except to start closing cities down, whatever the cost to its economy. If it let it rip, as Hong Kong showed, the health system could have been overwhelmed.

And yet it is simply ridiculous to pretend that this is anything more than a minor setback or that the lockdowns are insane. The latest evidence suggests that three doses of the home-grown Sinovac vaccine is at least as effective as the Pfizer and Moderna shots, and possibly even better for the over-80s, the most crucial sector of society to protect. Once those third shots have been delivered, China will be in far better shape.

Australia’s experience suggests that, realistically, lockdowns followed by mass vaccination are an effective policy, controlling death rates at relatively low cost. Shenzhen, the country’s key tech hub, is now fully reopened again after a lockdown that lasted two months. The chances are that Shanghai will be similar. And Beijing may well avoid total closure. Crazy? Not really. When the final tally is reckoned, China’s death rate will probably be lower than most other countries, and at far lower cost.

The key point is this. The rise of China, and its powerhouse economy, remains by far the most important story of the 21st century. It may come apart one day. But Covid, and a few weeks of lockdown in its major cities, won’t prove its undoing. It is far too strong for that, and has too much momentum behind it.

By the autumn, the temporary lockdowns will have been forgotten, the ports reopened, and restrictions lifted. China’s economy will be roaring once again, while the US and Europe are back in recession and working out how to pay for the ruinous cost of closing down society in 2020. In truth, this is just a blip – and China’s rise still has a long way to run.

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