Covid in China: Xi’s fraying relationship with the middle class
For decades, China’s expanding middle class had but one option to get ahead: neijuan, or joining the rat race of relentless competition.
Then, a surprising strain of resistance sprouted among the young last year: tangping, lying flat and doing only the minimum to make ends meet.
Now, after a return to gruelling lockdowns under President Xi Jinping’s zero-Covid policy, a third trend has emerged: runxue, the study of how to get out of China for good.
In late March, as more than 300mn people found themselves under fresh restrictions, searches on Tencent’s WeChat platform for “how to move to Canada” surged almost 3,000 per cent, a study by US think-tank the Council on Foreign Relations (CFR) found. In early April, WeChat searches for immigration jumped more than 440 per cent. Relocation consultants in China and abroad say they were also hit by a torrent of phone calls and emails.
The runxue phenomenon highlights that ordinary Chinese are deeply frustrated. Their day-to-day freedoms hinge on the results of mandatory Covid-19 tests, often taken every 48 or 72 hours. Their minds are occupied by the immediate risks of strict quarantine in state-run facilities, separated from their families, as well as deeper anxieties over job security and falling household incomes as the economy teeters on the edge of recession.
Earlier hopes that the severe lockdown imposed on Shanghai in March would be a one-off are fast fading, despite the glaring economic and social costs. Instead, Xi and his leadership have explicitly reaffirmed their commitment to the controversial zero-Covid playbook of relentless snap lockdowns, fastidious mass testing and closed borders.
Yet the longer zero-Covid persists, experts say, the more the leadership risks a longer-term fraying of the Chinese Communist party’s “social contract” with Chinese society, especially the fast-growing urban middle class which the party has so far managed to keep onside.
The legitimacy of the CCP and its leadership has long been underpinned by the extraordinary rise of China’s economy since the 1980s, which pulled the country out of poverty and propelled hundreds of millions of Chinese people into the relative prosperity of the middle-class.
But the return to sweeping lockdowns this year has demonstrated to many people that no amount of prosperity trumps political power in China, says Kathy Huang, a researcher with the CFR who has been tracking the spread of runxue.
Shanghai is gradually reopening but the shock of the returns to lockdowns has sparked a “shift” in the attitudes of Chinese people, Huang says.
Previously, many blamed the local officials for the haphazard implementation of the zero-Covid strictures. Now most are sympathetic toward those caught up enforcing the bureaucracy, “a recognition of how powerless everyone is under central policies,” she says.
Not since the one-child policy has a national strategy touched nearly every individual in China. Trapped in a web of unpredictable and chaotic lockdown rules, many Chinese are now dreaming of a permanent escape.
“For many elites, emigration had been a viable and popular option long before the lockdowns,” Huang says. “But the sudden spike in interest indicated by the search engines and the immigration consultancies tells us that a much bigger population, most likely those in the middle class, is starting to consider it after the lockdown.
They are looking for a long-term, not temporary solution to their unsatisfactory life in China.”
The squeezed middle-class
The economic reality and strict border controls means that the vast majority of the Chinese middle class have little hope of turning runxue from a study into practice.
Many economists expect China’s gross domestic product to contract this quarter — the second time it has entered recessionary territory in 30 years. Full-year growth forecasts have so far been revised down to about 4 per cent, half the 8.1 per cent growth recorded last year, and below Beijing’s aim for 5.5 per cent, which was already a three-decade low.
A resulting squeeze in living standards is rippling from low-paid labourers through to the professional classes and into boardrooms.
Eko, an export industry professional with a multinational company in Changsha, central China, says “most of my friends are experiencing some decline in their incomes and increased financial pressures, including government employees”. He wants Beijing to pivot to a “full opening” to rekindle the economy.
Andy Zhu, a 30-year-old computer programmer based in Shenzhen, China’s southern tech hub that was briefly locked down in March, says while there has been “a massive impact for all industries” he has been personally forced to rethink how he manages his own finances. “The pandemic has raised my awareness of recessions . . . we need to save more,” he says.
One 24-year-old accountant in the eastern city of Nanjing, who asked not to be named, expects her income to be halved this year as the downturn bites. Her parent’s plan to buy a new car was recently put on ice.
Nomura analysts have cautioned that “some fundamentals” might be worse than China’s official data suggested. The Japanese bank’s analysts point to China’s road freight index, a closely watched gauge of economic activity, down almost 20 per cent year on year, and sales volume of new homes slumping nearly a third.
They also note contractions in output across key commodities and products including power, cement, crude steel, cars and smartphones, adding that “although the worst appears to be behind us for this Omicron wave, there is no guarantee that a new wave will not hit in coming months”.
As the lockdowns drag on economic growth, Beijing is pledging economic support including a reversion to large-scale infrastructure projects and tax breaks. But economists, also worried about rising inflation, are not optimistic that the scale and delivery of the planned stimulus will be enough to prime a “V-shape” recovery from the world’s biggest consumer market and factory floor.
Job statistics will also be worrying Xi and his economic planners in Beijing. Unemployment among workers aged between 18 and 24 has hit a record high of 18.4 per cent. The rise in youth joblessness already has put China on par with Slovakia and Estonia. The problem will soon worsen with more than 10mn university students graduating in the coming weeks.
The zero-Covid policy is also taking a toll on people’s mental health. Although official data are in short supply, academic research into earlier stages of the pandemic are troubling. A survey of almost 40,000 students in 2020 showed the prevalence of depression, anxiety symptoms and suicide risk at double digit rates, a group of Chinese researchers wrote in a paper published by academic journal Current Psychology.
Logan Wright, who leads China markets research at Rhodium, the think-tank, notes that many people are now comparing this crisis to some of the darkest days under Communist party rule.
“China’s own citizens . . . are discussing the current crisis by likening it not to Sars or another epidemic, but to the Communist party’s political campaigns from China’s history — particularly the history of the 1960s,” Wright wrote in a recent policy analysis.
“There are frequent discussions of the overreactions of local officials to a few cases and the overreporting of economic data during the current slowdown using the context of the Great Leap Forward, and others comparing the ‘Big Whites’ (newly recruited medical volunteers assisting with the lockdowns) to the Red Guards of the cultural revolution,” he added.
The poor getting poorer
For Chinese at the lower end of the economic ladder, the leader’s refusal to budge from the policy of completely eliminating coronavirus is starting to erode years of progress.
One year ago, Xi claimed personal responsibility for eradicating poverty in China, a proud yet unprovable boast at a time of global economic pain with much of the world in the throes of the pandemic.
The issue is highly politically sensitive. Xi has personalised the state’s long-running anti-poverty campaign. Last year he also made equality a hallmark domestic policy under the “common prosperity” banner, which has included cracking down on the power of big business, cultural vice and excess among China’s ultrawealthy.
Research shows that Chinese living in, or on the edge of, abject poverty were among those hardest hit when the initial coronavirus outbreak emerged from Wuhan in early 2020. Academics from Chongqing University and Sun Yat-sen University said in a report analysing the initial nationwide lockdown in early 2020 that homeless people were hit by a “substantial decline in incomes” and “humanitarian aid from local governments of China decreased, whereas inhumane efforts to drive the homeless away intensified”.
Samantha Vortherms, a China expert at the University of California, Irvine, notes that in factories across the world’s second-biggest economy local staff are considered the “core employee base”. China’s 380mn itinerant migrant workers are “periphery”, she says, which means they are the first to be laid off when companies are hit by downturns, a problem exacerbated by unequal access to social security provisions.
“Migrant workers are much less likely to have formal labour contracts that allow them to pay into social insurance schemes that protect them if unemployed,” she says.
Gao Qin, an expert on China’s social welfare at Columbia University, says that the fallout from the latest lockdowns in densely populated urban areas will also hit rural households as more and more migrant workers are unable to keep up regular remittances.
Migrant worker livelihoods depend on mobility — moving between factories and towns looking for work — meaning that during the pandemic they risk not only losing work, but also being targeted by officials for spreading coronavirus, Gao says. “The pandemic has changed almost everything,” she says. “I think we all understand poverty [in China] . . . is an issue.”
The state’s promises of support have provided little solace nor cause for celebration among the workers themselves. “I sometimes listen to the news on the radio. It is all bullshit,” said a labourer surnamed Du who spoke to the Financial Times at a market in Guanzhuang, in Beijing’s eastern outskirts. Out of work and unable to send money to his children, Du planned to return to his farming plot in the country.
The rich look for an exit
Those who can afford to leave the country completely are finding it more difficult to do so. One Chinese entrepreneur now in Washington DC, who asked not to be named for safety reasons, considers himself among those “lucky” to escape before Beijing cracked down on people fleeing the country.
“I flew from Guangzhou to JFK in February . . . Even then it took me four hours to get through all the checks. At the first checkpoint I was interviewed by public security bureau policemen asking me ‘reason for travel’ and how much I was carrying. They were checking people’s baggage.”
Others weren’t so lucky, he adds. “A friend of mine wanted to go to New York to drop her child off at college, but the passport office refused to issue her a passport. They said dropping off her child at college wasn’t a valid reason to leave China.”
The issuance of Chinese passports — both new and renewals — was already down 95 per cent in the first quarter compared to before the pandemic, according to official data.
Then in May, the National Immigration Administration doubled down, announcing it would “strictly limit” unnecessary travel amid fears of infections caused by international travellers. But it denied it was completely suspending passport issuance.
A Singapore-based wealth management consultant in the city-state says in recent months she has effectively been moonlighting as a travel agent as her wealthy Chinese clients try to skirt the official edicts against all “unnecessary travel”.
“Even if people can’t leave, they are drawing up plans to do so. They want to feel like they have that choice,” says the consultant, also asking not to be identified.
She adds that, even for wealthy clients, finding lawyers in China who will notarise or translate documents required for overseas travel was also becoming more difficult. “A lot of lawyers won’t take these cases . . . If your passport has expired, then it’s a disaster,” she says.
Beijing’s rules might well have stifled a larger exodus. However, CFR’s Yanzhong Huang says people’s attempts to leave illustrates they are “losing patience and confidence”.
“They don’t feel like there is a future with the repressive political atmosphere and weak economy. They’re voting with their feet.”
The collective angst — from migrant workers up to the elites — adds pressure on the party leadership just months out from the 20th CCP congress expected in November, when Xi is set to break from term limits to cement unrivalled future rule.
Experts warn that if economic conditions worsen and social controls are ratcheted up again, faith in the Chinese leadership will be further undermined.
Yet Beijing shows no sign of changing course. A new layer of zero-Covid infrastructure is even now descending on cities across China. Officials are racing to erect testing sites no more than a 15-minute walk apart while a construction drive ramps up for new hospitals and centralised quarantine facilities, signs of Beijing’s commitment to using mass testing, contact tracing and quarantines to suppress further large-scale Covid-19 outbreaks through 2023.
Dissent, vanishingly rare in China, may yet bubble up. The staging of nightly protests in Shanghai, during which residents banged pots and sung from their balconies, as well as occasional clashes between Beijing students and other groups with police is evidence that, even in China, frustration can quickly erupt.
The state remains on high alert to guard against it. Most reports critical of the zero-Covid policy are swiftly stamped out by Beijing’s censors and tech platforms such as Tencent and Weibo, so too are episodic waves of memes and other social media commentary reflecting the dissatisfaction.
But China-watchers are looking to the autumn party summit as a potential crunch point. “In the best of times, such political meetings of party elites are seen for what they are: political pageantry,” says Diana Fu, an expert on China’s domestic politics with the Brookings Institution think-tank. “During times of crisis, they may serve as a focal point for social unrest.”
Beijing’s unwavering dedication to suppressing the virus in spite of the signs of frustration and alienation can be seen as a sign of things to come, says Kerry Brown, a professor of Chinese Studies at King’s College, London and author of Xi: A Study in Power, as Xi embraces an “imperial” style of governing.
“The Covid lockdowns are a clue as to where you get to when that sort of power is invested in one person,” he says.
Additional reporting by Maiqi Ding in Beijing. Data and visual journalism by Andy Lin in Hong Kong