China has taken some modest steps to relax its quarantine rules, such as shortening isolation times, but it is concerned about abandoning them completely.
Vaccination coverage in China is still low. About a third of the 260 million over-60s have not had a third dose.
The government has failed to convince the elderly citizens, many of whom are skeptical of instructions from the authoritarian regime, that the risks of vaccination outweigh the benefits.
This is partly a self-inflicted wound, as Xi has not clearly warned the Chinese people that COVID-zero should one day be lifted and they should protect themselves by taking their injections.
Xi’s nationalism has also made matters worse by preventing imports of mRNA vaccines from the west, even though they are more effective than homegrown Chinese vaccines.
The problem is obvious, but there is no quick way out of this binding.
It will take months to increase vaccination rates. If China suddenly eased all restrictions before protecting a much larger portion of its elderly population, it would spark another wave of the pandemic that would overwhelm its still-basic hospital system.
The transition from COVID-zero is just one of many economic challenges facing Xi.
China’s real estate sector, which was once one of the major drivers of the economic miracle, is now in deep crisis because it has built far too many new homes with borrowed money.
China’s largest apartment builder, Evergrande, filed for bankruptcy late last year, and many ordinary investors are finding they’ve lost their deposits due to off-the-plan purchases from stressed companies unable to complete their projects.
The Chinese government this week announced a $162 billion stimulus package to try to restore confidence in the sector.
After outperforming the world for decades, China’s economy is expected to grow just 3.2 percent this year, according to the latest forecast from the Paris-based Organization for Economic Co-operation and Development — slower than the US or Australia.
None of this suggests that the Chinese Communist Party state system is about to fall apart. Despite Xi’s recent turn towards authoritarianism and nationalism, the country has enormous economic strength and the regime is adept at managing the opposition.
But a period of slower Chinese growth and internal confusion has huge implications for Australia, both economically and politically.
Michelle Bullock, the deputy governor of the Reserve Bank of Australia, warned two weeks ago that given China’s importance as a trading partner, a further slowdown in China’s economy, particularly the housing sector that consumes so much of our iron ore, “would have consequences for Australia”.
On the other hand, China’s troubles may have a geopolitical silver lining, as a more modest Xi may want to focus on domestic issues rather than engage in wolf-warrior diplomacy.
While China often appears to be an unstoppable juggernaut, it is far from invulnerable. It could very well be that systems like Australia, with pluralism and democracy, could teach it some lessons.
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