Top Stories of the Month: Shanghai’s Rocky Road to Rebooting
Caixin Global’s Top Stories of the Month newsletter brings you the most popular news coverage over the past month. You can opt-in now and get handpicked news coverage delivered to your inbox each month for free.
China’s strict “zero-Covid” strategy has led to full or partial lockdowns in dozens of cities, with Shanghai among those suffering the most. Covid quarantines and other restrictions have impaired residents’ access to food and medicine, and have interfered with businesses’ operations and supply chains at home and abroad. The chaos has made it more challenging for the world’s second-largest economy to achieve its full-year GDP growth target of around 5.5%.
China is facing another challenge — finding jobs for its 10.76 million new college graduates this year. The figure is the highest on record. This will not be easy considering the hiring freezes at many Covid-impacted companies.
# Shanghai Covid #
In its fourth week of a citywide Covid-19 lockdown, China’s financial, logistics and manufacturing giant Shanghai is struggling to get back on its feet.
While authorities are pushing key businesses to resume operations and more than 1,000 enterprises have employees living and working on-site, the pandemic flare-up isn’t subsiding enough for the lifting of restrictions. As a result, gridlock rules in a city that contributes the second-most to China’s GDP, behind Beijing.
China has launched pilot programs in Shanghai, Guangzhou and six other cities to test out looser quarantine requirements for residents in locked-down communities, travelers from outside the country and the close contacts of confirmed Covid-19 cases, a government document shows.
However, high frequency of nucleic acid and antigen tests will be carried out during the reduced quarantine period for those individuals, as well as professionals stationed in some specific posts with high risk of infection, according to a document released by the State Council, China’s cabinet.
Two weeks ago, Jin Rong shared a message in her Shanghai residential community’s group chat that revealed most of their neighborhood residential committee had tested positive for Covid-19.
At that moment, Jin realized that she and the other residents that had recently volunteered to help out with the committee’s extra workload — things like organizing testing and arranging deliveries of food for locked-down residents — would now have to take over.
A sludgy mix of rain and snow hit Northeast China’s Changchun city on Yang Guang’s seventh day stuck in his truck, after a chance trip left him entangled in Covid restrictions and unable to drive on.
The wholesale depot to which he had made a delivery was found to harbor several Covid cases and locked down. But while most people stayed indoors that day, March 29, the non-local resident had to exit his makeshift home — but only for a Covid test.
# Struggling Economy #
More large-scale Covid lockdowns in China could cause heavy economic losses, five economists from Chinese and U.S. universities have said in a recent paper.
Using real-time truck flow data within the country to measure the impact of lockdowns, the authors estimated that if the four largest cities — Beijing, Guangzhou, Shanghai and Shenzhen — underwent a full one-month lockdown, the country’s real GDP, or inflation-adjusted GDP, could fall 8.6% during that period, according to the paper published on April 3.
This would translate into a 0.7% to 0.75% drop in annual GDP, Song Zheng, a co-author of the paper and economics professor at the Chinese University of Hong Kong, told Caixin.
China’s 2022 government work report set the target for this year’s GDP growth rate at about 5.5%. The target boosted market confidence in the Chinese economy, and it is achievable, though not without some effort, some said. Still, there are also concerns that the government will have to relax previous risk prevention measures in order to reach the target.
In fact, if China’s macro policy and the external environment remain the same this year, potential growth of real GDP can be roughly between 5.2% and 5.6%. In this case, the 5.5% growth target is achievable with effort. In reality, however, whether China can achieve this goal depends not only on its own loose macroeconomic policies, but on several “luck” factors of the external environment. It will also require government efforts to deepen reform to further improve the efficiency of resource allocation and enhance total factor productivity (全要素生产率).
# Hiring and Firing #
Tencent — the operator of China’s unassailable WeChat super-app, the world’s largest video game publisher and one of Asia’s most valuable companies — is firing staff.
At the tech conglomerate’s latest earnings call on March 23, President Martin Lau admitted the industry faces “fundamental changes and challenges” after years of “frothy and unhealthy” growth.
As he wandered among the booths of 78 employers recruiting new graduates at Beijing’s Renmin University March 30, Chen Jun’s hopes of finding just the right job faded.
“There are very few suitable jobs,” Chen said. The senior in economics submitted only four resumes at the event, which offered more than 500 job openings.
Yang Yanlin, a postgraduate in agricultural economic management, was similarly disappointed at the event. “There are limited job options for my major, and things aren’t going well,” Yang said.
# Weekend Long Read #
Japan’s ancient capital Kyoto is sinking deeper into financial trouble.
While many people have pointed to the impact of the Covid-19 pandemic on the city’s previously huge tourism industry, often overlooked is the city’s history of poor fiscal management and reluctance to cut its bloated budget.
Kyoto’s fiscal dysfunction can be seen in the Sanjo Bridge, originally built across the Kamo River by order of samurai and feudal lord Hideyoshi Toyotomi in 1590. Left unrepaired for nearly 50 years, its wooden rails are moss-covered, rotting and showing some ugly cracks.
New users save an extra $50 for the first year of an annual subscription by paying with Paypal. Subscribe now.
*You may opt-in/out now and get handpicked news coverage delivered to your inbox each month for free.
- MOST POPULAR