Release?

And then, suddenly, after months, no, in fact years, of insisting that the policy of dynamic zero was the great, glorious and correct policy and the proof that the China system was superior… the policy changed. Right now, the situation is still confused and testing for the virus is still an important part of life in many of China’s major cities. But the indications are that the whole process of lockdowns, quarantines and endless PCR testing is finally drawing to a close and the infrastructure for all testing is being dismantled. It will take a while for this to sink in and be fully implemented because it was executed until three minutes ago so rigorously, with no buts allowed.

What caused this change of heart? Obviously, it was the rising levels of frustration amongst Chinese people, and the disastrous impact of the policy on the economy. The most high profile manifestation of the frustration was the sudden and completely unexpected demonstrations of a couple of weeks ago by students and young people in many cities across China. The authorities have been at pains to emphasize that those protests were in no way a part of the decision to end the dynamic zero policy. And of course they would. It would be a dangerous precedent if the Center was seen to be responding to such social pressure in that way.

And so now we move into a new era. The goal is herd immunity, and in order to get there, a very large number of people need to be infected by the virus within a very short space of time. The actual number and the length of time is arguable, but we have seen estimates of 300 million within a two week period. Reports from Beijing and other places indicate that a very large number of people are suddenly getting the virus as controls are relaxed and that raises the question of how effective China’s medical system will be in handling the spike. This, of course, was always going to be the question. Given the nature of the current variant, for the vast majority of people, it will pass quickly. But there will also be people who die. How many, it is possible that we will never know. The China system as it is today, has the ability to not aggregate and not release statistics of that nature if it so chooses. And that is our guess of how this will pass, and by March next year, the virus will be behind us, in China, as it is already in the rest of the world.

One wonders how many white Baymax testers will be thrown out onto the streets, unemployed, as a result of the sudden shift in policy. But overall the relaxation will have a sudden stimulative impact on the economy, as people start to travel and spend and eat out. Next year should see solid increases in economic activity compared to the dire year 2022, but this is unlikely to be the great turnaround in China’s economic story. The underlying problems are still there. Does this sudden shift in the dynamic zero policy suggest that pragmatists within the leadership are now being heard? How does the balance between Marxism and pragmatism play out in in 2023? Only the Shadow knows.

Have a great weekend. Unless you are still in quarantine.