Commentary: Zero-COVID lockdowns throw China’s political preparations into turmoil

LONDON: Shanghai’s long lockdown is almost over. 

Cosmopolitan, vibrant Shanghai has been brought to a standstill for almost two months now, with some 25 million residents confined to their homes and factories shut in the “zero-COVID” lockdown.

Social media has been awash with pleading messages and dramatic videos from residents as food and water supplies dwindled and frustrations ran high. 

With new COVID-19 cases falling, Shanghai seems set to lift the lockdown on Wednesday (June 1). But in China’s richest city – with a gross domestic product larger than entire countries like Belgium – such a dramatic lockdown is bound to have significant economic effects. 

But the impact will reverberate beyond the economy, especially with the 20th National Party Congress, which will anoint the next five-year leadership for the Chinese Communist Party, set to take place later this year. 

While the black box of Chinese politics is inevitably difficult to interpret, such economic and social turbulence inevitably brings uncertainty. And in China, uncertainty means instability. 

It is widely expected that President Xi Jinping will secure a third term as party secretary. And with the cut-off age norm on party posts generally held at 68 years, eleven members (excluding Xi himself) of the Politburo could retire, including two in the seven-man inner circle, the Politburo Standing Committee.

Xi will be looking to promote his allies – even potential successors – at the party congress. But speculation is rife about how recent pandemic developments have shifted plans. It appears the position of some key allies may have weakened while that of his rivals strengthened.

SHANGHAI’S LI QIANG IS A KEY XI JINPING ALLY

Of course, the zero-COVID policy – China’s signature pandemic response – is at the heart of most discussions about political changes. And the response in Shanghai, once the shining model of COVID-19 measures, will be seen as nothing short of bungling and incompetent. 

There have been rare but small-scale public protests and wide dissemination of videos and posts critical of the government’s response on social media, despite heavy censorship.

These range from complaints about prolonged isolation conditions and the breakdown of food delivery services to separating COVID-positive children and babies from their parents – even a video of a pet dog bludgeoned to death in the name of COVID-19 prevention. 

The public response has been particularly embarrassing for Shanghai party secretary Li Qiang. Video of Li Qiang appearing to be verbally confronted by angry Shanghai residents circulated on social media in mid-April. 

Li Qiang is, or perhaps was, in a strong position for promotion to the Politburo Standing Committee. He is of the right age, at 63 well below the retirement cut-off – and a strong ally to Xi Jinping, having worked closely when Xi was party secretary of Zhejiang province in the early 2000s. 

He took over as the top party official in Shanghai when his predecessor was moved up to the Standing Committee in 2017. But now there is less certainty about Li Qiang’s promotion if the lockdown makes him appear to be more of a liability than an asset to Xi.

Similarly, Shanghai’s mayor, Gong Zheng, who was expected to assume Li Qiang’s position thereafter, is also now in doubt. 

Even if Shanghai may not be enough to deter Xi from elevating Li Qiang to the highest echelon of Chinese politics, the timing could not be worse for Xi.

UNCERTAINTY AROUND CHINA’S ECONOMIC GROWTH 

But Shanghai is only one sign of China’s larger zero-COVID woes. More than 208 million people in 26 cities are estimated to be under some form of lockdown or COVID-19 restrictions as of May 23, accounting for 20.5 per cent of China’s economic output.

A strict lockdown in Shanghai alone was earlier estimated to reduce China’s real GDP by 4 per cent, according to a Chinese University of Hong Kong study.

The city recently reported that April saw the biggest monthly decline in industrial output since 2011. Not a single car was sold in Shanghai in April, according to the Shanghai Automobile Sales Association. In 2021, the same month saw 26,311 vehicles sold.

Economic data suggests harder times ahead for China. Although the economy will likely rebound as zero-COVID restrictions are eased, millions of workers, including new graduates, may struggle to find work. 

The urban unemployment rate rose to 6.1 per cent in April, while youth unemployment reached a record 18.2 per cent. Retail sales fell more than 11 per cent nationally year on year.

Foreign investments may also be on the line, with the European Chamber of Commerce saying some members were considering shifting current or planned investments out of China. With no clear way out of the zero-COVID policy, the worry is that China’s harsh travel restrictions will remain and snap lockdowns, even in Beijing, could still happen. 

All of this bodes ill for China’s immediate growth, which is exactly the kind of economic uncertainty Xi Jinping would like to avoid ahead of the party congress.

RESURGENCE OF LI KEQIANG

But the economic distress has not been bad for all senior politicians. Indeed, it has put Premier Li Keqiang back into the spotlight, after being sidelined by Xi’s centralisation of power.

Xi has throughout his term elevated his economic policy tsar, Liu He, effectively minimising the premier whose role would typically be controlling the macroeconomic portfolio.

Leading a charge for a range of fiscal policy changes, particularly tax breaks for small businesses, Li Keqiang has garnered wider media coverage in a landscape usually dominated by Xi. 

On May 25, Li Keqiang addressed a national teleconference of party delegates from all levels, including all the vice premiers as well as five state councillors. Such a broad and high-level meeting without a specific reason is exceptionally rare.

State media focused on the “important speech” Li Keqiang gave on bolstering economic growth, underlining the exposure he is currently enjoying, often with alternative policies and governance styles to Xi.

This may not affect Li Keqiang’s future career, as he is constitutionally mandated to step down as premier in early 2023 after two five-year terms. Nevertheless, he will be looking to use his renewed position to exert as much influence as possible on the selection of his replacement at the party congress. 

These congresses always entail intense politicking and horse-trading as key players attempt to manoeuvre themselves and their allies into more powerful positions, for greater policymaking influence and counterbalancing against other factions. 

Ensuring that key allies such as Hu Chunhua, a protege of Li Keqiang’s own mentor, former president Hu Jintao, are promoted will be among his key goals. But whether Li Keqiang can convert recent gains to counter Xi loyalists will also depend on how zero-COVID and the economy continue to evolve in the coming months.

Amid the unwanted economic instability and the new level of uncertainty introduced into Xi’s succession plans, his plans for an unprecedented third term appear secure. No matter the rumours of his weakening position, the reality is that Xi Jinping maintains control of all the major levers of power in Beijing. 

Xi will almost certainly emerge from the National Party Congress with his allies peppered throughout the highest echelons of the party, but his rivals may be feeling more emboldened in their attempts to maintain their influence as well. 

Christian Le Miere is a foreign policy adviser and the founder and managing director of Arcipel, a strategic advisory firm based in London.