The long tail of China’s zero-COVID policy

Then when the restrictions finally came be lifted at the end of 2022, press coverage dissipated and the official Chinese position was silent. Just as the Chinese people were beginning to regain their economic footing and reckon with the emotional fallout of the previous three years, the world stopped paying attention.

However, the legacy of zero-COVID will not soon be forgotten. For three years almost every town was under various forms of quarantine, with as many 370 million people self-isolating in their homes at the height of politics. Shanghai, China’s financial hub, was among the cities hit by the strictest lockdowns. When it closed for two months in 2022, economists worried that the national GDP would decrease by several percentage points.

Today, the pain is being felt more widely, with wages and jobs being cut across the urban economy. Wages in typically high-paying jobs in technology and finance were decreased by 40 percent, even civil service jobs, which pay less but are considered more stable, face significant pay cuts. Such reductions are particularly painful in a country with an already low basic income level. In 2022, urban China’s median per capita disposable income (after taxes) was $6,224compared to $55,832 in the United States. (Of course, prices are higher in the US, but not by 8.97.)

Worse, the mass layoffs that began in the Chinese tech sector in 2021 have increased over time, with more than 200,000 tech jobs were eliminated just between July 2021 and March 2022. And that number doesn’t take into account the negative impact on closely related sectors like finance or law, let alone the broader impact on consumption and wealth accumulation, where those jobs have a disproportionate impact.

China’s much poorer rural areas have arguably suffered even more. In 2022, agricultural disposable income per capita was flat $2,777. In general, rural households supplement their agricultural income by working as migrant workers in cities, opening their cities to tourists from urban areas or from abroad, and selling high-value goods such as tea or flowers in urban markets. But during the zero-season period of COVID-19, rural villages were cut off from urban markets and tourists, leaving their residents to eke out a living as subsistence farmers.

Making matters worse, the demands of zero COVID on public spending deepened at the local level government debt, and now the country’s massive real estate sector is in crisis, with overall growth continuing to slow. These economic problems come at a time of acute personal suffering for many Chinese. Millions of migrant workers remain traumatized by living in dormitories or apartments without kitchens, surviving on instant noodles for weeks and months at a time. The full cost of COVID and lockdowns is still being calculated. While the youth suicide rate write down especially in the US during the pandemic doubled in China between 2019 and 2021.

When the government finally completed the lifting of zero restrictions for COVID-19, the vaccination rate was still low among the elderly and there was little time for hospitals and health workers to prepare for the a billion infections which soon followed. Given the sheer size of that number, China fared better than many expected. The virus did not mutate into a more infectious form, and the relatively less effective Chinese vaccine still protected most of the population from serious illness or death. An esteemed one two million people died the two months after the end of zero COVID-19, but that means China (with 1.4 billion people) still had a much lower death rate than the US

China’s biggest problem has been that all these deaths have come suddenly, overwhelming funeral homes and forcing families to stage cremations and burials without traditional mourning practices. These experiences, combined with official silence on the matter, have left a muted but palpable sense of collective pain.

Public reactions to these challenges were mixed. Not surprisingly, young people who only knew about China’s “economic miracle” before the pandemic are the most disillusioned. Youth unemployment was at a record high 21.3 percent last June, before China stopped publishing such data altogether. Now, many younger Chinese just want to quit (“tang ping“) or leave the workforce to become “full-time children.”

The older generation is more stoic. Most of those born before the 1990s remember poverty. In the 1970s and 1980s, China was one of the poorest countries in the world, and a single bad harvest could mean starvation in the countryside. In 1978, the average city dweller had a simple 3.6 square meters (39 sq. ft.) of living space. Older Chinese can endure new hardships knowing that their children will still be better off than they were at the same age—no matter what.

Some are even cautiously optimistic after the shift in tone in US-China relations. After years of rising tensions, recent diplomacy—including U.S. Secretary of State Antony Blinken visit in China in June and Chinese President Xi Jinping recent visit to the US — marks a return to stability, even if not a fundamental improvement in this most important of international relations. Stability can restore domestic and international investor confidence in the Chinese economy, thereby creating more tourism, trade, jobs and wage increases. There is still hope for more Chinese to escape poverty and resume a normal life.

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This article originally appeared on Project Syndicate.