Made-in-China Mess

November 28, 2022

What in the world is wrong with China? Months of draconian “zero-Covid” lockdowns have failed and the disease continues to surge, disrupting lives and livelihoods. Workers quarantined in Apple’s largest facility for weeks defied the edict last week and fled their dormitories. Then rumors spread across the country that a fire in a locked-down high-rise caused ten deaths last week because authorities impeded emergency measures. True or not, an unprecedented exhibition of national protest is spreading across the country. Protesters chant “Lift the Lockdown” and others demand that President Xi Jinping step down. The Chinese have lost patience with a government that has been unable to rid the country of a pandemic that others have arrested. And it’s also head-scratching as to why China, normally best in class, has completely bungled this issue. But the failure is a combination of politics and corruption and may demonstrate what some call “Peak China” or that the world’s second largest economy has reached its economic apex and from now on growth rates, exports, and prestige will decline.

Constant testing, confinement, isolation as part of a Zero-Covid policy

As Beijing flails, its arch-rival India, also with 1.4 billion people, has overcome Covid with relative alacrity. As of November 24, India had 44.671 million cases, 530,604 deaths, and now has virtually no new cases. By contrast, China has had four times’ more cases or 198 million, three times’ as many deaths or 1.496 million, and currently has 210,570 new cases. (The United States, with 331 million people, had 100 million cases, 1.1 million deaths, and few new cases.)

The difference is that India and western nations developed and deployed effective vaccines by quickly rolling out mass inoculation campaigns. About 94 per cent of India’s eligible populace has received at least one shot and 86 per cent are fully protected. Two-thirds of Americans are fully or partially vaccinated. In China, only two-thirds of the country’s 267 million people who are over 60 years of age and high-risk have received their third vaccine dose or booster, needed to attain high levels of immunity. They have also been vaccinated with inferior vaccines made in China because Beijing banned foreign vaccines. This, combined with China’s failure to provide enough ICU beds in its hospitals, forced governments to impose lockdown measures to prevent floods of Covid victims overwhelming its healthcare system.

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Another differentiator is that the U.S., Europe, and India are pharmaceutical giants and quickly adopted the new mRNA genetic drugs developed by Germany’s BioNTech and America’s Moderna that were discovered within weeks of the pandemic outbreak. India is the world’s single largest vaccine manufacturer and its Serum Institute of India is the single largest vaccine-producing company in the world, making vaccines for measles, tetanus, diphtheria, hepatitis and many other diseases. It specializes in genetic versions, exports to 170 countries, and estimates are that two-thirds of the world’s children are inoculated with its vaccines.

By contrast, China’s economic model includes a disproportionate number of inefficient state-owned enterprises. That, plus economic nationalism, got in its way of properly addressing the pandemic. For instance, President Xi Jinping’s government allowed a Chinese pharmaceutical company to buy a stake in BioNTech in 2020 to get 100 million mRNA doses, but regulators dithered and failed to approve the deals because China’s Sinopharm Group Co. and Sinovac Biotech Ltd. opposed any competition. They offered sub-standard alternatives, because their science lagged the West’s. “Worldwide data clearly indicates mRNA is the gold standard,” said Joerg Wuttke, president of the European Union Chamber of Commerce in China, which wrote to the Chinese government in April urging it to allow Western vaccines. “Why waste time and wait, for what?”

Xi’s government boasted that it was self-sufficient in vaccines at the start of the pandemic, but its domestic versions were sorely inadequate. Then Beijing’s ban against all foreign vaccines from entering its market, failed to protect its people. The recent high-profile visit to China by Germany’s Chancellor Olaf Scholz was about geopolitical matters involving the war in Ukraine, but was also designed to cement a deal for its champion, BioNTech. A deal was promised, no small accomplishment because, as one expert noted, “for them [China] to say now we are accepting BioNTech is tantamount to saying ours are not as good.”

Leader of the mRNA Revolution

China’s economic nationalism, combined with corruption, resulted in scandals that created a backlash against its vaccinations among China’s elderly and parents of children. Some 200,000 babies were given defective vaccinations that had been formulated for rabies, not Covid. Fraud was behind this mishap and that, along with bias against western-style medicine in the Chinese culture, led to low adoption levels. Unwilling to force people to get shots or to import effective vaccines, Beijing was forced into a lockdown policy, in some cases for months at a time, to try and stop the spread. “They don’t want to force through a vaccine mandate [but] they can’t afford old people dying” commented a politician. “There is no way we can open up right now.”

Xi must flood China with mRNA vaccines and require everyone, notably the elderly, to get inoculated. His zero-Covid policies have damaged society and also tarnished China’s reputation as a reliable trading partner, or supplier. Factories are relocating to southeast Asia, or being repatriated to Western countries. Lockdown measures have cost its economy jobs, export income, and growth and the most embarrassing casualty was Apple which made world headlines. Four out of its five iPhones are made at “iPhone City” at a facilities owned by Taiwan’s Foxconn Technology Group that employs 200,000 at its massive campus in Zhengzhou, in central China. A Covid outbreak led to a month-long lockdown of its workforce, who live in cramped dormitories, and last week thousands of them clashed with security officials and escaped. They pushed past white-clad guards in frustration at poor living conditions and inadequate wages. Foxconn has had to offer higher wages and better working conditions to try and entice them back, but many won’t return unless lockdowns are outlawed.

China’s white-clad Zero-Covid armies block and restrain people

One-fifth of China’s economy is currently shut down for health reasons, and officials continue sealing off buildings, and whole neighborhoods, based only on suspected cases. Several elderly persons have died in quarantined apartments, unable to contact emergency services, obtain food, or seek care at a hospital. And recent figures show that, despite oppressive measures, new cases in China soared by 52 per cent last week, far in excess of all nations except for chaotic Brazil where they jumped by 71 per cent. What’s underway is a nation-busting crisis that demonstrates the incompetence of China’s leadership and yet could be halted with the stroke of a pen. This is not about healthcare, but it’s now about the future of China.