While many observers claimed two years ago that China was the big winner in the Covid crisis, recent events underline that it is instead confronted with the persistence of the pandemic, a significant slowdown in economic growth, the property bubble, major obstacles to the development of the “New Silk Road”, strong imperialist pressure from the US: in short the prospect of major turbulence.
China’s inability to control the health crisis
Since the end of 2019, China has been suffering from a pandemic crisis that has largely paralysed its population and its economy. For the past three years, the “zero Covid” policy advocated by President Xi has led to huge and interminable confinements, as in November 2022, when no less than 412 million Chinese were locked up under terrible conditions in various regions of China, often for several months. By claiming that China would be the first to tame the pandemic through its “zero Covid” policy, Xi and the CCP rejected international anti-Covid strategies and medical research. As a result, they have found themselves stuck in an economically and socially catastrophic logic, with no real alternative: Chinese vaccines are largely ineffective, the hospital system is unable to absorb the wave of infections resulting from a less restrictive policy (Cuba has four times as many doctors and hospital beds per capita as China), especially since the corruption of the political administration in the provinces makes it impossible to obtain reliable data on the evolution of the pandemic (a tendency to disguise the figures to avoid political disgrace)
The Chinese authorities are therefore up against a brick wall. Faced with an exploding social protest against the horrific inhumanity of mass confinement, they abruptly abandoned the “zero Covid” policy without being able to propose the slightest alternative: without significant levels of acquired immunity, without effective vaccines and lacking sufficient stocks of drugs, without a policy of vaccinating the most vulnerable, without a hospital system capable of absorbing the shock, the inevitable catastrophe did indeed take place: sick people are queuing up to get into overcrowded hospitals and corpses are piling up in front of overcrowded crematoria, tens of thousands of people are dying at home, morgues are overflowing with corpses, the authorities are totally overwhelmed and unable to cope with the tidal wave: projections foresee 1.7 million deaths and tens of millions of people heavily affected by the current explosion of the virus.
Aggressive US pressure adds to economic difficulties
For several years, China has been under intense economic and military pressure from the United States, both directly in Taiwan and through the formation of the AUKUS alliance, but also indirectly in Ukraine. Indeed, the longer the war in Ukraine drags on, the more damage China suffers through the collapse of its main partner on the imperialist scene, Russia, but above all through the disruption of the European routes of the “New Silk Road” project.
On the other hand, the explosion of chaos and every man for himself, intensified by the aggressive policy of the United States, also weighs heavily, as shown by the plunge of Ethiopia, one of China’s main pivots in Africa, into civil war. Plans to expand the “New Silk Road” are also in trouble because of the deepening economic crisis: almost 60% of the debt owed to China is now owed by countries in financial difficulty, up from just 5% in 2010. In addition, economic pressure from the United States is intensifying, in particular with the Inflation Reduction Act and the Chips in USA Act, decrees that subject exports of technology products from various Chinese technology firms (e.g. Huawei) to the United States to heavy restrictions through protectionist tariffs, sanctions against unfair competition, but above all the blocking of technology transfer and research.
Repeated lockdowns and then the tsunami of infections leading to chaos in the health system, the property bubble and the blocking of various “Silk Road” routes by armed conflicts or the surrounding chaos have caused a very sharp slowdown in the Chinese economy. Growth in the first half of this year was 2.5%, making this year’s 5% target unattainable. For the first time in thirty years, China’s economic growth will be lower than that of other Asian countries. Large technology and business companies such as Alibaba, Tencent, JD.com and iQiyi have laid off between 10 and 30% of their staff. Young people are feeling the pinch, with an estimated 20% unemployment rate among university students looking for work.
The “neo-Stalinist” model of the Chinese bourgeoisie in great difficulty
Faced with economic and health difficulties, Xi Jinping’s policy had been to return to the classic recipes of Stalinism:
– economically, since the administration of Deng Xiao Ping, the Chinese bourgeoisie had created a fragile and complex mechanism to maintain an all-powerful single party cohabiting with a private bourgeoisie, stimulated directly by the state. Now, “by the end of 2021, Deng Xiaoping’s era of reform and openness is clearly over, replaced by a new statist economic orthodoxy” The dominant faction behind Xi Jinping is thus tending to reinforce absolute state control over the economy and to close the prospect of economic renewal and the relative opening of the economy to private capital.
– on the social front, with the “zero Covid” policy, Xi not only ensured ruthless state control over the population, but also imposed this control on regional and local authorities, which had proved unreliable and ineffective at the beginning of the pandemic. As recently as the autumn, he sent central state police units to Shanghai to impose order on local authorities that were liberalising control measures.
However, while the policy of the Chinese state since 1989 has been to avoid at all costs any large-scale social turbulence, the flight of buyers scared by the difficulties and bankruptcies of the property giants, but above all the widespread demonstrations and riots in many Chinese cities, expressing the population’s exasperation with the “zero Covid” policy, have given Xi and his supporters cold sweats. The regime was forced to back down in great haste in the face of the rumbling social unrest and to abandon in a few days the policy it had maintained for three years against all criticisms. Today, the limits of Xi Jinping’s policy, a return to the classic recipes of Stalinism, are apparent at all levels: health, economic and social, while the man who imposed it, the same Xi Jinping, has just been re-elected for a third term after complex behind-the-scenes negotiations between factions within the CCP.
In conclusion, it appears today that if Chinese state capitalism was able to take advantage of the opportunities presented by its passage from the “Soviet” bloc to the American bloc in the 1970s, by the implosion of the “Soviet” bloc and the globalisation of the economy advocated by the United States and the main Western powers, the congenital weaknesses of its Stalinist-type state structure are now a major handicap in the face of the economic, health and social problems facing the country and the aggressive pressure of US imperialism it is under.
The situation in China is one of the most characteristic expressions of the “whirlwind effect” of the concatenation and combination of crises that mark the 20s of the 21st century. This ‘whirlwind’ of upheaval and destabilisation is putting heavy pressure not only on Xi and his supporters within the CCP, but more generally on China’s imperialist policy. A destabilisation of Chinese capitalism would have unpredictable consequences for global capitalism.
R. Havanais, 15 January 2023
 “Foreign Affairs”, reprinted by Courrier international n° 1674.