In December 2019, the first official Covid cases came into the public eye. Shortly afterwards on the very first day of Chinese New Year 2020, the biggest Chinese holiday, China declared a lockdown of Wuhan city and by extension the whole country with differing layers of control.
As Covid rampaged around the world, different countries adopted different measures. On one hand we have the European and US free-for-all style, the middle-ground Singaporean half-half restrictions and the other extreme of China’s hardcore lockdown method. Through each of their Covid management system befitting of the political and societal structure of their own country, the top leaders have been reaping off the commoners using the system they implemented. In the European countries, we have discussed before that as the elderly died, the pressure on supporting the elderly has been reduced on the country.
Similarly in China, those with the network and connections are able to profit off the lockdown system. When a city gets locked down, only a very few specialised and critical businesses can enter and exit the lockdown area, such as those supplying food. Perhaps you may remember the hardest lockdown in China this year would be Shanghai’s 2-month lockdown. Pang Pang Xiang was one of the companies allowed to supply food to the Shanghai region. To the shock of many, it gathered enough capital to raise an IPO in the Hong Kong Stock Exchange shortly after the lockdown, simply by selling groceries.
During the Shanghai lockdown, other provinces has been greatly supporting the lockdown by sending much food into the city. However, there had been reports of people throwing away the food and not surprisingly, reports of people paying sky-high prices for food. As mentioned earlier, the black market for legal goods is much more lucrative than the market for illegal goods. I will remind again: Do not think that you will never see the day where you have to fight for resources in the black market just because your country is peaceful and doing well. The day the country allows a few companies to control critical resources is the day the companies will make sure everyone fork out sky high prices or suffer from the man-made lack of supply.
The Shanghai lockdown was a mess, corruption was rampant and the Covid cases simply could not be cleared despite such harsh measures. For all the Chairman Xi’s talks and actions about removing corruption, the corrupted Shanghai chief was promoted to Premier in the latest CCP meeting.
During a lockdown, what other necessities are needed to go into the city? I do not need to say more. Just look at what we need on a daily basis and you can use your imagination to guess how many more selected companies in each sector profits off the poor commoners. When you do it too overboard, even the idiots on the streets will realise it.
The West will never recognise the East’s style of hardcore lockdown. Similarly, China will never compromise on the zero Covid policy. The reason is simple. After staking so much on it, after unleashing the propaganda machines (I consider BBC, CNN and New York Times as propaganda machines of the West too), after standing on their end and gearing up their citizens to condemn the other side, they simply cannot back down and admit they are wrong and that the other side has its merits.
Both sides have its share of joy and desperation. When the West saw hundreds and thousands of people dying, China was celebrating and going about their lives as normal without masks. But as time progresses, the West see people trying to live life as normal and co-existing with Covid, while China grapple with its lockdowns.
Face value to an individual is worthless, but losing on face value may have dire consequences to a country. Sometimes, these countries have no choice but to hold on to their current system all the way till the end, at least in name and on the surface.
The West, for all its freedom about not wearing masks and not restricting movements, have seen certain countries and cities being put under lockdown and enforcing the wearing of masks. China, for all its brainwashing on the benefits of zero Covid policy, is seeing protests from hardcore lockdowns and is gradually preparing to grant autonomy to each individual province on how hard they want to enforce a lockdown.
For the West, protesting on the streets is a common affair. For China, protesting and rioting against the Covid lockdown is a serious issue, because we remember the last time it happened tanks were rolled out. In America, each state having its own autonomy is a given since the system was set up that way at the founding of the country. But in China, that does not mean well.
The Zhou dynasty in China was the third and longest dynasty in its history. But it is more famously known for its Spring and Autumn Warring States period. To be more specific, Spring and Autumn (春秋) period is one era, and the Warring States period (戰國) is another era. Together they form one of the greatest period of conflict and turmoil in China’s history, ending only when Qin Shihuang unified China. One thing particular to note is that during this whole time and for a period before that, it was considered the Zhou dynasty, where there was a king. But the kings were weak and the feudal lords waged war with each other with no regards to what the king may think.
If you are a Chinese, and knew this portion of your history, and knew throughout history the people in power always sought to unify the whole country under absolute rule (一統天下), what will you think now when the government actually allows autonomy? We are not talking about small things such as each province settling their own housing and industrial aspects. We are talking about Covid, which the CCP has shown its absolute authority as one unified country and one unified policy led by one unified party. However now in the war against the virus, each province will be allowed to control their own ‘army’, fighting in a way they see fit.
To put it nicely, the provinces have been granted autonomy. To put it bluntly, perhaps we can use the Chinese phrase: 一盘散沙 (literally: plate of scattered sand).
The Chinese are legitimately scared and desperate now. A lockdown means nothing for the government officials sitting in their air-conditioned offices collecting taxpayer’s money. But for many others, not being able to go out = not able to work = no salary. Yet, they still have to eat, to pay bills, to pay housing loans, failing which they will die or be charged or have their houses confiscated by the banks, which of course is another system backed by the government. Despite this, China’s propaganda machine is still out doing their job everyday, blatantly lying through their teeth like some press in certain countries.
The Chinese are weary in the fight against Covid, are desperate over the uncertain future and emotionally damaged from not having a peaceful life. If it is me, I too will be anxious and stressed from all the financial burdens in an uncertain environment where my income becomes unstable and can be broken off any time.
Long periods of lockdown stagnate the economy, resulting in businesses shutting down and people losing jobs. Export has dropped due to weakening overseas demand. But now domestic consumer spending power drops. Yet China’s international ambition does not stop. This will naturally lead to one thing: the intensified collection of taxes, which has already started. In fact, it has clamped down its check on transactions so much that people doing a legitimate business especially in the area of international export are suffering. This will only lead to one more thing – the loss of confidence and the running of capital.
Capital will naturally flow to the one who has the power to control it or the one who has the power to protect it. The harsh business competitions everywhere is an attempt of people to control each another’s capital, and the putting of money in the banks is the confidence in the organisation’s ability to protect it. This works not only domestically, but also internationally. The fleeing of Chinese capital can best be reflected in its exchange rate. As more people dump the Chinese RMB in favour of foreign currencies, the RMB supply increases and its prices drop.
This creates a vicious cycle where the more the CCP tries to clamp down, the more capital wants to flee, the more its price drops, the more the CCP tries to clamp down. In fact, the CCP has to come out to assure the people that the CCP will not sacrifice the rich for common prosperity. But it was only 60 years ago that all the landowners had their land and resources forcibly confiscated and re-distributed out to everyone. If a foreigner like me can remember what happened to China 2500 years ago, you can count on the Chinese to remember what happened 60 years ago. In case one still forgets, for all the trade and businesses China is doing, China is still a communist country.
Few months back I had written about the opportunities of China, believing that China has a way to catch up to the West, more specificaly the US, despite still being a far away number 2. Yet as it is with life, current affairs and politics are unpredictable. Things change, sometimes in a slower pace, sometimes in a surprisingly fast manner. It is now the time again to sit back, watch and review where China is going.
I still have a sum of investment in China, but I will not all-in China. Also, I will not withdraw everything from China unless things go downhill further. Because earning money with capital is only secondary. The first objective of sending out capital, be it for the individual, the corporate or the country, is always to capture more resources. Never forget that money is but a tool for the exchange of resources.