In China this weekend, hundreds of millions of people began travelling in preparation for the January 22 Lunar New Year — also known as Spring Festival — the country’s main annual holiday.
It’s the first Chinese New Year since 2019 without hefty travel restrictions and comes just weeks after Beijing executed a sharp U-turn on the zero-COVID policy, which was proving an increasingly thorny problem for the nation’s struggling economy.
This massive migration is already exacerbating the country’s devastating COVID wave, one already sweeping across the impoverished rural interior, and could exacerbate the economic fallout from China’s lurching COVID policies on Australia and the rest of the world.
On Friday, the New York Federal Reserve said that “while supply chain disruptions have significantly diminished over the course of 2022, the reversion of the index toward a normal historical range has paused over the past three months”. It added that “our analysis attributes the recent pause largely to the pandemic in China amid an easing of ‘Zero COVID’ policies”.
COVID infections have pummeled the country’s workforce, especially in the factories and logistics networks powering its world-leading exports, with reports stating that in some regions more than half the workforce is affected by COVID. China’s factory activity contracted for the third month in a row in December 2022, and on a monthly basis is diminishing faster than at any point during the past three years.
At least three major Chinese ports, Shanghai, Shenzhen and Qingdao — each in the world’s top six container ports — have reported supply chain delivery problems. And as factories have slowed production due to increasing COVID infections, the Chinese New Year slowdown will force them to cancel or delay production into February.
In the end, Beijing had little choice in dumping its zero-COVID policy in mid-December. It was undermining an economy already slowing for long-term structural reasons, especially the unwinding of its unsustainable property boom.
Lockdowns were cutting exports and retail sales as well as inflaming social tensions, which recently led to unprecedented street protests against the government. They were mainly against Beijing’s harsh COVID management, but some of the unrest spilled into broader critiques of Chinese Communist Party (CCP). These spread quickly on social media before censors could hose them down.
Last week Federal Treasurer Jim Chalmers warned that China’s COVID-related supply chain issues would affect Australia.
“The impact of COVID on China and on supply chains is one of the key risks to our economy in 2023,” Chalmers said.
“We are heavily reliant on Chinese markets and Chinese workforces for a lot of the goods in our economy. It’s really right across the board.”
Chinese supply chain shortages have been hardest felt in sectors such as pharmaceuticals, where China and India account for more than 60% of the supply of active pharmaceutical ingredients. COVID is also increasingly triggering subsequent infections, causing a spike in demand as supply issues continue to plague the sector.
Countries such as the United States and United Kingdom have already experienced shortages in antibiotics. In the lead-up to Christmas, the Therapeutic Goods Administration said that popular medications, such as antibiotics cefalexin and amoxicillin, were in short supply.
But longer term, China’s opening up to the world after three years is expected to lead to the export of more inflation to a global economy, one already struggling with surging prices in the wake of Russia’s ongoing invasion of Ukraine.
Still, if the pandemic has taught businesses one thing, it’s the diversification of their supply chains and wariness on overreliance on one supplier or country.
The human implications of China’s “let it rip” decision are devastating; hospital and funeral parlours have been overwhelmed in recent weeks. It is unlikely we will ever know the full extent of the tragedy inside the country, with the CCP withholding any credible information on death and injury tolls.
One potential upside to China’s rapid-fire removal of all COVID restrictions is that international travel is once more available to its citizens. Spring Festival is the most popular time of year for Chinese people to take international trips, and Australia has long been a popular destination. Prior to COVID, China was Australia’s primary source of tourists.
Canberra’s decision to introduce mandatory COVID-19 testing for Chinese tourists and business visitors last week may have invoked the ire of Beijing, but it does not appear to have dampened enthusiasm for people to visit Australia.
Still, the economic news for Australia from China has not been all bad, with signs last week that a drought-induced hydroelectricity shortage in the Middle Kingdom has reopened the door to Australian coal. But China’s trade restrictions have also forced once-complacent exporters to find new markets, so reliance on China — on both sides of the import/export equation — is not quite what it once was.
I’m not ditching my masks until I know what variables – if any – are coming with the new migration.
As soon as I saw Sainsbury’s byline, I scrolled to the end. There is never an unbiased article from him. Total Western China hater.
Just parrots the US Democratic Party leaning liberal media talking points on China.
Difficult to compare or analyse China with Australia due to the sheer difference in population size/distribution, vaccines used (or not) and health support or logistics systems; a short term spike is to be expected especially amongst elderly who have not been vaccinated and living in close quarters across generations?
Australia in winter ’22 had Covid, flu and cold running rampant with, correct me if I am wrong, higher numbers of Covid deaths compared with times of restrictions in ’20 & ’21 before vaccination roll outs?
On the latter many in the UK and Europe are asking for some anti-Covid measures to be reintroduced, if they haven’t already, that is masking and booster shots.
While everything Sainsbury says may be true, there is hardly a spec of data in this article. I know reliable data is hard to get, but just one more article talking about “devastating waves” wont cut it.
China is a very populous country with many very large urban centres. In a sample of the ten largest cities in the world China has five of the largest. Shanghai and Beijing, the two most populous cities in China and (currently) on our planet have a combined total population of about 45.8 million people. What is the total population of Australia? About 25.7 million people.
The five largest cities in China have a combined total population of about 89 million people or about 22 million people more in these five cities than in the entire United Kingdom. The other five largest cities on the planet (which are in five different countries all outside of Europe) have a combined population total of about 79 million people or about 10 million people less than the combined total of the five largest cities in China.
The challenges of managing civic or public health undertakings (in addition to “business as usual”) in cities this large is constantly underestimated outside of those cities. The Chinese government was constantly criticised by “commentators” outside China for lockdowns considered too harsh, too lengthy or too unfair. Now that the population of China is vaccinated and the circulating global Covid strains are much less lethal, China is relaxing its lockdowns and other restrictions.
The Chinese government is now being criticised for that.
Such is ignorance.