What’s really going on in China?

The Beijing Winter Olympics, which drew to a close this weekend, has been a chance for China’s leaders to present the country as soft and cuddly, a dignified member of the international community.

The chaos caused by snow – the real stuff – was a rude intrusion of reality on a carefully choreographed performance. It was also a perfect metaphor for the artifice of the Games; sweep away the surface layer of fake snow and there’s a lot going on in China.

After a strong bounceback following its 2020 nosedive, China’s GDP growth is sluggish. It’s unlikely to reach its 5% target this year. Coal shortages and regulatory crackdowns on tech firms have sapped momentum. Worries about China’s vast and overleveraged property sector are also weighing heavy. Evergrande, the property giant with eye-watering debts, is in the grip of a massive, state-led restructuring operation. It could still collapse.

Nor is Beijing’s doubling down on its zero-Covid policy doing the economy any favours. With city-wide lockdowns still par for the course, the most immediate threat is to consumer spending. Goldman Sachs thinks restrictions this year could wipe a full percentage point off growth in household consumption which shrank in real terms in December compared to the year before.

Part of the Covid problem lies with China’s home-grown Sinovac and Sinopharm vaccines. Five out of six Chinese citizens are double-vaccinated and a third have had a booster. But Sinovac is just 51 per cent effective at preventing symptomatic infection from Delta compared to Pfizer’s 95 per cent. In December, Hong Kong researchers found that two doses of Sinovac failed to produce enough antibodies to fight Omicron.

Nowhere is feeling Covid more acutely than Hong Kong which has been engulfed by Omicron in recent weeks, thanks in no small part to a ludicrous policy of hospitalising every positive case regardless of symptoms – the price the city pays for keeping its doors open to the mainland. Eleven public hospitals are at or beyond capacity with hundreds of seriously ill patients spending nights outdoors.

The backdrop to the crisis is the slow suffocation of Hong Kong’s democracy and erosion of its institutions. But Beijing doesn’t seem interested in harnessing Hong Kong’s considerable strengths. Despite being well-placed to challenge London post-Brexit as the world’s leading financial powerhouse, President Xi is keen to diversify Hong Kong’s high finance economy which, it’s believed, he disapproves of ideologically. Ex-pat bankers are heading abroad and taking their know-how with them.  

And looming over all of this is a genocide in Xinjiang. The ruthless persecution and cultural destruction of the Uighurs is the greatest atrocity of our time. China’s leaders want the world to talk about something else. It’s why we’ve all been invited to watch the Games and smile.