Containment Approach:

China has recently witnessed a wave of protests against the central government’s "Zero COVID" policy and continued strict lockdown measures in the country, despite the availability of vaccines. While the Zero COVID policy itself has created challenges and had negative impacts, especially on the Chinese economy, the recent protests deepen some of these challenges. The protests are the most widespread in decades, surpassing the local nature of protests that characterized demonstrations in China for the past 20 years. The demands of the protests have also widened to include political dimensions. This comes as China announced, on 4 December 2022, 35,775 new COVID-19 infections, 31,607 of which are asymptomatic, bringing the total number to 336,165 cases and 5,235 deaths.

Worrying Nature

Protests in China have a number of defining characteristics that make them worrying for the ruling authorities:

1. Protests expand to include a wide geographical scope: The circle of protests in China has widened to encompass broad geographical areas. Several Chinese cities saw protests against health restrictions imposed due to the Zero COVID policy. Hundreds of students from Tsinghua University demonstrated in Beijing, in addition to other protests organized at the Nanjing Communications Institute, and in Xi’an, Wuhan, and Guangzhou.

2. Urumqi fire is considered a catalyst for protest: Many Chinese circles are convinced that the Urumqi fire in Xinjiang is the main catalyst for the current wave of protest. Posts on social media in China linked measures to combat the COVID-19 pandemic with the death of 10 people in the blaze. These posts said anti-COVID-19 measures exacerbated the disaster, given the presence of parked cars for weeks due to the lockdown in the small neighborhood leading to the burning building, which hindered the arrival of rescue personnel. The Chinese Foreign Ministry, meanwhile, accused those it described as "forces with ulterior motives" of linking this fire to the local COVID-19 response policy.

3. Chanting slogans against Chinese President Xi Jinping and the Communist Party: Videos taken at the protests showed demonstrators chanting slogans calling for President Xi Jinping to resign and attacking the ruling Chinese Communist Party (CCP). These included "We don’t want a COVID test, we want freedom," "We don’t want dictatorship, we want democracy," and "Democracy and rule of law! Freedom of expression!" as well as "Xi Jinping! Step down" and "Communist Party, step down." Slogans chanted by protesters against the Chinese president and CCP sparked fears that anger over the general lockdown could turn into calls for broader political reforms.

Economic Fallout

The Chinese protests caused a number of direct, rapid economic repercussions, most of which were temporary:

1. Fall in some European and Asian stocks: Some European and Asian stocks fell in conjunction with the Chinese protests. On November 28, European stocks fell from their highest levels in three months due to declines in energy, retail, and mining stocks after China’s protests triggered a wave of selling in global markets. For example, the STOXX 600 index of European companies’ stocks fell by 0.5% after sharp declines in Asian stocks. Credit Suisse shares fell 0.3% to a new record low. The Japanese Nikkei index also fell, as did the TOPIX index, by 0.68%. China’s CSI 300 index fell by up to 2.5%, indicating that investor morale was impacted by the Chinese protests. It should be taken into account that stocks bounced back and rose again, especially with expectations that COVID-19 restrictions would be eased.

2. Decline of gold, yuan, and oil against the dollar: Gold prices fell after the dollar rose, with Chinese protests boosting demand for it as a safe haven. Growing uncertainty caused by increasing unrest in China led to a fall in the yuan and pushed investors towards the dollar. The price of oil also fell to its lowest level since December 2021 amid the wave of unrest, which impacted the outlook for energy demand and increased pressure on the global energy market landscape. Notably, these were momentary declines under the weight of fears over the future of the protests. Currencies and commodities recovered and rose again, especially with expectations of eased restrictions.

3. Threatening Beijing’s production image: Chinese protests and unrest rejecting the Zero COVID policy threaten to cause a deficit in the production of iPhone Pro phones by 6 million units this year. Protests by workers and employees against restrictions imposed by Chinese authorities raise concerns over the continued operation of Taiwanese company Foxconn’s factory in the Chinese city of Zhengzhou. The factory has already been hit by widespread lockdowns and weeks-long labor strikes. This deficit in phone production is expected to continue, and increase, if lockdowns continue in the coming weeks. That comes after thousands of employees fled the factory this past October following chronic food shortages. They were replaced by new employees, who rebelled against wages and quarantine practices. Reports indicate that Foxconn’s protests and problems threaten China’s global production image, and are driving some companies to consider other countries as alternative options.

Western Exploitation

Western countries and platforms have worked to take advantage of the Chinese protests and use them as part of their propaganda rhetoric against Beijing:

1. United States warns Beijing of the consequences of violence against demonstrators: The United States (US) criticized the Zero COVID strategy, and a National Security Council spokesperson said it would be very difficult for China to be able to contain the COVID-19 virus through the strategy in place. The spokesperson also stressed Washington’s support for peaceful demonstration in all countries of the world, including China. Forty-two members of the US Senate also said, in a December 2 letter to Chinese Ambassador to the US Qin Gang, that they are closely monitoring Beijing’s response to the protests. The senators warned the Chinese government not to "once again undertake a violent crackdown on peaceful Chinese protesters" and threatened extraordinary damage to bilateral relations if Beijing resorts to violent options.

2. European criticisms of China’s treatment of the media: The British BBC reported that one of its reporters in China was arrested while covering protests in Shanghai and beaten by Chinese police officers. British Business Secretary Grant Shapps denounced Chinese police practices, which he called unacceptable and disturbing, and stressed that press freedom must be sacrosanct, no matter what happens. The European Broadcasting Union also condemned what it described as "unacceptable acts of intimidation and attacks against journalists and production teams, members of the EBU in China."

3. Britain calls on the Chinese government to listen to its people: The British government expressed understanding and support for Chinese protesters’ demands, and called on the Chinese government to heed and understand them. British Foreign Secretary James Cleverly highlighted this, saying that the Chinese government must listen to the voices of its people when they say they are unhappy with the restrictions imposed on them.

4. Germany shows solidarity with Chinese protesters’ demands: German President Frank-Walter Steinmeier said he can "only imagine how great the burden is for people in China where the measures are much stricter, have been in place much longer and are still being enforced." At the same time, he called for Chinese authorities to respect freedom of expression and demonstration.

Multiple Moves

The Chinese government has taken a number of steps in the face of protests against the Zero COVID policy:

1. Sticking to the Zero COVID policy, despite pledging to lessen it: Despite the Chinese government announcing it would curtail some of the Zero COVID policy’s rules and restrictions—by easing quarantine restrictions for travelers abroad and penalties for airlines that bring in infected travelers, and canceling mass COVID testing in many cities—it has not done so, while the government continues to adhere to the same policy. Beijing has justified its commitment to the Zero COVID policy by maintaining the number of official victims of the COVID-19 pandemic in China at only more than 5,000 people, compared to more than one million deaths in the US. This is even at the expense of some resentment and unrest, as Beijing fears that retreating from the policy could lead to a health crisis, hospital overcrowding, and increased death rates.

2. Security assurances of confronting the protests strictly and decisively: The Central Political and Legal Affairs Commission of the CCP, which is responsible for the security forces, stressed the need to suppress activities of sabotage and those that disturb the peace, carried out by hostile forces, in accordance with applicable Chinese laws. The head of Chinese domestic security also vowed to effectively maintain overall social stability in the country, urging law enforcement officials to "firmly crack down on infiltration, sabotage, and illegal and criminal acts that disrupt social order."

3. Use of technology by Chinese authorities: The Chinese government has worked to boost levels of censorship to respond to emergencies, by attempting to counter methods used by Chinese people to bypass online censorship, blocking, and banning. Press reports indicate that instructions have been issued to strengthen online content management. The security services have also worked to take advantage of technology to strengthen their security control and access to protesters. Media and human rights reports have mentioned the Chinese police’s use of high-tech methods, relying on surveillance footage and facial recognition, as well as using phone location data captured by scanners at the sites of gatherings.

4. Relative easing of restrictions in Chinese cities: Statements by Chinese officials indicate that there is thought about a new stage of the Zero COVID policy in light of the reduced severity of the Omicron variant, the increase in vaccines, and the growing accumulated Chinese experience in combatting the pandemic. This appears to be a relative retreat in the face of the demands of the protesters. There are signs of a relative decline in the application of the Zero COVID policy and the easing of some restrictions. On December 3, major Chinese cities such as Beijing announced they would not make a negative COVID-19 test a condition for residents to ride public transportation. Notably, the Goldman Sachs bank expects China to end the Zero COVID policy before the second quarter of 2023.

Prolonged Policy

In conclusion, China defends President Xi Jinping’s Zero COVID policy as aimed at saving lives and confronting the pandemic, and as necessary to not burden the healthcare system. Despite the turmoil caused by the protests, the objections to the Chinese policy that emerged multiple times in the past, and the economic losses many reports attribute to the strict policy, officials say the Zero COVID policy will continue—especially given the rise of new cases in recent weeks. However, there are signs that China will be forced to relatively relax its policy, in order to contain domestic, economic, and external pressures on it related to it.