China Celebrates New Year Under the Shadow of COVID-19 – Foreign Policy

Welcome to Foreign Policy’s China Brief.

The highlights this week: China celebrates Lunar New Year without travel restrictions for the first time in three years, Hong Kongers taking refuge in the United States face an impending deadline to depart, and a video game giant leaves the Chinese market.

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Welcome to Foreign Policy’s China Brief.

The highlights this week: China celebrates Lunar New Year without travel restrictions for the first time in three years, Hong Kongers taking refuge in the United States face an impending deadline to depart, and a video game giant leaves the Chinese market.

If you would like to receive China Brief in your inbox every Wednesday, please sign up here.

Lunar New Year Arrives Without Travel Restrictions

The Year of the Rabbit began on Sunday, as hundreds of millions of people in China returned to their families to celebrate Lunar New Year, known as Spring Festival in China. For migrant workers, the holiday is often the only week they spend at home all year, usually after long treks across the country. The end of China’s zero-COVID policy last December once again made this possible.

For three years, travel restrictions and other COVID-19 containment measures had prevented the trip for many people. In 2021 and 2022, the number of travelers inside China for the festival decreased from 400 million to around 250 million. But casting a shadow over joyous reunions is COVID-19 and fears that increased travel may cause a new wave of outbreaks.

Ahead of the holiday, top Chinese government epidemiologist Wu Zunyou reassured people on Weibo that this scenario was unlikely, claiming that 80 percent of China’s population had already contracted COVID-19. It’s not clear if Wu’s statement was based on data not yet made public or if he was making a rough estimate based on how quickly COVID-19 spread in the last two months.

China’s government has pushed the idea that this wave of infections is effectively over; its data shows severe cases falling by 72 percent since early January. But the messaging also reflects a need to restart the economy, and since zero-COVID measures were lifted, health authorities have minimized the dangers of the virus.

Either way, Wu’s statement again draws attention to the discrepancy between China’s official estimate of COVID-19 deaths since last December—now at some 72,000—and the likely reality. Eighty percent of the Chinese population is roughly 1.1 billion people, and the dominant omicron subvariant has a roughly 0.3 percent mortality rate, which varies based on vaccination status and age. That would mean 3.3 million deaths, a figure that far surpasses even most outside estimates. It’s more likely that Wu’s statement is significantly off and that there are large populations that COVID-19 hasn’t yet hit.

But this is all guesswork because of the lack of accurate government figures and the widespread signs of significant deaths, especially among older people. Funeral costs are rising, and coffins are running low in some rural areas. It’s unlikely that even the central government itself has a precise estimate of COVID-19 cases and deaths, given that reporting procedures largely ended with zero-COVID and doctors are under pressure not to record COVID-19 on death certificates.

Because COVID-19 is so devastating to older people—the least vaccinated group in China—the sense of loss at a festival so closely associated with grandparents may be acute for recently bereaved people. But others may be acting as if the virus has peaked: Many Beijingers I know who contracted COVID-19 and recovered last month now have an attitude toward risk closer to that of people in the West.

The Chinese government may be paying more attention to economic data. The Spring Festival, with gifts and dining out, is traditionally a period of high consumption. A few signals so far point to a real but limited recovery. Temple fairs to mark the new year—usually crowded events—have reopened after three years but only partially. And China’s Lunar New Year box office has improved without returning to 2019 levels.

If Spring Festival travel does cause a major COVID-19 resurgence, I would expect it as soon as next week. That could mean a hard stop on economic recovery—or the wave could be confined to isolated rural areas, with less economic activity. On the other hand, if there is no new wave, that would give China a boost of confidence.

What We’re Following

Hong Kongers under threat. Hong Kongers who took refuge in the United States to avoid the consequences of China’s draconian national security law are watching their time there tick away: U.S. President Joe Biden’s directive on deferred enforced departure for certain Hong Kong citizens will automatically expire on Feb. 5. The order gave most Hong Kongers in the United States the right to remain in the country and work—but only for 18 months.

The expiration date leaves around 3,860 people who could be forced to return to an increasingly harsh regime, unless the United States acts. This should be a no-brainer for Biden. After all, even anti-immigration Republicans should have a hard time reconciling their anti-communist stance with throwing people back under Beijing’s thumb.

COVID-19 outbreak hits North Korea. Pyongyang is under a five-day lockdown due to an unspecified “respiratory illness”—almost certainly COVID-19—in the city. Last summer, North Korea claimed victory over the virus after weeks of lockdowns, but the end of China’s zero-COVID policy made its return almost inevitable, given frequent border crossings between the two countries. Although both sides tried to restrict movement, illegal crossings and cross-border trade are common.

China’s abandonment of zero-COVID makes North Korea the last country in the world committed to similar measures. The cult of personality around North Korean leader Kim Jong Un makes the government’s denial and obfuscation even higher than in China. It’s possible that the outbreak could cause tension and resentment toward Beijing, with the North Koreans blaming the Chinese for failing to contain the disease.

Zambia debt spat. After U.S. Treasury Secretary Janet Yellen visited Zambia and criticized a lack of Chinese debt relief there, the Chinese Embassy in the country fired back—saying the United States should be concerned with its ongoing government default battle at home. Yellen called China a “barrier” to resolving Zambia’s debt crisis. The country was the first in Africa to default on its external debt during the pandemic, and China is its single biggest creditor.

China’s government is sensitive to accusations of so-called debt-trap diplomacy. (Many analysts agree that recipients of Chinese funding have agency in shaping their relationships with Beijing.) But Chinese-Zambian relations are also fragile: Despite long-standing ties, critics in Zambia see Beijing as promoting economic colonization of the country, and China is often an election issue in Zambia.

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Tech and Business

Gaming giant leaves China. Thanks to a dispute between the gaming giant Blizzard Entertainment and its Chinese partner, NetEase, Chinese fans just lost access to many popular online games, including World of Warcraft, Hearthstone, and Overwatch 2. For years, World of Warcraft was a national obsession for Chinese gamers; although the game has declined from its early 2010s peak, recent estimates suggest that half the player base is Chinese.

Video games have faced tough times in China in recent years, including a moral panic around teens playing games, censorship, and fear of Western influence. The government crackdown on the industry has somewhat eased, in part because the government realized it was undermining a massive economic sector. The current dispute seems to be financial, not political.

Holiday cold snap hits gas market. This Lunar New Year holiday is one of the coldest on record in China, with Beijing plunging to minus 22 degrees Celsius (minus 8 degrees Fahrenheit). Melting ice caps are increasingly driving snow across East Asia. The cold snap has caused nationwide natural gas shortages amid soaring prices, leaving entire neighborhoods without heat. Normally, local governments would subsidize buyers, but the economic crisis and overspending on zero-COVID measures have left their financial resources strained.

Ant Group slowly restructures. Ant Group, China’s premier financial services provider, was once part of the sprawling Alibaba empire before China’s technology crackdown forced a divorce. Now it faces trouble with the authorities—despite signs of easing toward Alibaba. Disgraced Alibaba co-founder Jack Ma has relinquished his holdings at Ant Group, which owns the Alipay digital payment platform. But regulators still insist on a major restructuring of the firm, aiming to make it into a financial holding company.

Ant Group prefers to avoid that outcome since it imposes tight limits on investments. The company’s proposed initial public offering in late 2020 triggered the government crackdown on the industry, and there is no sign of another attempt yet.