At the beginning of the new year, China is facing a serious situation of “double resistance” against the epidemic and the severe cold, and at the beginning of 2020, China’s economy almost came to a standstill due to the outbreak of the Chinese Communist virus. In the beginning of 2021, in addition to the “double resistance,” China’s systemic financial risks are approaching a critical point, and disposable income and consumption are taking a big hit, threatening another setback for China’s much-needed economic repair.
At the end of 2020, Chinese Communist Party propaganda led the public to believe that the epidemic had subsided and that a vaccine might become widely available. But the situation has recently changed abruptly, with outbreaks in Sichuan in the southwest, Liaoning in the northeast, and Hebei in northern China. Shijiazhuang in Hebei is the most serious.
“The virus has been spreading stealthily for some time” and many provinces and cities are in a state of war
Some experts analyzed that the biggest feature of this wave of outbreaks is that “the virus has been spreading stealthily for some time,” with many cases concentrated in rural areas where the epidemic prevention and control system is weak, or where infected people are detected only after more than four nucleic acid screenings.
In November and December 2020, Tianjin, Anhui, and Sichuan provinces were rumored to be in a state of war one after another.
Analysis suggests that a large number of migrant workers were either forced to leave their jobs due to economic adjustments or left their jobs voluntarily because the New Year’s Eve was near, creating a tidal wave of return to their hometowns that made the associated epidemic appear in the countryside.
According to reports, the epidemic is fierce in Hebei, “everywhere is a battlefield” in Inner Mongolia, Beijing has entered a quasi-war time state, Heihe City in Heilongjiang Province is “closed”, and Dalian, Shenyang and Ningxia Lingwu City in Liaoning Province have declared a war time state. In first-tier cities such as Shanghai and Guangzhou, mutations of the virus have been found, increasing its infectivity by 40 to 70 percent.
Since the Chinese Communist Party has been hiding the epidemic, there are questions that the number of infected people in Hebei Province in this outbreak should be much higher than the officially notified figure.
Economic activity tested against epidemic and severe cold
As a new wave of epidemics breaks out across China, the entire country has been experiencing extremely cold winter weather for several days, making “fighting the cold” a new test. For example, Beijing is experiencing the “cold of the century” and the cold wave is affecting Shenyang in Northeast China and Jinan and Shanghai in East China, with temperatures in the cities concerned likely to hit a 20-year low. At the same time, Inner Mongolia, Heilongjiang, Shaanxi, Shanxi, Henan, and even Hubei, have fallen snow.
The severe cold hit a wide range of areas, affecting not only the fight against epidemics, but also people’s lives and industrial and commercial activities, with electricity supply becoming strained and insufficient to adequately supply heat and heating. There was also a coal supply shortage, which forced some businesses to cut off power and disrupted economic activity.
In early 2020, China’s economy came to a near standstill due to the outbreak of the Chinese Communist virus. Chinese economist Lin Caiyi recently said that the outbreak hit small and medium-sized enterprises hard in 2020, with a 25% drop in disposable income, making it difficult to expect a major upturn in consumption in 2021.
After 2021, China will encounter “double resistance” in addition to the systemic financial risk is further approaching the threshold. Moody’s expects China’s banking sector to face more bad debt risk this year, while Fitch predicts that the number of SOE defaults will increase. ANZ also estimates that real estate developers face $77.5 billion (RMB 520 billion) in debt service pressure in 2021, while the International Monetary Fund (IMF) projects that CCP government debt will rise to 92 percent of the nation’s economic output (GDP).
At the end of 2020, the official outlook of the Chinese Communist Party is that Chinese companies will resume work and production, which predicts a full economic recovery. In reality, however, China’s “double resistance” and the above-mentioned crisis signals are likely to make the economic scenario in 2021 even more precarious than in previous years.
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