How Do You Keep China’s Economy Running With 750 Million in Quarantine?

The “demon virus” threat has rattled the confidence of many Chinese in the regime’s ability to protect people’s lives and jobs.

A man wearing a protective face mask walks in a nearly empty shopping mall, a few minutes after rush hour, in Beijing on Feb. 24.
A man wearing a protective face mask walks in a nearly empty shopping mall, a few minutes after rush hour, in Beijing on Feb. 24. NICOLAS ASFOURI/AFP via Getty Images

BEIJING—Returning to China in mid-February, I had seemingly stepped into a parallel universe. Much of Beijing looked, and even smelled, like the familiar metropolis in which I’ve lived for decades. Except for one thing.

Where were all the people? 

BEIJING—Returning to China in mid-February, I had seemingly stepped into a parallel universe. Much of Beijing looked, and even smelled, like the familiar metropolis in which I’ve lived for decades. Except for one thing.

Where were all the people? 

The Chinese capital has more than 20 million residents. But the coronavirus that burst out of Hubei province—infecting some 79,000 worldwide and killing more than 2,600 (mostly in China)—had almost emptied Beijing’s vast boulevards. I felt as if I’d stumbled onto the set of a post-apocalyptic film. (Though the city confirmed only four coronavirus deaths, everyone was jittery about infection.)  In my silent apartment building, 36 pages of warnings, notices, instructions, and lists of fever clinics were taped neatly to the lobby walls, with 11 more in the elevator. They told returnees to Beijing to scan a QR code (leading to a nosy questionnaire) and isolate themselves at home for 14 days. 

I was asked some obvious questions: “Have you been to Hubei?” where the provincial capital, Wuhan, was the epicenter of the outbreak. (I haven’t been for years.) Plus less obvious questions, like my ethnic background and “Are you a member of the Communist Party?” I thought: Does being a member of the Chinese Communist Party have anything to do with whether one’s infected or not?

Actually, the party has something to do with everything in China, especially under Xi Jinping—and suddenly, for Xi, that has become a double-edged sword. As president, party head, and top military commander, Xi has consolidated his authority, centralized decision-making, abolished presidential term limits, and promoted his loyalists. People expect Xi, China’s “chairman of everything,” to fix everything when it goes wrong.

And this is an especially critical test for a Communist leader who has steadily gathered power since becoming party head in November 2012, turning himself into the most powerful Chinese leader since Mao Zedong, in the eyes of some observers. Now Xi and his party apparatus are scrambling to achieve two ambitions—both urgent but conflicting—at once. Xi must reduce (and hopefully eliminate) new coronavirus deaths and infections swiftly while simultaneously reviving China’s shellshocked economy. Problem is, people can’t get back to business if they’re hunkering in a bunker. Yet kick-starting economic activity is key if Beijing hopes to prevent this viral outbreak from becoming the “black swan” that Xi has always worried about, sabotaging China’s economy and the world’s along with it.

A man wearing a face mask walks out of a residential compound in Beijing on Feb. 22.

A man wearing a face mask walks out of a residential compound in Beijing on Feb. 22. NICOLAS ASFOURI/AFP via Getty Images

Meanwhile public trust in the system has been badly shaken, and coming weeks will determine whether the damage is irreparable or not. “Some days I don’t even make enough money to cover fuel costs and the daily 200 RMB [renminbi] I give to the taxi company,” complained Beijing taxi driver Yang Guoning. He said he’d asked the company for a daily subsidy but was told to “wait for the government policy.” What can he do in the meantime? “All I can do is show up for work and take all the precautions,” he said. What precautions? His voice dripped with sarcasm. “Wear a face mask. Disinfect my taxi. Roll down the windows, and get plenty of fresh air—after all, that’s what the government says I must do. What else is there?” He pressed the “down” button to further lower his taxi windows with an exaggerated gesture—and a look of disgust.

Most tragic are recurring reports—most often from Hubei but repeated in some other communities—of an overstressed public health system. Patient care has suffered from overtaxed medical staff, heartless forced quarantines, and shortages of beds, equipment, and diagnostic testing kits. Ailing Chinese were manhandled into strict isolation and then left untended. People suffering from unidentified or non-coronavirus complaints—from HIV/AIDS complications to cancer to injuries from exploding fireworks—were thrown out of hospitals to make way for high-priority novel coronavirus cases.

Such descriptions evoke wartime scenes from a combat triage tent—and that may be no accident. Girding to fight the “demon virus,” Xi himself has likened the anti-epidemic battle to a “people’s war.” The question is what happens if many people no longer believe him and begin to seek private survival strategies. For some, that might mean long delays before resuming work; if pervasive and prolonged, this could deal a body blow to China’s already slowing economy. Worse, others may try to evade their quarantines. The potential for even greater public health catastrophes is sobering.

Chinese President Xi Jinping checks the treatment of hospitalized patients at the monitoring center and talks to medical staff on duty via a video link at Beijing Ditan Hospital in Beijing on Feb. 10.

Chinese President Xi Jinping checks the treatment of hospitalized patients at a monitoring center and talks to medical staff on duty via a video link at Beijing Ditan Hospital in Beijing on Feb. 10. Xinhua/Ju Peng via Getty Images

Early this week, Xi’s precarious balancing act was in full view. In a rare Sunday meeting, he said the crisis had reached a “crucial stage” and acknowledged “obvious shortcomings” in China’s epidemic response, leading to the nation’s worst public health emergency since 1949. As a further hint that China Inc. was not back on track, Beijing unusually postponed the annual National People’s Congress, China’s rubber-stamp parliament. Then officials flip-flopped on whether nonresident Chinese stranded inside Wuhan’s drastic lockdown could travel out so long as they were asymptomatic. First, some were told they could; then, at the last minute, they couldn’t again.

Beijing’s default toolkit for any tough task—be it social, digital, economic—is full of quarantines. The Great Firewall of China and censorship protocols isolate most Chinese online users from ideas such as free speech and universal suffrage, which suffuse the free internet. To counter ethnic unrest in the majority-Muslim Xinjiang region, Beijing officials threw a security cordon around it, restricted internet usage inside the zone, and forcibly interned those perceived to be potential troublemakers in camps. When the government decided to experiment with free market principles in the post-Mao era, it built special economic zones to ringfence the quasi-capitalist enclaves from everywhere else.

The good news for Xi and the party at the moment is a decline in reported new cases and deaths nationwide (the vast majority in Hubei). The bad news, however, is that Hubei’s horrors have tarnished the trust many Chinese had in their officials’ ability to safeguard citizens’ lives and livelihoods. 

Anger is rising in online memes. When the contagion first erupted, Xi was curiously absent from public view. He normally dominates headlines, but it was premier Li Keqiang who traveled to Wuhan on the requisite morale-lifting mission. Subsequently Xi materialized on a Beijing street, greeting locals and suggesting that shaking hands wouldn’t be a great idea right now. When the official photo of Xi in a face mask circulated on social media, many Chinese jumped in on the social media platform WeChat with the pointed question: “When are you going to Wuhan?” Despite China’s vigilant censorship of most negative online content, that sarcastic retort was not scrubbed.

A Chinese woman wears a protective mask as she dances in a sparsely attended park in Beijing on Feb. 23.

A Chinese woman wears a protective mask as she dances in a sparsely attended park in Beijing on Feb. 23.Kevin Frayer/Getty Images

Then there was debate about Beijing’s requirement that citizens wear face masks in public. Virtually everyone in Beijing is complying. Still, many seem to know about Singaporean Trade and Industry Minister Chan Chun Sing’s apparent criticism of Hong Kong Chief Executive Carrie Lam for wearing a mask while holding a press conference. In a tape leaked to media, he said had Singaporean politicians done the same, panic would have ensued and the public health system “would have broken down” due to face mask shortages. “You must have heard about what the Singapore minister said,” a Chinese friend said to me as we were catching up after returning to Beijing. “It was all over WeChat. Basically the minister was pointing out how incompetent Chinese officials are.” (For a while, shortages of face masks and other protective gear afflicted mainland China, and in Hong Kong, criminals broke into parked cars to steal face masks and even conducted an armed heist of toilet paper.)

It comes as little surprise that more and more Chinese seem skeptical about official Chinese epidemic statistics. Foreign critics have been raising eyebrows over Beijing’s funny numbers for decades. Worse, recently Beijing flip-flopped on which criteria to use to determine “confirmed” infections; at one point, case definitions flipped and then flopped back, all in about a week.

But the regime’s most dangerous moment came in early February, as anger erupted over the death of Li Wenliang. The 34-year-old ophthalmologist had tried to warn colleagues about an infectious new pathogen in Wuhan. Police rounded up Li and seven others, reprimanding them for rumormongering and “illegal behavior.”

“This is not rule of law,” the former U.K. diplomat and China expert Charles Parton wrote in a Financial Times commentary. “The room for abuse and fear is obvious. … All of that breeds distrust and cynicism, both with the people and among officials.” Li himself wound up infected by the virus against which he’d battled. After he died, the Weibo hashtag “Wuhan government owes Dr. Li Wenliang an apology” was viewed 180 million times before being scrubbed by censors. 

Even some educated Chinese acquaintances seemed to believe outlandish conspiracy theories and ghoulish rumors about the epidemic. Lurking behind their jitters is an unsettling question: How much—and how many—would China’s mandarins sacrifice to save their own hides? Before my return to Beijing from a monthlong sojourn in Southeast Asia, Xi denounced grassroots “formalism and bureaucratism.” The regime sacked Hubei cadres and party members, 337 in Huanggang city alone. Outside the official narrative, dark tales emerged from Hubei of appalling government blunders. Apparatchiks in Hubei were said to have downplayed the public health threat at first so they could preside over two party meetings and a Lunar New Year hot pot gala for some 40,000 families.

While Xi remains the commander in chief, the numerous loopholes that allowed the coronavirus to emerge suggest China’s Big Brother regime is less omnipotent and more disjointed than one might think. His regime now presides over a system in which sycophants rule. The dangers of doing something risky outweigh the risks of doing nothing. For many apparatchiks, the default position is bureaucratic paralysis. As the China expert and former U.S. diplomat David Cowhig put it, Chinese officialdom is a coalition of “a lot of little ‘Big Brothers’” who can resort to many tools, such as propaganda and local power networks, to protect their interests.

Xi can give commands, but he cannot ensure that they’ll remain clear and not in contradiction with each other as they get passed (or not passed) down the line. For example, precisely how the regime will help cash-strapped businesses and citizens through the crisis still remains unclear to many of them, even though officials and corporations have scrambled to trumpet upcoming relief measures in the form of subsidies, loans, rent holidays, and the like. 

“If Mr. Xi’s world is to end, it will not be with a bang or a whimper,” the former British diplomat Parton wrote. “But it might be with a broken economy.”

A Chinese man wears a mask as he rides in a nearly empty bus during rush hour in Beijing’s central business district on Feb. 13.

A Chinese man wears a mask as he rides in a nearly empty bus during rush hour in Beijing’s central business district on Feb. 13. Kevin Frayer/Getty Images

The big question is whether grassroots Chinese believe the regime is still keeping its side of the grand bargain that has prevailed since Deng Xiaoping’s post-Mao reforms. It went like this: So long as the Chinese Communist Party allowed citizens more economic freedom and rising standards of living—and for some, the dream of getting rich—in return, the people would not rebel en masse against heavy-handed social and political controls. If that bargain breaks down, Xi’s team is in trouble because ever since Mao’s time this deal has been the foundation of the party’s mandate to rule.

The government’s own quarantine protocols are another reason China, the “factory to the world,” has yet to reopen for business. Beijing already extended the Lunar New Year holidays due to the epidemic, so many workers have just started returning home to Beijing. On Feb. 15, Beijing announced its 14-day self-quarantine for returnees—meaning all who came back after Feb. 15 would still be sequestered at home now.

In contrast with the more heavy-handed lockdowns in Hubei, Beijing’s varieties of quarantine seemed a tad quixotic. I came back to Beijing before the quarantine announcement, so I wasn’t required to isolate myself for two weeks. (Anyway I’m a U.S. citizen, and eventually someone said foreign citizens were exempt.) Had I been a Chinese passport holder returning after Feb. 15, I’d be sequestering myself for 14 days. An article raising many quarantine questions was published in a local magazine, the Beijinger, and its headline said it all: “To Quarantine or Not to Quarantine: Confusion Reigns for Foreigners Returning From Overseas.”

Many Chinese passport holders returning to Beijing submitted themselves to much more frustrating routines. Some compounds—especially those that had lacked automated entry pass systems before—are now outfitted with color-coded entry cards. Access is once again ruled by neighborhood committees, which date back to Mao’s time. (Back in the ’80s, the Beijing-based foreign press corps saw them as eagle-eyed busybodies who spied and snitched on their neighbors.) 

A Chinese woman wears a protective mask as she puts on make-up while waiting for customers at a clothing store in Beijing on Feb. 23.

A Chinese woman wears a protective mask as she puts on makeup while waiting for customers at a clothing store in Beijing on Feb. 23. Kevin Frayer/Getty Images

Enjoying a new lease on life, these committees are functioning sort of as quarantine cops. They’re responsible for managing the brand-new entry-exit systems that record residents’ comings and goings and degree of isolation compliance. “If you’re supposed to quarantine yourself but don’t do it, you’re allowed to exit your compound—but then you can’t get back in,” said Linda, a 20-something friend of mine who returned to Beijing the same day I did; she requested that her real name not be used. “Some people have been barred from entering their own apartments, though that’s supposed to be illegal.” Her neighborhood committee calls her at least a couple times a day, asking after her health and whereabouts. The situation seems rife for abuse by the “little ‘Big Brothers.’”

Linda works in the beauty and cosmetics business, and she said none of her colleagues have returned to work. “They’re either in quarantine in Beijing or under lockdown in the provinces.” The shop where she works eats up more than 100,000 RMB ($14,285) in monthly rent, yet the glass-walled space sits silent and empty. With three locations in Beijing, her boss will likely shut down one of the three, she said with startling calm, “maybe by the end of February or early March.” When might the virus scare subside? Shrugging, Linda said, “Who knows? My brother works with tour groups going to South Korea, and he plans to reopen March 1.” 

A Chinese security guard wears a protective mask as he stands in a nearly empty shopping mall in Beijing on Feb. 22.

A Chinese security guard wears a protective mask as he stands in a nearly empty shopping mall in Beijing on Feb. 22. Kevin Frayer/Getty Images

If you reopen stores, will customers come? The glittering Taikoo Li mall in Sanlitun district is normally teeming on weekends. Walking through the vast complex on Feb. 20, I didn’t see more than two dozen shoppers. Virtually overnight, temporary fencelike barriers had appeared in front of the vast Apple Store, funneling visitors toward an opening where a black-clad temperature-taker with “security” emblazoned on the back of his jacket stood guard. Apple had just announced that it would miss revenue goals in the current quarter because of a “slower return to normal conditions” than it had anticipated in China, which is not only a big iPhone market but also whee most Apple products are assembled. Analysts warned revenues could be $10 billion below the $65.3 billion that had been previously expected.

The coronavirus outbreak obviously is hurting China’s economy, but it’s hard to know precisely how much worse it’s hurting compared with the SARS contagion that lasted from November 2002 to July 2003. SARS, a cousin of the coronavirus, infected 8,000 people, killed nearly 800, and caused $30 billion to $100 billion in disrupted trade and travel. It cut China’s GDP growth rate that year by about 1 percent. But in 2003, China’s economy bounced back to double-digit growth in the third quarter. 

SARS had a higher mortality rate—9.6 percent—than this coronavirus. But for other reasons, the current outbreak could still live up to its label as Xi’s “demon virus.” For one thing, China’s economy today is much bigger, and more globally intertwined, than 17 years ago. It’s at the heart of huge global supply chains, capable of triggering all kinds of disruption far and wide, as Apple has discovered. Now China represents an estimated 16.9 percent of global output, compared with just 4.3 percent in 2003. The International Air Transport Association has already warned that the coronavirus contagion could cost the worldwide airlines industry nearly $30 billion in lost revenue.

Little wonder that Chinese authorities are trapped in a tug of war pitting their hunker-down-and-quarantine instincts against the back-to-business imperative. Officialdom prefers to call the two-pronged effort to contain the coronavirus while at the same time reviving the economy as “waging war on two fronts.” That’s a gargantuan task and markets got spooked by it on Monday around the world.

The two-pronged nature of Beijing’s challenge makes it extremely risky for the regime. Heightened distrust of the regime wouldn’t be so incendiary if it were due, say, just to tougher restrictions on academic freedom or a clampdown on Protestant house churches. However, eroding grassroots confidence could become a game-changer if paired with “a collapsed economy, bankruptcies on a large scale, unemployment, unpaid wages and inflation (this last a big factor in the unrest of 1989) and agricultural failure if preparations for the looming planting season cannot be put in place.

China’s economy has been slowing. It took a hit during the Sino-U.S. trade war, ever before the demon virus escaped from Wuhan. In 2003, China’s economy was growing annually in double digits; now it’s 6 percent and heading south. The systemic dysfunctions—and Hubei’s horrific triage scenes—have rattled grassroots confidence that Beijing can keep its side of the Dengist bargain while using the same authoritarian tactics and even some of the same tools dating back to Mao’s time. 

To be sure, Beijing has been turning to more high-tech levers of social control, and some of them have been used to battle the outbreak. A new brand of facial recognition software is said to work well even with people wearing face masks. More sensitive thermal imaging systems are being installed to record travelers’ temperatures. (A social media post, plus colorful video, declared: “Never mind a fever, this even shows if you fart!”) Beijing municipal officials recently used mobile phone location services to text nearly every cell-phone user in the city, warning of an impending snowstorm and “the need to take health precautions during this time of virus prevention.” New mobile phone apps tell you when you’re nearing locations where people infected with coronavirus have been. 

But every new innovation introduced to combat the virus also reminds Chinese just how invasive and controlling Xi’s reign has become. Whether medical or social or economic, quarantines can help buy time that allows governments to seek solutions—but they aren’t lasting solutions in and of themselves. Recent decades suggest many Chinese have tolerated the political excesses of Big Brother, even when they disliked them. But in return Big Brother was expected to protect lives and livelihoods from economic, social, environmental, and health threats. Whether people think that deal still stands may determine if they can pull off the swift economic recovery that China, and the world, needs badly. 

Melinda Liu is Newsweek’s Beijing bureau chief and the co-author of Beijing Spring, about the events of April-June 1989.

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