STEVEN KUO: China’s opening bodes well for SA and the world

On a visit to my GP last week, instead of a boring discussion on the declining vitality of an overweight middle-aged man we had a lively chat about China.

My GP admitted that while he’s been to China and has no doubt it is a country of significance, he doesn’t know how to make head of tail of developments there. I suggested, as I do to my students, that he first read Harvard historian John Fairbank’s books, then Jonathan Spence’s The Search for Modern China, and Henry Kissinger’s On China.

The doc’s eyes glazed over a bit, seemingly put off by the thought of studying Chinese history like a grad student. “Perhaps a historic novel that’s more interesting to read?” So I suggested Wild Swans: Three Daughters of China as lighter fare. He ordered a Kindle copy, and we went back to discussing my health (fine).

Wild Swans is a good basic introduction to China, how it has changed and how it has remained the same. Its recent loosening of Covid restrictions and reopening to the world is the event that will have the greatest consequences for the global economy in 2023.

The war in Ukraine will continue to fester, but short of a nuclear strike by Russia, which is highly unlikely given that China has now warned Russia against it, Europe and the world will just have to navigate around the war.

In China, the two main reasons for the lockdown U-turn were rising discontent in a population that was fed up with three years of hard lockdowns, and the physical impossibility of achieving zero Covid given the transmissibility of the Omicron variant.

Three years of lockdown has been extremely costly to the Chinese population. People are mentally exhausted. Local officials tasked with enforcing lockdowns were at their wits’ end, stuck between directives from the top and increasingly strident complaints from below. Zero-Covid policy may have been effective in 2020, when Wuhan was locked down to stop the spread of Covid, but it was clearly no longer effective by 2022.

Ultimately, though, the reason Beijing decided to change course on Covid and learn to live with the virus was economic. It is imperative for the survival of the administration in Beijing that the economy continues to grow to keep distributing wealth and lifting people out of poverty. That is no mean task.

Together with lifting Covid restrictions, Chinese regulators have loosened limits on Chinese tech companies. The stock market responded immediately. Hong Kong’s Hang Seng tech index has soared almost 60%, with Tencent and Alibaba gaining $350bn in combined market value since October, according to the Financial Times.

When it comes to foreign policy the signs are that China is extending the olive branch to the West, de-escalating the tensions of the past three years, when accusations and counter-accusations flew on who was responsible for Covid. Following a meeting between the foreign ministers of China and Australia in Beijing, the ban on imports of Australian coal has also been lifted.

Qin Gang, the well-regarded Chinese ambassador to the US, has been promoted to foreign minister. Qing has been on the customary January tour to Africa this past week, visiting Ethiopia at the AU headquarters, as well as Angola, Gabon, Benin and Egypt. We should see him again in SA later in 2023, together with President Xi Jinping, when they attend the Brics summit in Johannesburg.

China’s opening and the Brics summit will offer President Cyril Ramaphosa some respite from the gruelling domestic troubles he is facing. A growing Chinese economy should boost commodity prices, which will be positive for SA. However, energy prices may also rise along with growing Chinese demand.

The stock market rally is a good omen though. I believe 2023 will be a positive year as we all put Covid behind us and get back to business.

• Dr Kuo, a former lecturer at the Shanghai International Studies University in China, is adjunct senior lecturer in the University of Cape Town’s Graduate School of Business.