Sinology On-the-Ground in China

Key Takeaways

  • Two weeks on the ground in China made clear that people there are living with COVID just as we are, and that life on the streets, and in offices, bars and restaurants is consistent with macro data showing a gradual, consumer-led recovery.
  • Life, and the economy, are clearly not yet back to pre-pandemic levels, but the process is well underway and is sustainable.
  • The political relationship between Washington and Beijing is likely to remain strained, but a crisis is unlikely. Political and trade tensions won’t disrupt the Chinese economy, as domestic demand is its primary growth engine.

My first trip to Shanghai and Beijing since the start of the pandemic provided an opportunity for a first-hand checkup of China’s nascent economic recovery. My clinical assessment: the gradual, consumer-led rehabilitation is well underway and is likely to continue. The resilience of China’s entrepreneurs and pragmatic government policies should overcome the short-term challenges of weak manufacturing, low private sector investment, and high youth unemployment. The property market has bounced back better than I’d expected. But, investors should anticipate that the road to rehabilitation will continue to have peaks and valleys, and that periods of softer data will lead some to prematurely proclaim the end of the recovery process.

Back on the ground

My last, pre-COVID trip to China was in December 2019, so it has been great to get back on the road again this year. In February, I returned to Taipei, Hong Kong and Shenzhen, and last month I was finally able to make an extended trip to Shanghai (where I lived for 14 years) and Beijing (where I lived for 5 years).

My first impression was that Chinese people are living with COVID just as we are. There are new cases, and I had to do one meeting by phone rather than in-person, with a contact who was recovering from a mild case, but no one was changing their behavior and there were no government COVID restrictions. Face masks were not mandatory, and only about two-thirds of passengers on the Shanghai subway were wearing them. There was no talk of resuming mass testing or the use of lockdowns. This was a big change from February, when masks were required everywhere I went in Asia, and I had to take a PCR test to travel from Hong Kong to Shenzhen.