Do you know why there protests in china for the first time in a long time?
The Asian giant was shaken this weekend by what the Chinese media themselves called “unusual protests” against the confinement policies contemplated within the strategy of the Chinese authorities called “Zero Covid”, to eradicate the disease.
While the country has so far been successful in containing the spread of the virus since it first appeared in Wuhan province, control measures have led to population jaundice.
The protests took shape and increased after last Thursday, ten people died in a building in the city of Urumqi that was apparently confined, which complicated the rescue tasks by the firefighters and misfortune occurred, the chronicles indicate that the rescue teams took more than three hours to solve the situation.
China is the second largest economy on the planet, Its leaders seem determined to keep their anticovid policy unchanged and, at least in these days, there were signs of a possible crisis that, if not contained, could become an additional factor of pressure for the world economy and finances, just at times when it is least needed.
What happens in China matters a lot to the world, here we have five effects on the markets and the global economy, due to these protests that could be the “wick” of one more global fire.
1. Government tightening, the memory of Tiananmen
33 years ago in Tiananmen Square, a series of protests that had been going on for almost seven weeks in Tiananmen Square in Beijing were brutally suppressed and dispersed.
The brutality with which the Chinese authorities decided to end the protest earned them harsh, almost global condemnation. It was never known exactly how many people died at the hands of the Army and other security organizations.. The authorities never gave a figure and, according to various sources, the number could be in the hundreds or thousands. The Chinese authorities have shown little tolerance. But China was not the second global power 33 years ago, not even the third or fourth most powerful nation, it was barely in the top ten, in the last place. Today only the United States is above them, these protests worry the markets, and also the economy.
2. Recovery slows down more and more
The protests make it clear that China does not want to abandon its Zero Covid policy, it does not even want to relax the rules, so this causes recovery expectations to become increasingly slow. The recovery is stalling and that is bad news for everyone in the world.
3. The growth drag
In 2022, at the beginning it was thought that the Chinese economy would grow up to 5.5 percent, now it is estimated that it will grow around 3.2 percent. That means that this year’s economic growth will remain low, while the world needs “explosive” rates, which it is not clear how they will be achieved.
4. Potential crisis
The potential for a major crisis in China is present, which is why global markets fell on Monday the 28th; They were not the steepest losses of the year, but investors showed signs that they are “worried”, and there are plenty of reasons, nobody wants to see a Tiananmen again, and nobody wants to imagine how the world would react or the economic consequences of something like that, 33 years ago nothing happened beyond global condemnation, today it could be something different, we are in this matter in an “unknown zone”, as in many related to this Asian giant.
5. Covid is not dead
The Chinese authorities have great fear and that is why they have acted like this since the pandemic began; they know that if it runs wild, it would be a big problem and the risk of the collapse of their health system, the economic crisis and, in a way, the risk of implosion of an economy as big as China’s. The Covid has been controlled in the world, but in China the fear is that it will resurface so violently that it could even put the world in check again.
The markets are worried, they already showed it on Monday, but they have done it on other occasions; it is not for less. China continues to be the focus of attention because of the risk it represents. And the worst thing is that, it seems, We could be immersed in a vicious circle in which as long as China does not end the Covid, it will not allow economic activity as we knew it until 2019, before the pandemic, which is very bad news for the entire world.
By Antonio Sandoval
High level Alto Nivel is the Mexican medium with more than 30 years of stories, content and news on the economy, finance, business and leaders.