The epidemic outbreak in Shanghai, Beijing, and other places since March had caused a significant impact on the mainland economy. But China’s current pandemic control policy is a “tragedy of the commons” phenomenon. The current method isn’t practical in balancing between controlling the pandemic and maintaining economic growth.
That are remarks of China’s former finance minister Lou Jiwei during the iFeng finance summer summit 2022 held from June 16 to 18.
According to Caixin, the former minister explained that the “tragedy of the commons” in economics means that private landowners use a piece of public land without compensation, resulting in the overuse and abandonment of public land. Ultimately, the practice damages all users.
The former minister said that the mainland’s public health prevention and control methods are biased towards containment. Improper closure has led to bottle-necked transportation and industrial chain disruption, while people cannot go to work. He also said the negative impact was “comprehensive,” and holding anyone accountable is tricky. Therefore, the policy caused significant adverse effects on the Chinese economy and caused harm to all involved.
Lou Jiwei said that the current main contradiction of the mainland economy is not inflation. He said, “Despite the pressure of imported inflation, but due to the lack of final consumption, the pressure is mainly digested in various parts of the industrial chain.”
Taiwanese financial expert Huang Shicong told Da Ji Yuan news outlet that if China still insisted on the Zero-covid policy, many cities might be closed again at any time. Due to the policy’s uncertainty, the lockdown measures have impacted consumers’ behavior. The expert said the slump in the domestic demand would not be resolved in the short term.
Lou Jiwei is considered a close confidant of former Chinese Premier Zhu Rongji. Lou has served in the Ministry of Finance for many years. Soon after Zhu Rongji became Prime Minister in March 1998, Lou Jiwei became the Deputy Minister of Finance. Lou stepped down as minister of finance in March 2016.
According to overseas Chinese media, Lou Jiwei has always been regarded as one of the more radical reformers in the Chinese government. The former minister often makes sensitive remarks about China’s economy. In an interview with the South China Morning Post in 2019, Lou Jiwei expressed his dissatisfaction with the “Made in 2025” plan, saying the plan was all talk, no action, and a waste of taxpayers’ money.