After two months of extreme lockdown, Shanghai is experiencing its aftermath

China’s financial hub has experienced a credit crunch, harsh business environment, supply chain disruption, foreign capital outflow, flight of talents, and rising unemployment. Citizens are in a traumatic situation, and the birth rate is falling. Infighting struggles within the government have intensified.

Nearly 3 weeks after Shanghai ended its lockdown measures, residents’ lives and the business operation have not returned to the past track.

Earlier in June, a New York Times article pointed out that the lockdown greatly impacted Shanghai retailers. It said that some small and medium-sized garment factories in the city might take two months to resume normal production.

Some other retailers mentioned that the logistics are still heavily affected. The lack of raw materials will also affect the production of the factories.

In short, Shanghai will not return to normal in a short period of time.

Recent economic data painted a grim picture of China. The country’s factory operations improved slightly last month, and consumption and employment continued to weaken. The strict Covid epidemic policies continue to drag the economy down.

According to the government data released on June 15, China’s service output index in May fell 5.1% year on year, and retail sales of consumer goods fell 6.7% on the year. Industrial production increased slightly 0.7% on year last month.

The unemployment rate fell from 6.1% in April to 5.9% in May, but it is still above the government’s target of less than 5.5% this year.

In particular, the unemployment rate in 31 major cities surged to an all-time high of 6.9%.

In Shanghai, the city’s statistics bureau released data on its official website on June 17. It shows that Shanghai’s industrial output fell 27.6% year-on-year in May, and exports fell by 19.6%.

Mr. Song is a Chinese business owner. He lived in Shanghai for more than fifty years before moving to the U.S.

He said that some large stores in the U.S., including Walmart and Home Depot, used to have about 90% of the products from China. But now they have many goods from other countries, and the industrial chain has begun to disperse.

Mr. Song said that the relocation of businesses or their headquarters may lead to the disruption of the entire industrial chain. And it may take decades to restore this industrial chain.

Song said that, after the lockdown, Shanghai people felt that living in China, and even in Shanghai, will never be the same. They now think that the communist regime’s propaganda may be false. Many people plan to flee Shanghai, and those who have gone abroad do not intend to return to China.

He added that many companies may have broken the capital chain, industrial chains have been damaged, and now it is unlikely to restore these industrial or capital chains.

Dr. Yang Jingduan is an expert in integrated psychiatry in the U.S. He said that the lockdown threatened people’s lives and freedoms, seriously traumatizing the spirit of the people of Shanghai. The memories will never be erased. It will have a long-term impact on the future of both Shanghai and China.

Many Chinese people have also experienced a lot of post-traumatic stress syndrome.

Dr. Yang also said that the lockdown is exacerbating the decline in the birth rate of Chinese people. Because of the extreme epidemic control measures, people’s basic living conditions are restricted, and they are unwilling to give new births.

The lower proportion of low-cost laborers would also exacerbate the foreign capital withdrawal.

Chinese society itself is also facing a total collapse of social trust. As a result, it will bring a more serious internal governance crisis.

The lockdown has knocked down China’s fragile credit system and is beginning to disintegrate.

According to some experts, as the Chinese Communist Party prepares for the leadership conclave in the city of Beidaihe this summer, the power struggle is intensifying among the top officials of the two lines: those pursuing the Covid epidemic prevention and others prioritizing the stabilization of the economic market.

These two objectives cannot go hand in hand. So China is at a dead end. Because if China wants to have Zero-Covid, its economy will be deadlocked. If it wants to stabilize the economy, then Zero-Covid must be eliminated. The two sides are a contradiction, like a zero-sum game.

The problem could not be solved if there is not a high degree of unity and coordination within the Communist Party.

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