The Political and Economic Consequences of COVID-19 for China

Abstract

In popular discourse, the consequences of COVID-19 for China have been described by some authors as potentially existential for the Chinese Communist Party, either through internal political or via economic channels. However, the weight of the existing evidence about Chinese regime strength should have made it clear that this outcome (regime change) was unlikely. Xi Jinping has successfully removed any serious competitors for power, Chinese economic prosperity has a relatively strong macroeconomic foundation, and the long-run prospects for growth, even in the COVID-19 era, are reasonably good. However, in both the political and economic realms, there are a number of existing fissures and imbalances within the Chinese system that are likely to be made worse by the impact of COVID-19. Chief among these include a long run increase in cynicism toward the regime, increased and increasingly unresolvable local government debt problems, and possibly an increase in official corruption because of government stimulus measures. All of these consequences have the potential to be difficult and stubborn to resolve, even if they do not rise to the level of threatening CCP power.