The COVID-19 battle being waged in China has fractured the invulnerability that President Xi Jinping has carefully cultivated during his eight years in power. The outbreak could not have come at a worse time as the structural slowdown associated with China’s aging population and low birthrate were already putting downward pressure on the economy.
The negative economic consequences from the virus outbreak, in addition to the economic punch the Chinese economy is taking from the trade war with the United States, will accelerate the shift of some businesses and foreign direct investment to Southeast and South Asia to create an alternative production network.
This is not good news for a regime that has bet its political life on the Faustian bargain that citizens will forgo political rights in exchange for a stable socio-economic environment in which their lives improve tangibly year by year.
The question for China watchers is whether Xi and the Chinese Communist Party will weather this viral storm and emerge strengthened from the crisis or whether Xi and the CCP will be damaged beyond repair, resulting in a cascade of unpredictable consequences for China, Japan and the world.
As of Thursday, Xi has responded forcibly to the COVID-19 crisis. At the national level, the response by Xi and the CCP, while harsh, has been responsive and necessary to prevent the epidemic from spiraling further out of control.
Look for other publications from Prof Nagy, as he has deep insight into the most pressing global issue of 2020 – the global impact of this new virus.