Has Policy in Beijing Turned a Corner?

Beijing signals a policy reset, but significant questions remain
By Milton Ezrati
Milton Ezrati
Milton Ezrati
Milton Ezrati is a contributing editor at The National Interest, an affiliate of the Center for the Study of Human Capital at the University at Buffalo (SUNY), and chief economist for Vested, a New York-based communications firm. Before joining Vested, he served as chief market strategist and economist for Lord, Abbett & Co. He also writes frequently for City Journal and blogs regularly for Forbes. His latest book is "Thirty Tomorrows: The Next Three Decades of Globalization, Demographics, and How We Will Live."
February 7, 2023Updated: February 7, 2023


Authorities in Beijing seem eager to signal a change in policy. They want, or so the signals imply, to take reform beyond the abandonment of zero-COVID, jumpstart China’s still-stalled economy, and also improve strained diplomatic relations with the West.

If the change involves a relaxation of the authoritarian, statist trend of recent years, people inside China and outside should welcome the policy shift—but that is far from apparent in what has been said.

Because a policy shift of any kind can imply a previous policy error, Beijing is proceeding carefully. Most of the available information has emerged in leaks rather than in official announcements, much less in explanations. Typical are the communications reviewed in a recent Financial Times. Much of the information Beijing provided there concerns itself less with the nature of new policies than with reports of demotions among officials linked to old policies.

So, for example, a once prominent figure in China’s foreign affairs ministry, Zhao Lijian, described as one of China’s “wolf warrior” diplomats and an open critic of all things Western, has been transferred to the relatively obscure department of boundary and ocean affairs. That Beijing harshly punishes failure is nothing new, but nothing in this news tells who will replace him or what new initiatives will follow.

The general lack of specificity makes it easy to doubt that any substantive change is likely. Two concrete moves do, however, stand out. One is the decision to abandon the zero-COVID policy and the other is the decision to inject monies into the property development sector.

Epoch Times Photo
An epidemic control worker guards the gate of a government quarantine facility in Beijing on Dec. 7, 2022. (Kevin Frayer/Getty Images)

The severe lockdowns and quarantines imposed by zero-COVID have been disastrous. They not only failed to eradicate the virus, as Beijing claimed they would, but they stalled China’s economy while the rest of the world made something of a recovery from the pandemic and created a public resistance of a sort not seen in China for decades.

What may be worse, zero-COVID denied the population the herd immunity that other nations seem to have acquired. Worse still, the lack of herd immunity, plus Beijing’s rejection of vaccines from abroad, has precipitated widespread and severe infection now that the authorities have at last allowed people the freedom to leave their homes. Though these problems will delay the nation’s economic recovery, they will eventually run their course and allow the long-delayed recovery later this year.

As is the case with China’s new COVID-19 policy, the decision to inject funds into the failing property development sector also comes late in the game. Couched in terms of 16 separate actions, this long-delayed effort will put the equivalent of some $148 billion into this important economic sector.

As readers of this column know, Beijing should have done something like this more than a year ago when the property development giant Evergrande first announced that it could not meet its obligations. Had the authorities acted then, they could have avoided the failures and loss of public confidence that has developed in the intervening months. Though the delays will make it harder for the new policies to meet the economic and financial challenge, this late action is nonetheless welcome.

Epoch Times Photo
A general view shows Evergrande residential buildings under construction in Guangzhou, in southern China’s Guangdong Province, on July 18, 2022. (Jade Gao/AFP via Getty Images)

Beyond these two moves, Beijing remains frustratingly vague about other changes, much less reforms. Take, for example, official promises to do more to stimulate the economy. Nothing in them comes close to a specific policy. The best the officials can do is reassure everyone that the actions will be “appropriate.” Otherwise, all that Beijing’s spokespeople offer is aspirational rhetoric.

Speaking for the authorities, for example, finance professor Chen Zhiwu of Hong Kong University offers assurances that the economy will grow faster than 6 percent this year, even though the International Monetary Fund (IMF) forecasts only 4.4 percent growth. His optimism would be more convincing if it included some gesture toward how the authorities plan to foster such a growth surge, especially since it is already evident that the present rise in COVID-19 infections will hold back growth early in the year.

Similarly, Beijing has assured all and sundry that it will free the economy from its former heavy reliance on residential real estate development. This is a worthy goal. That reliance had always imposed imbalances. But the authorities offer no guidance on how they plan to make the change. Han Wenxiu, an official of the influential Central Financial and Economic Affairs, did speak of controlling “risk.”

Risk control all but goes without saying and, in any case, offers no insight into how the authorities plan to stem the slide in housing sales, which, at last measure, are running almost 30 percent below year-ago levels. Nor does Beijing offer anything on how it plans to get the Chinese consumer to spend more freely and so pick up the slack left by a reduced reliance on property development.

China needs more than Beijing’s preference for rhetoric. To be sure, despite the lack of concrete plans, China’s economy will improve later this year. Now that it has reopened, some growth is almost assured once the present surge in infections runs its course. But the authorities will have to do a lot more than quote strong growth expectations to sustain China’s development against more lasting burdens, such as the legacy of failed real estate debt, the ill effects on growth rates of its aging population, and the economic drag as supply chain considerations encourage the West to reconsider the former prominence of China trade.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.