China’s Zero COVID Strategy: Stairway to Heaven or Highway to Hell (Part II)

The (Acceleration of) China’s Expat Exodus

Whilst government policy vision aims at reducing the infectious spread and death toll from COVID, many Chinese and International residents in affected cities want a way out.

Some Chinese nationals with limited mobility choices are choosing to leave cities like Shanghai to return to their hometowns (for non-Shanghai natives). China’s wealthy take it one step further and look for ways to move overseas, according to immigration consultants who claim inquiries from wealthy individuals trying to leave the country have surged following the lockdown of Shanghai, underscoring the mounting frustration with Beijing’s Zero-COVID strategy. But it is primarily China’s expat population who are not willing to tolerate the situation any longer and are seeking refuge or permanent leave to overseas destinations leading to what is being called an expat Exodus.

In fact, expats leaving China was already an ongoing trend. The foreign population in the country plunged as the coronavirus began spreading across the country in early 2020, hundreds of thousands of overseas nationals fled to what they assumed were safer parts of the world. Many have never returned. Later, in March 2020, China introduced a near-total ban on foreign nationals entering the country. Nearly two years later, border restrictions remain tight, student and tourist visas are nearly entirely suspended and work permits are much harder to obtain, as applicants now need to provide an invitation letter from the Chinese government. Meanwhile, traveling to China is a stress-inducing ordeal due to international flights disruptions and mandatory quarantine.

The recent lockdowns disruptions, in particular the one in Shanghai, which has now lasted well over 2 months, have accelerated this trend even further. Jörg Wuttke, president of the European Union Chamber of Commerce in China, in an interview with CNN Business, estimated that China has already lost 50% of all European expats since the pandemic started and there could be another exodus of families this summer when the school year ends. "I wouldn't be surprised if another half of [those remaining] leave," he said.

Image Source: Craig Stephens (Illustration), South China Morning Post

The expat shortage is causing businesses — and MNCs in particular — some serious headaches. Foreign staff often have skills that are hard to replace: from language teachers with native speaking ability to international sales executives with experience and established networks in overseas markets. Will these expats ever return? Statistics from China’s National Immigration Administration show that the number of foreign arrivals and departures dropped to 4.53 million in 2021, only 4.6% of the 2019 level.

Gabor Holch, an entrepreneur and East-West leadership consultant and trainer, recently presented his views on Why Business with China will never be the same, and spoke of a dichotomous reality - China is both 'opening' and 'closing'. Both narratives remain true but incomplete and misleading:

• China is Opening, because despite the country's physical isolation, new multinational investment and projects take place in the PRC, Chinese firms invest abroad and new agreements happen;
• China is Closing, because the government shows little interest in convincing frustrated expats and firms from leaving or attracting new ones. Over time, barriers will create bypasses and Beijing will have to start over again;

China never reached high levels of people-to-people exchange with the world. The moderate standards it reached were accomplished incredibly fast, but the trend soon reversed. Indices of ‘trade openness’, ‘global exposure’ and other relevant measurements show an A-shaped pattern culminating around 2010, then declining. Factors such as the slowing economic growth, trade wars and COVID-19 were simply catalysts to an already observable trend of less foreigners coming into the country, and a now more observable trend of foreigners moving out of the country.

Data Source: United Nations DESA, Migration Policy Institute

In fact, you could make the statement that despite China’s openness to global trade and investment, its migration policies never allowed the country to fully become an international population hub.

According to China’s 7th national census conducted in 2020, right before the pandemic, data showed that 845,697 foreigners are living in China. This means that in terms of hosting foreigners, China is a bottom-ranking nation. If you account for a national population size of 1.41 billion people, that means foreigners account for less than 0.06% of its population. This number is dwarfed by the ratios of developed Asian economies like South Korea (2.3%), Japan (2%), far behind fellow laggards like India (0.4%) and even unlikely challengers like North Korea with a ratio nearly 4 times as high (0.2%). On top of that if you take into consideration that many of the expats in this 2020 census have since left and many naturalized Chinese people return as foreigners - US Department of Homeland Security alone registers over 35,000 naturalized Americans coming to China each year -, then China’s foreigner ratio as percentage of total population is even lower.

Additionally, if we assess the breakdown of the foreign population in China (nationality breakdown only available according to the 2010 census), we can see that the majority of non-Chinese nationals living in China come primarily from the Asian continent rather then the Western hemisphere which often sees China as a land of opportunity, which it is, but with tight migration and permanence policy.

Data Source: Top 10 foreign nationalities in China, China Briefing

These statistics and observations are not meant to dissuade those who see China as a potential relocation destination, nor is it meant to glim its glamour and appeal to those who wish to live here, learn the language, its ways, its mysteries. However it must be noted that in spite of its affirmation as a global superpower, global economy growth engine, growing middle class and consumers’ market, the PRC has swung between internationalist and nationalist narratives for 70 years, opening and closing, and even before that, similar patterns repeated for millennia. Regardless of the exodus, the show must go on, the money is flowing, demonstrating perhaps that the inflow of trade matters more than that of people. The majority of those who want to move here, return here, or remain here, yearn for the return of normality. Meanwhile, the world moves on and when China reopens, normality might not be what we remember it to be.

From this series analysis so far, we have seen how Zero COVID has led to social dissatisfaction, reduced mobility and the acceleration of an expat exodus. What about the impact to its economy?

I will explore more in my next article.

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This is an 8-part article series, which delves into the latest developments and impact of China´s Zero COVID Policy:

1. China’s Societal and Healthcare Concerns
2. The (Acceleration of) China’s Expat Exodus
3. The Costs of China’s Zero COVID Strategy on the Economy
4. The Costs of China’s Zero COVID Strategy on SMEs
5. The China Supply Chain Nightmare
6. The World and MNC’s Exposure to China
7. Deglobalization and Decoupling: Myths and Realities
8. Updates on China’s National and International COVID Policy

*All data, images and news sources have been properly hyperlinked in the article.

#China #Coronavirus #COVID19 #ZeroCOVID #ChinaLockdown #ShanghaiLockdown #RMBMoreira