Opinion | Why China’s embrace of economic pragmatism in the face of chaotic zero-Covid exit deserves attention and recognition

The speed at which things have changed in the last few weeks has left even the most hardened China watchers a bit stunned, fanning speculation as to what prompted Beijing to make a sudden U-turn on all its hallmark policies, including zero-Covid.

The relative mildness of the Omicron coronavirus variant, drying up of fiscal resources, quickly deteriorating economic situation on the ground and a population increasingly impatient with draconian lockdowns and regular testing must have all played a role in persuading decision makers to change course.

However, the real reason for Beijing’s change of heart can be summarised into one Chinese saying: the circumstances are always stronger than the men. The grand shift is not caused by a single factor, it is the result of multiple developments.

Beijing’s change of mind over the property market followed the same logic. Beijing has not stopped worrying about debt problems among the highly leveraged real estate industry. But a slew of developments convinced the Chinese government to review its approach and reconsider its priorities.

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Trace, test, lock down, repeat: Three years under China’s zero-Covid strategy

Trace, test, lock down, repeat: Three years under China’s zero-Covid strategy

Local authorities, that rely on land sales and property-related revenue, cannot sustain basic municipal operations if the real estate market freezes. Moreover, the collapse of heavily indebted developers – which not only owe banks and suppliers, but are also yet to deliver homes to buyers – will only push the problems to a point of no return.

The Chinese leaders have also renewed talks to “protect” the country’s private businesses and “treat them equally”.