The Very, Very Long Way Home for Chinese New Year
(Bloomberg Opinion) -- This will be the second year in a row that I won’t make it home for Chinese New Year.
Last year, China surprised us with a Wuhan lockdown two days before the Lunar New Year. I’d seen my family in Shanghai during a work trip a week before. So I canceled my flight and worked on my columns about the crisis.
This year the continuing struggle against the virus has blocked the way. To go home, I’ll have to be isolated for two weeks. We Shanghainese have it easy, sort of: The second week can be spent at home, alone — if I agree to install surveillance cameras and post a quarantine note at my door so outsiders “won’t barge in,” according to a note from the Shanghai Municipal Health Commission. Our Beijing comrades have to endure the so-called “14+7+7” schedule: two weeks at a hotel, one more week of isolation at home, and seven more days of ad hoc health checks from the government. Officials are especially strict now that Covid-19 has flared up in China this month — inconveniently, in Beijing’s neighbor Hebei province.
For the tens of thousands of people in the financial industry in Hong Kong, China’s tough quarantine rules clash directly with the way we do our work. I, for one, can’t publish my columns while there. I don’t have the right visa. Many mainlanders who work for Western banks share my problem. Licensed only in Hong Kong, analysts can’t put out reports while onshore. The range of businesses private bankers can conduct there is restricted, too. We have to choose: work in Hong Kong or waste our vacation days isolated in a small hotel room.
Still, our plight is nothing compared to the 170 million migrant workers in the mainland, who traditionally seize what can often be their only chance in the year to return home. For years, the lunar festival was the world’s biggest example of human migration, facilitated by seven-day statutory holidays granted by the government.
This year will witness far less movement. China is now blaming villagers for virus outbreaks in Hebei and northeast Heilongjiang provinces — and saying that people shouldn’t return to their rural homelands because of unsanitary conditions and lax regulation. This virus is very “cunning,” state-owned tabloid Global Times quoted health officials.
The new guidelines for migrant workers, published on Jan. 20, showcase the obstacles they face. Before getting onto high-speed rail, a worker has to show a negative nucleic acid test result conducted within the last seven days. Once she’s at her home village, she will be tested two more times, on the 7th and 14th day of her stay. If she has passed through any “high-risk” areas on her return trip, or if there were Covid-19 cases on her train, she will have to be quarantined at a hotel for 14 days. This new rule is in place between Jan. 28 and March 8.
Going home is one thing. Being home won’t be very fun either. Migrant workers are strongly encouraged to isolate at home for 14 days. The government says: don’t visit neighbors; don’t gather in groups; postpone weddings; hold brief funerals; host no banquets. There’s no upside to returning.
A worker’s loss, however, is a capitalist’s gain. In the past, China’s first-quarter economy was always in a funk because the nation’s industrial production ground to a virtual halt as workers traveled. This year could look very different. As more people remain in the cities, the first quarter would have 61 effective work days compared to 45 last year, estimates Soochow Securities. China’s first-quarter gross domestic product could grow 28.9% year-on-year, proclaimed the brokerage.
Stock investors are already celebrating the windfall. Online food delivery platform Meituan, for instance, could be a big beneficiary, as migrant workers stay in the mega cities and continue delivering milk tea. Analysts polled by Bloomberg foresee Meituan reporting 34.5 billion yuan ($5.33 billion) in revenue in the first quarter, comparable to the third quarter last year, according to the latest data. That would be a 106% jump from a year earlier. Meituan’s shares rallied 36% to another record high market cap of $304 billion Monday.
While China may have found a novel way to boost its GDP – economists polled by Bloomberg sees the economy growing 8.3% this year — is this set of rules limiting holiday travel-wise?
Beijing has already closed its doors to the outside world, canceling existing tourist and business visas and making it difficult for Chinese to travel overseas. For the next five years, domestic consumption will have to be the key catalyst for growth. But as we saw in 2020, China’s economic rebound was anything but balanced. The production side was a lot stronger than the consumption side. In December, industrial production accelerated to 7.3%, as the utilization rate hit its highest since 2013. Retail sales, on the other hand, continued to stall, growing at 4.6% only.
The government’s tactic is a double-edged sword. Instead of taking extra vacation days, workers are now laboring away. But they aren’t opening that bottle of Moutai at the village banquet, or buying smartphones for their relatives as gifts.
I get it. China has paid a huge price for the Wuhan Covid-19 outbreak. The government has also put in so much effort trying to control the pandemic that it can’t lose the battle now. But by inconveniencing and scaring people with new guidelines and frequent propaganda on how dirty the world is, China’s consumers are simply too paralyzed to go anywhere or spend anything. When vaccines arrive and we all emerge from the pandemic, the balance of power between the world’s major economies will remain the same: The U.S. will still have the world’s most tenacious consumers, while China will still have the most diligent worker bees.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.
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