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  1. Home
  2. / Investing
  3. / Global Equity

Deadly Fire Sparks Covid-Rule Demonstrations Across China

Chinese stocks moved lower Monday as protestors demand an end to harsh anti-Covid measures -- and, in Shanghai, the end of Communist rule.
By ALEX FREW MCMILLAN
Nov 28, 2022 | 07:30 AM EST
Stocks quotes in this article: HNHPF, AAPL

Demonstrations against China's harsh anti-Covid restrictions spread across the country over the weekend and at times have taken on an unexpected anti-government tinge. The spark has been a fire in a high-rise building in Urumqi, the capital of the Xinjiang region, where 10 people died and nine were injured.

Protestors gathered in Shanghai on Wulumqi Road, which is named after the Xinjiang capital, for a candlelight vigil on Saturday, with many demonstrators returning on Sunday afternoon, often holding blank pieces of paper in protest.

It is dangerous to openly criticize government policy in China, so it has been a surprising feature of these demonstrations that some protestors have been so bold as to demand, as they did in Shanghai, "Xi Jinping, step down!" and "Communist Party, step down!"

Students on the campus of Tsinghua University in Beijing, one of the country's elite institutions, gathered on Sunday to protest their own situation, which has seen them generally confined to campus, sometimes while faculty and staff could come and go. "Democracy and rule of law," the crowd demanded. "Freedom of expression!" The university later on Sunday said it would provide free air and rail travel for students to travel home.

Chinese shares and currency sold off on Monday. The Hang Seng Index in Hong Kong lost 1.6%, with the Hang Seng China Enterprises Index a notch lower at 1.7%. The CSI 300 index of the largest listings in Shanghai and Shenzhen lost 1.1%, the biggest moves on a day most Asian markets moved slightly lower. The Topix index of the broad market in Tokyo, by comparison, edged down 0.7%.

The Chinese yuan weakened from ¥7.17 to the U.S. dollar on Sunday in Asian trade to ¥7.23 on Monday morning. Since early March, the Chinese currency has lost 13.8% of its value against the greenback. It is carefully managed and doesn't trade freely, and its losses reflect a lack of confidence in the ability of China's economy to recover from the pandemic.

That's because the pandemic, and pandemic restrictions, are still very much the order of the day in China. These demonstrations come in large part as a reflection of mounting frustration and anger with the intrusion of the ruling party into almost every aspect of everyday life.

Video footage of the fire on Thursday night in Urumqi showed that fire engines had trouble reaching the blaze with their hoses. The blaze, on the 15th floor of a residential building, started from a power strip that caught fire and then spread to the two floors above it, according to the city's fire department. It took three hours for firefighters to extinguish the blaze.

Much of Xinjiang province, which has a majority Muslim population, has been in lockdown for more than 100 days. Frustration about those rules has spilled over to criticism of the response to the fire, while other residents have posted, as this woman did in Beijing, how the fire escapes in her building have been locked, chained or padlocked shut to prevent residents from leaving buildings in lockdown.

The Urumqi government organized a news conference late on Friday to explain how the fire department responded to the apartment fire, with Mayor Memtimin Qadir apologizing to residents. Parked cars blocked fire engines from getting close to the building, and some commentators online speculate the cars were impossible to move because their batteries had run down during more than three months of inactivity.

While the authorities insist that the fire exits were open in the building and that the building was not in full lockdown, that has done little to soothe a nation whose residents are increasingly fed up with their government's strict rules surrounding Covid. Some Internet users posted conversations between the government and residents of that community indicating the area had recently been put under a stricter level of lockdown. There also has been a history of revisionism over such incidents, with local authorities interpreting rules in stricter ways than the official account.

There are plenty of other points of tension surrounding the zero-Covid policy well beyond a fire on China's westernmost fringe. China is essentially alone in still imposing super-strict measures and attempting to control every outbreak of a virus that, once vaccinations have been widely rolled out, most other nations are simply living with as one of many endemic diseases.

Shanghai Protests Intensify

Shanghai experienced a hard lockdown of almost two months this spring. Protests continued on Saturday and Sunday on the street sharing a name with the Xinjiang capital, with the police pepper spraying and detaining protestors on Sunday. In response, city workers took away street signs carrying the name Wulumqi Road, apparently in an effort to remove any focal point for the demonstrations.

The BBC says its reporter Ed Lawrence was arrested and was beaten and kicked by police while covering the demonstration on Wulumqi Road. He was held for several hours, with the BBC stating that Chinese officials claimed they arrested Lawrence "for his own good in case he caught Covid from the crowd," which the BBC said was not credible.

The Chinese authorities later amended that account to say that Lawrence "didn't voluntarily present his press credentials." A Swiss journalist was also arrested elsewhere in Shanghai.

Social media posts show protests on around 50 university campuses. Forget street names - it's the oppressive zero-Covid stance that is offering a focal point for protestors, who demand an end to PCR tests as well as "freedom." Chinese President Xi Jinping, meanwhile, consolidated his stranglehold on power in China with the results of the once-in-five-years National Congress. He has eliminated voices of dissent within the government and directed the arrest or harassment of opposition voices.

It is not clear how Xi, who has made the "victory" against Covid one of his key platforms, will shift Chinese policy away from a zero-Covid stance. It's likely that there will be more and more noise out of the government about easing local rules and making them easier to follow, which don't always translate to an easier life on the ground. The rules are so complex and variable that Chinese citizens say they play "Covid roulette" with any trip outside their home city, because they have no idea if they'll be allowed to travel back home.

The Urumqi police have arrested one local woman for "spreading rumors on the Internet" surrounding the fire. It's a charge often leveled alongside "provoking quarrels" to silence dissent. Amnesty International, in a statement, is calling on the Chinese government to refrain from arresting peaceful demonstrators, who the rights group says are demonstrating "remarkable bravery." It also asks Chinese authorities to review their Covid policies "to ensure they are proportionate and time-bound."

The soccer World Cup is now in full swing in Qatar. The sight of thousands of spectators watching matches bare-faced infuriated some viewers in China, who aren't able to go anywhere in public without sporting a mask. The response of the state-owned broadcaster in China has been to start blurring crowd sequences or switch to footage of the coach and substitute's bench whenever global viewers would be viewing the crowd.

At the Foxconn Technology (TW:2354 and (HNHPF) ) complex making iPhones for Apple (AAPL) in Zhengzhou, the capital of Henan Province, workers have clashed with security and public health personnel, as I explained last week. They have protested Covid-rule living conditions and what they said were broken promises surrounding bonus pay.

Protests? What Protests?

Chinese state media essentially have ignored the Urumqi fire protests. The China Daily newspaper today highlights the launch on Tuesday of the Shenzhou XV spacecraft and "China's pursuit of sci-tech goals to benefit world." The Global Times does at least address Covid, in an article headlined "Precision urged as cities roll out optimized Covid response." It's full of the jargon surrounding the highly complex and variably applied rules, with this the ninth edition of control protocols involving 20 "optimized measures" to curb the virus. The city of Hefei, capital of Anhui Province, has issued a "not-to-do" list of 16 measures, including a reminder to local authorities "not to seal and weld doors" for those in quarantine at home.

China on Sunday reported 40,347 new Covid cases, with the record levels in November easily outstripping the previous outbreak centered around Shanghai in April. While 92.6% of the Chinese population has had at least one anti-Covid dose, according to Johns Hopkins, China has not approved any mRNA vaccines. Early studies abroad showed the Chinese vaccines only just met international standards against the initial strains of the vaccine and there's no recent research abroad as to how the vaccines stand up against the latest strains of Covid. Consequently, health authorities have expressed the fear that healthcare facilities would be overwhelmed by a simultaneous nationwide outbreak of Covid.

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At the time of publication, McMillan had no positions in the stocks mentioned.

TAGS: Investing | Politics | China | Real Money | Global Equity | Coronavirus

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