We have updated our Privacy Policy and Terms of Use for Eurasia Group and its affiliates, including GZERO Media, to clarify the types of data we collect, how we collect it, how we use data and with whom we share data. By using our website you consent to our Terms and Conditions and Privacy Policy, including the transfer of your personal data to the United States from your country of residence, and our use of cookies described in our Cookie Policy.
{{ subpage.title }}
China's COVID lockdowns made its people depressed and hurt its economy
China’s economy keeps slowing down, and that could be a problem for the rest of the world.
On GZERO World, Shaun Rein, founder and managing director of the China Market Research Group, sits down with Ian Bremmer to explain why he’s become bearish on China’s economic outlook.
2023 was supposed to be the year China’s economy came roaring back after almost three years of brutal zero-COVID lockdowns that ground domestic spending and production to a halt. But Rein points to a few reasons why China’s rebound hasn’t exploded the way some economists predicted.
“I think people underestimated how much the lingering effects, not just economically but physiologically, that [zero-COVID] would have on China,” Rein says, pointing out that 50% of people in Shanghai suffer from anxiety and depression, according to the government.
Rein argues that because income levels in 2022 stayed so low, with millions of Chinese locked down and furloughed from their jobs, the revenge spending expected after zero-COVID ended never materialized. He also says that an increasingly hostile geopolitical environment under the Biden administration has made COVID recovery even more challenging.
Watch the GZERO World episode: China’s economy in trouble
And watch GZERO World with Ian Bremmer every week on gzeromedia.com/gzeroworld and on US public television. Check local listings.
- China flirts with deflation. Why is that a bad thing? ›
- The Graphic Truth: China's old vs. new zero-COVID ›
- China’s zero-Covid woes deepen ›
- Birdsong and stolen cherries: Lockdown life in Shanghai ›
- “Health is a human right”: How the world can make up progress lost to COVID - GZERO Media ›
- The US vs TikTok (and China) - GZERO Media ›
Episode 1: Should I STILL be worried?
Listen: “The equivalent of what we spent in World War II was spent in the course of a year and a half to support the US economy, and that had global impacts. All of that was rolled out with incredible speed and effectiveness, [but] the hangover effects from that are very, very significant,” said David Bailin, Chief Investment Officer and Global Head of Investments at Citi Global Wealth. Years into a global pandemic and one year into an unexpected war in Ukraine, the stability of the world's economy - and political balance - remains in question.
In this episode of “Living Beyond Borders,” we’re asking once again just how worried investors and citizens need to be in the face of an ongoing conflict in Europe, rising interest rates and inflation, and more global shifts.
This episode is moderated by Shari Friedman, Eurasia Group’s Managing Director of Climate and Sustainability.
Shari Friedman
Managing Director of Climate and Sustainability, Eurasia Group
David Bailin
Chief Investment Officer and Global Head of Investments, Citi Global Wealth
Ian Bremmer
President, Eurasia Group and GZERO Media
- Episode 2: The economic power of women - GZERO Media ›
- Episode 3: Inflation Nations: What to know about inflation and interest rates - GZERO Media ›
- Episode 4: Broken (supply) chains - GZERO Media ›
- Episode 5: Energy transition today - GZERO Media ›
- Episode 8: Global food (in)security - GZERO Media ›
- What's next in 2023? - GZERO Media ›
Explaining inflation & what's next for the US economy
US inflation is now at a 40-year high. So, what can we do about it?
The Federal Reserve is trying to cool down the overheated economy by raising interest rates. But if the Fed goes too far, the rate hikes could trigger a recession that'll hit low-income Americans hardest.
On GZERO World, Ian Bremmer speaks to economist and University of Chicago professor Austan Goolsbee, who says the recipe to fixing inflation depends on whether you see it as a demand or supply problem.
Goolsbee also shares his thoughts on why some COVID innovations like making masks domestically or WFH were just economic blips, why the Biden administration perhaps put up too much stimulus for the recovery, and why Americans feel glum about the economy yet still have cash in their pockets.
Bonus: find out why people are stealing CATS across America.
After COVID, Belgian small business began to bloom
Isabelle Nijs runs a hair salon in Begijnendijk, Belgium, about an hour’s drive to the northeast of Brussels. Nijs struggled to keep her business going through the pandemic during lockdowns and the lack of customers that brought. Rents and insurance premiums continued going up, but she didn’t get any financial support to meet the rising costs. Now, with people coming out of COVID restrictions, her business has begun to bloom … only to be impacted yet again, this time by the war in Ukraine. Now, she’s also dealing with supply chain issues, with prices going up and quality going down, not to mention long wait times.
Watch more from our conversation on how small businesses can thrive after COVID, which was recorded live on March 22, 2022.
Waiting for foot traffic to return in Tokyo
Shizuka Takahashi wants Tokyo’s foot traffic to return. Having face-to-face interactions with her customers means everything to her — in fact, the desire to interact with people is why she opened her Tokyo shop, PuRe Juice Bar. She got the idea while living in New York City, where people know and love smoothies. In Tokyo, however, the juice culture is less common. Takahashi opened in 2019 only to be hit by reduced sales as a result of COVID-19. By learning to market herself throughout the pandemic, and with government aid, she’s been able to keep her company afloat. Now she’s looking forward to helping her Japanese customers get hooked on healthy juice drinks.
Watch more from our conversation on how small businesses can thrive after COVID, which was recorded live on March 22, 2022.
COVID's lessons on humanity for Annabelle Santos, small business owner
Inspiration struck Annabelle Santos when she struggled to find any products that could help soothe her baby girl’s eczema. Having grown up around plants and flowers, and with a background in biochemistry, Santos set out to make her own formula to help her daughter. Now she brings her mixtures of fruits, olive oils, and herbs to customers through her company, Spadét, which she founded in 2014. For years, she worked on her products from her home kitchen in New York City. Then, just before the pandemic hit, she got her big break: product placement in the whole northeast region of Whole Foods. In fact, her products shipped out to the stores just a week before lockdown. The pandemic was really tough on her business, but grants helped her keep afloat, and she’s looking forward to meeting with and healing customers now that restrictions have lifted.
Watch more from our conversation on how small businesses can thrive after COVID, which was recorded live on March 22, 2022.
2021: Groundhog Day in a G-Zero world
Did 2021 actually happen, or are we still stuck in 2020? So many things seem to have barely changed this year. After all, we’re entering yet another holiday season worried about a fresh wave of the pandemic, and uncertain about what comes next for our economies and our politics.
In a lot of ways, the past 365 days feel like a year of unfulfilled promise. Let’s have a look back at what did, and did not happen in 2021.
The year kicked off with US democracy in deep trouble: first the Capitol insurrection, and later Donald Trump's second impeachment over it. After Joe Biden was inaugurated as president, he told the world: America is back. (Spoiler: the world is still waiting.)
Global attention soon turned to the COVID vaccine rollout. It sputtered at first, but even when it got better it exposed deep divisions over things like health passes, vaccine mandates, and patent waivers. The vaccination gap between the rich world and everyone else was hard to ignore. Still, to have inoculated half the world’s population in under a year is no mean feat.
Middle East politics got hot again with a brief war between Israel and Hamas, Iran's presidential "election," and Bibi Netanyahu ousted as Israeli PM after 12 tumultuous years.
Then came a series of extreme weather events that focused everyone’s attention on climate change just months ahead of the COP26 climate summit. But first, the world watched in disbelief as the US chaotically withdrew from Afghanistan, and then the Taliban reclaimed power virtually overnight — right before the 20th anniversary of 9/11.
Like in 2020, global cooperation was hard to come by, as we saw a bit at UNGA but much more at COP26. The fact that even faced with such an existential problem, the world’s top polluters failed to agree on the same deadline for net zero emissions revealed again how fragmented global politics have become. Forget G20 or G7 — we live in a rudderless, G-Zero world.
In such crazy times, arguably the smoothest political transition came after the German election, with Angela Merkel handing over the reins after 16 years as chancellor — and Europe’s de-facto leader — to Olaf Scholz.
And now, as the end of the year approaches, we are about to mark the 30th anniversary of the Soviet Union’s collapse worrying about whether Vladimir Putin actually intends to invade Ukraine.
More broadly, there are three things that didn't really play out as many people expected they would at the start of the year.
First, US-China ties didn't get quite as bad as many feared. With Biden in the White House, the world’s two largest economies didn't exactly bury the hatchet. They remain at odds over trade, technology, Taiwan, the South China Sea, and Xinjiang. But they did find some common ground on climate — and domestic distractions for both countries helped quiet the rumblings of a new Cold War. (Not to mention a hot war, which as retired US Adm. James Stavridis told us, could start over Taiwan.)
The arrested development of deteriorating relations wasn't the product of anybody's grand design. Biden began his presidency with big foreign-policy ambitions, but he soon got bogged down at home by squabbling among Democrats over his domestic agenda, and later by Afghanistan. Xi Jinping, for his part, showed more interest in further consolidating his own power over tech giants, the Chinese economy, and the ruling Communist Party than in picking fights with Biden.
Whether the Cold Peace will hold in 2022 will likely depend on what happens inside each country, especially if they really start to recover from the pandemic.
Second, 2021 was the year of the vaccine, but the jabs on their own didn't end COVID. The good news is that vaccines were successful at bringing down deaths and severe illnesses. The bad news is that distribution was unequal, and hesitancy higher than expected in some places.
Where access to jabs was lacking, the delta variant brought a more deadly wave, like the one that ravaged India for weeks. (We spoke to Indian journalist Barkha Dutt the day after her own father had succumbed to the virus.) Now we are waiting to see how effective the current jabs are the face of omicron.
Finally, the post-pandemic recovery was not what we hoped for — mainly because we never made it to the “post-pandemic” at all. Even where economic growth rebounded to pre-pandemic levels, the lingering virus messed up supply chains (check out Ian Bremmer's explainer), drove up the prices of food, energy, and pretty much everything else.
US economist Larry Summers told us why he sounded the alarm bell on inflation earlier in the year. We also learned from LSE's Minouche Shafik about how women bore the brunt of the unequal pandemic recovery.
It’s been a disappointing year, but one way in which 2020 mirrors 2021 is that we end the year with fresh hope. Last year we looked forward to the arrival of the vaccine to change things. This year we look ahead to 2022 hoping that the current pandemic wave may be the last major one. Let’s see how our optimism fares this time around.
Will we finally ditch COVID in 2022?
Many of us, at least in the advanced economies, thought the pandemic would be over sometime in 2021. Vaccines worked, and a lot of people got them. Restrictions were relaxed, and things started to return to normal. But then came the virus variants, which threw a wrench into hopes of a speedy recovery. What'll happen next year?
Here are three things that could threaten the global post-COVID comeback.
The first major problem is more COVID variants, and how countries react to them.
Everyone's panicking now about omicron, which so far seems to be more contagious and more overpowering to vaccines than previous variants. It also seems, at least for now, to be less deadly – though if it spreads widely that could still mean a lot of deaths. Travel bans are back. Lockdowns could follow. Vaccine mandates will likely expand.
All of this is starting to feel like the darkest days of 2020 all over again — though the vaccines are likely to prevent similarly high death rates.
And even after omicron passes, we don't know what the next letter in the Greek alphabet will do. It’s possible that omicron could spread widely enough that it becomes the final big wave of the pandemic. But with nearly half the world still unvaccinated — and clear evidence that the disease can infect even the vaccinated — it’s also possible that new variants will emerge that pose fresh threats to the vaccinated and the unvaccinated alike.
That will raise, yet again, the thorny political questions about lockdowns, border closures, mandates, and remote learning. But after two years of first lockdowns and then vaccination campaigns, followed by fitful returns to normalcy later imperiled by new variants, the political backlash against fresh restrictions is sure to be even higher. How do we deal with another year of this?
The second big problem, a result of the first, is that COVID-related economic disruptions will continue.
The pandemic messed up global supply chains, which are still struggling to keep up with high demand. Delivery delays, higher shipping costs, and shortages of just about everything have become a huge headache for consumers and for governments, which can do little to fix the problem.
Supply-chain disruptions are the main factor driving soaring inflation around the world. Rising prices will make leaders in countries where inflation is going through the roof, like Brazil or Turkey, walk a tightrope between encouraging economic recovery and taking unpopular measures — like spending cuts or interest rate hikes — to fight inflation.
That economic frustration could, in turn, lead to anti-incumbent and anti-establishment rage at the ballot box. There are several big elections coming up next year where those in power will not be able to tell voters, “you're better off than before you elected me.”
Finally, there are two long-simmering geopolitical conflicts that got hotter this year, and could boil over in 2022.
First, Ukraine. Vladimir Putin has amassed 100,000 troops at the Ukrainian border because he doesn't want NATO to expand further into former Soviet territory. Putin has little to gain and much to lose from an actual invasion, but the risk of one is higher than it's been in at least seven years — that is, since the last time Putin invaded Ukraine.
Russia, the US, and Europe are playing a dangerous game of cat and mouse. If Putin overplays his hand, America could shut Russia out of the SWIFT, the cross-border payment network used by most banks worldwide. The Europeans, for their part, could cancel Russia’s Nordstream 2 pipeline, which would carry Russian gas that Europe depends upon keep homes warm.
Second, Taiwan. Xi Jinping has long aimed to “reincorporate” the self-governing island into the People’s Republic, but throughout 2021 China has been amping up the pressure by taunting the Taiwanese by air and sea. Meanwhile, the Biden administration has signaled that, after decades of deliberate ambiguity, it might in fact be prepared to actually defend Taiwan.
So, will China invade Taiwan next year? Almost surely not. Despite China’s growing military power, it would be a risky and immensely costly undertaking, particularly if the US does intervene, and it would almost certainly lead to crippling economic sanctions.
Still, Xi is keen to play up the nationalist card by talking big about Taiwan. With US-China relations quite frosty these days, and the Americans snooping around Taiwan as well, there’s always the risk of a miscalculation that blows up fast.