China’s war on COVID-19 spurs expat exodus, but lockdowns are only part of the story
Ker Gibbs knows and loves China.
The American businessman first travelled there in the 1980s.He lived in Shanghai for 19 years and raised his family in the city.
“When I first arrived in China, there was a sense of optimism, of openness and curiosity,” he said.
After finishing his tenure as the president of the American Chamber of Commerce in China late last year, Mr Gibbs decided to return to the US.
He said his decision was driven in part by the COVID-19 lockdowns and travel restrictions, but also by an increasingly repressive atmosphere in China.
“The current direction is troubling,” he said.
“It’s going much more towards a more repressive, authoritarian model.”
Even before the pandemic, foreigners had begun to leave China en masse.
Official figures show the number of foreigners in Shanghai decreased from 208,000 in 2010, to around 163,000 in 2020.
The downturn was even starker in Beijing, where the number of foreign residents declined by 40 per cent over the same period.
However, since 2020, those numbers are thought to have dropped even more dramatically.
Jörg Wuttke — the head of the European Chamber of Commerce in China — said earlier this year that the “number of foreigners in China has halved since the pandemic began”.
In a survey conducted during the strict lockdown of Shanghai in April, 85 per cent of the 950 respondents said the lockdown made them rethink their future in China.
A quarter said they want to leave China as soon as possible.
Pandemic measures are only part of the story.Many say the spirit of openness that underpinned China’s economic rise may be in terminal decline.
‘Politics trumps economics now’
As leaders gathered at the Great Hall of the People in Beijing earlier this month, President Xi Jinping lauded China’s economic fundamentals and promised to “open the door wider” to the world.
However, amid recurring border closures, that oft-repeated line is seemingly clashing with reality.
China is facing a slowing economy, waning business sentiment and is increasingly isolated.
Analyst Frank Tsai — an American who founded the Shanghai-based consulting firm China Crossroads — knows all-too-well the challenges of living under a COVID-zero regime.
Speaking to the ABC this week from a hotel room after his apartment building in Shanghai was placed under lockdown, he tried to make sense of the policy.
“Xi Jinping wants victory at any cost … the party has been telling people for two and a half years, ‘This is what makes us better'[than the West]’,” he said.
“It’s very meaningful for the Chinese people … there’s huge economic costs but not everything is about money for the party.”
Brian Klein — a former US diplomat and chief global strategist at Ridge Point Global — said Mr Xi’s appointment of party apparatchiks known for their loyalty to leadership positions over pro-market pragmatists would do little to quell anxiety over the country’s direction.
“Politics trumps economics now,” he said.
Painful decision to leave
Despite being one of the most globalised cities in the world and home to many foreigners, Shanghai has been at the forefront of China’s COVID-19 measures, and sporadic shutdowns are keeping residents on edge.
For Belinda — not her real name — the burden of Shanghai’s long April lockdown was simply too much to endure.
“China was my home and had been for the last 11 years.I had no intention of leaving.It was purely the way they handled lockdown,” she said.
“About one month in, when we couldn’t order water, my husband and I made the decision to leave.
“We had both signed work contracts to actually stay for another couple of years but not being able to order food and water sent us over the edge.”
Compounding her grief, Belinda also had seven viable embryos extracted for IVF shortly before leaving.
“In China they don’t let you take them out of the country, so leaving also meant leaving behind the embryos,” she said.
“[But] I don’t regret my decision one bit [after] talking to my friend who decided to stay,” said the long-term expat, who feared her friends might suffer retribution if she was identified.
Those still living in China are seeing their expat communities dwindle.
“I haven’t really considered leaving,” said Rachel Weiss, an American living in Beijing.
“But I’ve been to goodbye parties for friends leaving every month.
“Some people think the overall vibe has changed from an openness and curiosity about interacting with foreigners … China is not as open towards international connection.”
Perceptions of increasing hostility
For some, there appeared to be a link between deteriorating geopolitical relations and brooding hostility on the ground.
Matthew Bossons — the managing editor of RADii China, based in Shanghai — travelled to a rural area outside Guangdong with some friends back in August.
“We wanted to go swimming … it was really a really hot summer [and] there’s a very nice river up in the mountains,” he said.
There were no other foreigners in sight, and Mr Bossons recalled how a man approached them with “a million questions”.
“He wanted to know if we were Americans … I’m Canadian, and my friend lied and said he was also Canadian,” he said.
“The man went on this long tirade about how much he hates Americans, saying Americans are idiots, and they’re the worst people in the world.”
Mr Bossons said xenophobic sentiment is on the rise in Xi Jinping’s China, driven by tensions with the West and a belief that foreigners are importing not only COVID-19 but also monkeypox.
“People kind of avoid you on the road and people maybe don’t want to sit next to you on the bus,” he said.
He added that his five-year-old daughter, who is half Chinese, was teased at kindergarten for being a foreigner.
Still in Shanghai for now, he’s decided to emigrate with his wife and daughter.
“Mentally, I’m already two feet out the door … but it is sad.
I do love China,” he said.
Another geopolitical issue giving expats pause is the increasing tension over Taiwan.
Some analysts note the congress hinted at an accelerated timeline for China’s desire to reunify with Taiwan, possibly by force.
Such a prediction has companies looking with increasing anxiety at the commercial exodus out of Russia after its invasion of Ukraine.
“Nobody wants to be in that kind of situation and, at this point, when we’re hearing the rhetoric coming out of Beijing and Washington DC, it’s hard to mistake what is possibly on the horizon,” Mr Gibbs said.
Uncertain economic outlook
While an exodus of foreign businesses has not quite followed the expats, alarm bells are ringing for some.
“Xi Jinping has not been hiding the fact that he wants Chinese companies to thrive … and he’s building a new model for China that diverges significantly from the past,” Mr Klein said.
The American Chamber of Commerce in China’s 2022 business report, released on Friday, revealed that, while American businesses remain profitable, most companies have less confidence in China’s economic management.
A third have redirected planned China investments elsewhere in the past year, almost double the number of companies that did so in 2021.
AmCham Shanghai president Eric Zheng said COVID-19 measures “had a huge impact on business sentiment … global tensions are critical as well”.
“It’s also difficult for our executives based in China to travel overseas … the one thing that the government could do to help foreign businesses in China would be to ease travel restrictions.”
Mr Zheng said there is a trend towards localisation for foreign-owned businesses.
“Many [American] companies here are now headed up by Chinese nationals … more and more I think you’ll see Chinese nationals are running multinational companies in China,” he said.
Reckoning over expat privilege
Foreigners were once sought after for their expertise in business and technology, but China today has an abundance of home-grown talent.
“During the reform and opening period, foreigners were critical … today China is leading in many areas, [for example] electric vehicles, solar and high-speed rail,” Mr Klein said.
PhD candidate Christina Kefala from the University of Amsterdam has been studying the reasons why young Western entrepreneurs have been leaving China.
Many of her interview subjects wrongly assumed that, as a foreigner in China, they were entitled to success.
“They always mentioned that China is the land of dreams, and you can easily make it in China, especially if you’re a foreigner,” she said.
Many of those same people have now left.
“This imagination that: ‘Because I’m white, I can do it in China’, was wrong … after this big shock during COVID, they said, ‘It’s time to go back.
I don’t feel very privileged here anymore’,” Ms Kefala said.
However, the departure of expats could precipitate a more stark decline in people-to-people relations that could have profound repercussions.
“This is a China that’s living in angry isolation … we do have history as a guide, these periods of time have led to disastrous consequences [for China] in some way in the past,” Mr Gibbs said.
Mr Tsai said pushing foreigners out is an ‘own goal’ for Beijing.
He said that with fewer foreigners in China, in particular journalists, real stories about China are rarer.
“I truly bemoan some of the reporting on China that is not from journalists who are actually here,” he said.
“When I was in quarantine [after travelling], it was fine, I didn’t think it was draconian.
“But, talking to the quarantine staff, they said to me: ‘You think you have it bad? We haven’t been home for two years’ … We’re all trapped in this system, and you miss those everyday interactions if you’re not here,” he said.
Nonetheless, Mr Tsai also said hopes about China opening up completely were always misguided.
“Make no mistake, China has not fundamentally changed since the reform and opening — they just wanted to get rich, they needed to do that.”
“And they’ve arrived, now it’s time to go back to the old game plan.”
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