Wuhan opens up
Edition 5. How does an economy restart? Privacy and taking Zoom calls on Peloton
As coronavirus was taking over the world, images from Wuhan in Hubei province in China (the original epicenter) served as a reminder of how severe it could be.
At 00:00, April 8th, something momentous happened.
The city lit up in response.
In a moment that should give us all hope as we stay in isolation, signs of stuttering normalcy are returning to Wuhan.
In recent days, more shops have reopened, often setting up street-front counters so that customers can buy vegetables, alcohol, cigarettes and other goods without entering. In parks along the Yangtze River, growing numbers of families have ventured out to take in the sunshine and fresh air.
Older residents have started congregating again in small groups to chat or play rounds of Chinese chess. Children are a rarer sight, and always appear to be under the wary watch of parents. Public buses and the subway system have restarted, although they often seem to have few passengers.
People are queuing up for what is truly important.
Looking at these images and tweets filled me with hope. The current gloom shall pass and we will emerge on the other side, even if ‘normal’ looks different in ways big and small.
An experience like that changes things, and for Ms. Yan it has reshuffled her priorities: Health and family first. Work, career, success — all of that second.
She has long talked about adjusting her life in that way. “But I never actually did it.”
The ordeal has also helped her see her home city in a new light.
The grass looks greener, the trees more luxuriant. There even seem to be more little songbirds in the garden outside her apartment.
How does an economy in hibernation wake up?
The challenge of putting the economy back on track and the scale of human tragedy can’t be understated.
Wuhan has emerged from this lockdown as a city scarred.
The experience of death and near-death has left psychic wounds. Of mainland China’s more than 80,000 reported cases of the virus, nearly two-thirds have been in Wuhan.
“Wuhan people experienced it firsthand,” said Yan Hui, a Wuhan native and sales executive in her 50s who recovered from the coronavirus. “Their friends got sick. Their friends and friends’ relatives died. Right before their eyes, one by one, they left us.”
The economic cost has also been catastrophic. Analysts estimate a contraction of the economy by over 10% - a first for the country in over 30 years. Getting back to work in times like these is a fundamentally challenging task. China prospered in the 1980s, 90s, and early 2000s due to capital investment and reducing state control of the economy allowing private enterprises to flourish. However, the same deregulated private enterprises now face the imminent risk of collapse leading to unemployment.
As this instructive piece explains
Reviving growth involves boosting both supply and demand. Officials schooled in Marxist theory, which emphasizes production rather than consumption, have naturally turned first to the former, ie, to ensuring that goods are made. The main problem has been a dearth of blue-collar workers, many of whom went to their hometowns for the spring festival just before the lockdown and have not yet returned
While the officials are boasting that 98% of all listed companies have resumed work and around the country, big investment projects are underway, the reality is muddied by unreliable data.
For example, it has been noted that some companies have been inflating their power consumption, by turning on idle equipment, to claim the government subsidies and please the lower level bureaucracy who have been given targets for the resumption of economic activity.
Travel between cities, whether by plane, train or car, is at less than half its normal level, international travel is still banned.
Nevertheless, it does seem like people are getting back to work. This thread from a professor at Peking University in Beijing is insightful
While production might resume, demand, both domestic and international (exports), is repressed. With the global economy in the throes of a painful recession as COVID-19 lashes major export centers - USA and the EU, domestic spending needs to be revived.
The government has started handing out prepaid vouchers directly to people to encourage spending (since these cannot be saved unlike the money given to a bank account). Yet, amounting to a total of $700M, it is 0.01% of the total retail spend in 2019 and nowhere enough to revive demand.
The Chinese economy, the world’s second-largest, has grown ~4x since the 2008 crisis ($~4T to $~15.3T). How it behaves will offer a playbook to the rest of the countries as the pandemic recedes and will tell us what the global growth is going to look like.
The end of privacy?
The current pandemic has been a boon for big-tech. While the tech-lash against the likes of Facebook seems to be subsiding as we rely on these platforms to stay in touch virtually, the period will also mark a watershed movement against personal privacy.
China has led the way here. It was the first country where facial recognition technology went mainstream with widespread government adoption. China went on to export the technology.
Chinese product pitches are often accompanied by soft loans to encourage governments to purchase their equipment. These tactics are particularly relevant in countries like Kenya, Laos, Mongolia, Uganda, and Uzbekistan—which otherwise might not access this technology
A similar wave seems to be hitting health tech. The Alipay Health Code developed by Alibaba initially for Hangzhou province (where its headquarters are located) spread to 100 cities before being rolled out nationally. Tencent which owns WeChat also rolled out its version of the health code. These two ubiquitous platforms give users color-coded designations based on their health status and travel history and a QR code that can be scanned by authorities.
Generally, people with a green code can travel relatively freely. A yellow code implies that the user should be in-home isolation, and a red code implies a confirmed COVID-19 patient.
A deeper dive into the app showed something interesting.
A New York Times analysis of the software’s code found that the system does more than decide in real-time whether someone poses a contagion risk. It also appears to share information with the police, setting a template for new forms of automated social control that could persist long after the epidemic subsides.
While deep collaboration between the public and private agencies is a common practice in extraordinary times such as these, China has pushed the boundaries on its reliance on tech to combat this crisis. This great podcast summarizes the involvement of tech majors in combating COVID-19 in China well. As we have noted in the past, decisions taken in a war economy, stick after the war itself is over.
Is this the watershed moment where we willingly trade our privacy for health?
Sangeet Paul Choudary - a thinker on platforms and big-tech highlights the 4 big shifts that the post-COVID world might see. He makes a compelling case for reassessing the resilience, sustainability, and governance of platforms to reign in their dark side.
In other news
The productivity gurus have been busy waxing eloquent about social isolation being an opportunity to learn skills. Not happy with an overdose of Zoom calls while sitting at their desk, a few have gone further.
Don’t be shamed into ‘being productive’. It’s perfectly OKAY if you are not.
People have been sharing heartwarming photos of nature returning to claim the surroundings as humans recede. For one, I am glad about nature making a comeback.
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