China Paralyzed As Feud Erupts Between Xi And Li Over Covid Response

Well, now it's official because as Bloomberg reported this morning, China finds itself gripped by "Discord" at the very top level, with president Xi and premier Li on opposite sides of the the "Zero covid" ring.

As Bloomberg notes, shortly after Premier Li Keqiang held the previously discussed "Rare" video call with thousands of Chinese officials across the nation to warn of an even worse economic crisis than two years ago, and calling on them to better balance Covid controls and economic growth, those same government officials charged with implementing policy at the ground level found themselves stumped and unsure whether they should still listen to: supreme leader Xi - who continues to emphasize the need for officials to push for zero Covid-19 cases - or Li, who continuously urges them to bolster the economy and hit preordained growth targets.

For a glaring example of just how deep the schism within China's core runs, one should look at who did not attend Li's mammoth meeting - which brought together cadres right down to the county level, featuring officials from nearly all government departments including propaganda, environment, and utilities, according to notices on county-level government websites - the top-ranking Communist Party official for many cities was absent because they had to focus on ensuring Covid control, said a BBG source, adding that it signaled that pandemic work still trumped the economy.

"He is being put in the impossible position of trying to rescue the economy without being able to adjust the one policy - zero-Covid - that is causing the most economic damage," McArver said, referring to Li. For Li, who will depart the post of China's second in command next March, the stakes couldn't be higher: the Chinese Communist Party prepares to hold a twice-a-decade leadership conclave later this year, where Xi is expected to win a landmark third term, yet where rumor also has it some of his challengers are sharpening their knives if covid is still uncontained and if the economy remains a complete mess.

Which is a problem because as Li warned on Wednesday, when he delivered his starkest warnings about the economy's weak performance, Beijing is facing another economic crisis with "Difficulties in some aspects, to a certain extent, are greater than when the epidemic hit us severely in 2020." He said China must avoid a contraction in the second quarter, adding that the nation would pay a huge price with a long road to recovery if the economy can't keep expanding at a certain rate.

"China's resolve to open up at a high standard will not change and the door of China will open still wider to the world," Xi said at a recent trade council anniversary meeting, in a typical comment.

At the same trade council event in Beijing earlier this month Joerg Wuttke, president of the European Union Chamber of Commerce in China, said the premier "Woke up" when some delegates shared their frustrations over China's Covid policy.

https://www.zerohedge.com/economics/china-paralyzed-feud-erupts-between-xi-and-li-over-covid-response