China's fragility feeds the doom-mongers in Davos

Davos has gone from debating China’s seemingly indomitable rise to fretting about its weakness.When Chinese President Xi Jinping took the stage at the World Economic Forum in 2017, he was the man of the moment.Standing at the podium in the exclusive Swiss resort town for the first time, Xi mapped out China’s muscular economic gameplan — just three days before Donald Trump was inaugurated as U.S. president, vowing to pursue an isolationist, America-First approach. The Economist Intelligence Unit estimates the lockdown stands to chomp an annualized aggregate of 6 percent off Shanghai’s economic output, plunging China’s leading port city into recession and causing Beijing to undershoot its overall gross domestic product target.Those kinds of numbers are setting off tremors worldwide.It fell to philanthropist George Soros — the ultimate Davos stalwart — to sum up the scale of what he slammed as “Xi’s worst mistake.”“The lockdowns had disastrous consequences,” he said. Putin expected to be welcomed in Ukraine as a liberator; Xi Jinping is sticking to a Zero Covid policy that can’t possibly be sustained.”From China, the economic signals are dire. When the crisis hit, however, he took a step back and put Li upfront as the fixer, while the Communist Party prepares for the once-every-five-year congress that is likely to see Xi take the helm for the third time.Foreign businesses are unsure about how to cope without a market that used to be their irreplaceable profit engine.“While our surveys find that there is broad pessimism among CEOs across the regions of the U.S., China and Europe, CEOs of Western multinationals in China are recorded as being the most pessimistic about current business conditions,” said David Hoffman, senior vice president of The Conference Board, an international economic-research body financed by donations from large corporations.“Unexpected, sporadic and widespread COVID-19 lockdowns across numerous Chinese cities, most prolifically Shanghai, and the logistics, people and production havoc these so-called Zero COVID policies have wreaked across the commercial sphere have clearly taken their toll on business sentiment in the region,” Hoffman said.Whether the future looks rosier or gloomier depends on whom you ask.