Regulatory policy

China’s zero-Covid policy has damaged its stock of global talent

The writer is founder of the Center for China and Globalization

While China’s zero Covid policy has been remarkably successful in containing the virus and keeping death rates to a fraction of those seen in the US and UK, it has also profoundly affected the country’s economy. In particular, the impact on China’s global talent stock has been severe.

The cross-border flow of people has been drastically reduced – last year, travel to or from China by mainland citizens fell by 79% compared to 2019. For foreign citizens, the number fell even more sharply , at only 4.6% of the 2019 Level.

These numbers will start to increase with the recent measures to facilitate entry into China. But the pursuit of strict immigration and quarantine controls has already hurt business. China-based staff at foreign multinationals have been unable to return to headquarters to share knowledge, train and network. Likewise, it has been difficult for employees of Chinese multinationals to venture out to forge personal relationships and gain first-hand experience in local markets.

This disconnect has been aggravated by the exodus of foreign talent. The European Chamber of Commerce in China estimates that up to half of European expats may have left China since the start of the pandemic. In May, 74% of respondents to a survey by the American Chamber of Commerce in China said zero Covid measures had hampered their ability to attract or retain qualified foreign staff. A third said senior managers or essential foreign workers had turned down postings in China due to the latest Covid outbreak.

The family infrastructure that supports the international workforce is also eroding. The British Chambers of Commerce in China estimate that 40-60% of foreign teachers will leave this year. Bilingual schools, which often lead to study abroad for Chinese students, have been hit by this teacher shortage, as well as a regulatory crackdown.

There have, however, been some advantages for local employees, who are fast-tracked for promotion while multinationals are forced to fast-track localization and abandon the old model which saw key positions filled by foreign executives on positions short.

In January, Volkswagen announced plans to cut 30% of China-based expatriate employees over the next two to three years. A late-April survey of EUCCC members found that over the coming year, around 60% plan to localize staff at all levels. Apple, which before the pandemic reserved 50 business class seats to ferry staff between San Francisco and Shanghai daily, is now relying more on local engineers to troubleshoot problems.

This localization reflects the growing skill set and technical skills of Chinese workers. It may also boost China’s future economic dynamism, as Chinese leaders of multinational corporations often join local companies or found their own.

Further down the pipeline, the pandemic and Beijing’s political response have also affected students. The closure of Chinese borders has emptied campuses of foreign students, which numbered nearly half a million in 2018. This will set back the long-term internationalization of the country’s workforce, given that more than 60% of international students say they intend to work in China after graduation. I know that the Chinese Embassy in the United States has helped international students to return to China, and the Chinese Embassy in France has also started to help French students to return.

The impact on study abroad has been more mixed. In 2020, many Chinese students delayed or changed their study abroad plans, but the demand for education abroad has since recovered. Since May 2021, the number of student visas issued to Chinese people to study in the US has reached over 90,000. And last year, the number of Chinese students in the UK was back to around 2019 levels. , after a 32% drop in 2020.

There is evidence that the pandemic has reinforced longer-term trends for students to choose closer destinations – such as Hong Kong, Singapore or Japan – or stay in China for postgraduate studies. These patterns reflect a number of factors, including the rising quality of China’s top universities, a declining salary premium for overseas education, and a growing perception that the West is hostile to Chinese students.

But domestic talent alone will not be enough for China’s rapidly growing market. At a national conference last September, President Xi Jinping stressed that efforts to cultivate local talent “should not mean isolation” and stressed “global appeal and competitive advantage”.

The agency tasked with this task is the National Immigration Administration, which has been preoccupied with keeping the virus out of China for two years. Once the borders fully reopen, the agency will resume efforts to improve the immigration system and attract foreign workers. How eager they are to return, only time will tell.