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HomeMarketChina’s Covid Protests Aren't a 1989 Redux. Here's What to Expect.

China’s Covid Protests Aren’t a 1989 Redux. Here’s What to Expect.

The current protests in China differ from those in 1989.

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Thousands of protesters gathering in major cities and university campuses in China chanting that they “want freedom” have rattled global markets, but analysts don’t see demonstrations borne out of frustrations over stringent Covid policies turning into a prelude to 1989-like change.

Widespread demonstrations on a common issue have been incredibly rare under Xi Jinping’s decade in power. But analysts caution against making comparisons to the1989 protests in Tiananmen Square that defined modern China—and to expectations the unrest could usher in quick fixes to China’s economic woes.

Against a backdrop of a struggling economy, high levels of youth unemployment and frustration over Covid-related lockdowns looming over daily life, the protests are noteworthy in a political system that prizes social stability. That is especially the case as a young generation of Chinese face difficult economic prospects, including the possibility they won’t enjoy the kind of improvement in living standards their parents did.

Protesters are demanding not just economic livelihood but also political rights—freedom—with ordinary people now using language previously used only by Chinese dissidents, said Diana Fu, nonresident fellow at the John L. Thornton China Center at Brookings and associate professor of political science at the University of Toronto, in an email.

Still, the current protests differ from those in 1989. Those infamous demonstrations sprung from a memorial for reform-oriented leader Hu Yaobang and represented a gamechanger for a generation of young Chinese people. Whereas the 20th Party Congress last month made clear Xi has no viable political opposition for a generation to rally behind, Stephen Roach, former Morgan Stanley Asia chairman and author of Accidental Conflict: America, China, and the Clash of False Narratives, told Barron’s.

On Monday night, police turned out in force to discourage gatherings. Analysts expect arrests, censorship, and mass propaganda ahead. But Scott Kennedy, senior advisor at the Center for Strategic and International Studies and who focuses on economic policy in China, tells Barron’s he doesn’t see the protests spilling over into other issues, unless leadership fumbles its response and uses lethal force that causes a significant loss of life.

Unlike in 1989 when the protesters were seeking fundamental political reforms, this time protesters are appealing for officials to rethink Covid policies— something they have already started doing as they grapple with the economic costs of harsh restrictions and the reality on the ground as the highly transmissible Omicron variant sends cases to new highs in China.

“If this goes on for much longer and people in more cities join, pressure to more openly shift away from zero-Covid will build,” Kennedy says. With the pressure it is exacting on its economy, Kennedy adds that it is in Xi’s interest to unveil a road map, if not a timeline, for change. 

But investors may want to lower their expectations of what Beijing’s response looks like—and how quickly it comes. Indeed, the iShares MSCI China exchange-traded fund (ticker: MCHI) had rebounded 20% since late October, before the protests, on optimism Beijing was moving closer to rethinking its zero-Covid policy. But the domestic A-shares market had been pricing in extreme pessimism and uncertainty on phasing it out and had barely budged on the protests, said Phillip Wool of Rayliant Global Advisors via email.

Wool still expects a gradual scaling back of restrictions, with the protests accelerating those shifts on the margin and pressuring authorities to improve their messaging. “This is still probably good for investors, because it could bring more clarity and sooner,” Wool adds.

That likely will bolster Chinese stocks but the economic recovery may not be as robust as bulls expect. In the near-term, Roach sees a greater perfusion of lockdowns to deal with the ebb and flow of Omicron, even as policy shifts. Longer-term, the economy is still hampered by structural forces such as a shrinking working-age population and a major blow to the country’s entrepreneurial spirit following Xi’s crackdowns on the once-vibrant internet sector in the last couple of years.

“Investors are just focused on short-term developments related to zero-Covid and stimulus for the property sector and could care less about the long-term stuff. That is going to be myopia that ends up biting them,” Roach says.

Take that as a word of caution for those who equate a near-term recovery in Chinese stocks as an all-clear.

Write to Reshma Kapadia at


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