The China panda has morphed into the elephant in the room

China is one of the few countries globally which has adopted a zero-COVID strategy. This approach has meant that China has effectively barred the entry of foreigners for the past 2 years. However, China’s approach to managing the effects of the pandemic on their own population has been at an enormous potential cost to its aim of being a global economic powerhouse.

According to the World Bank, since China began to open and reform its economy in 1978, GDP growth has averaged almost 10 percent a year, and more than 800 million people have been lifted out of poverty. There have also been significant improvements in access to health, education, and other services over the same period.

The World Bank further observed that “China’s high growth based on resource-intensive manufacturing, exports, and low-paid labor has largely reached its limits and has led to economic, social, and environmental imbalances. Reducing these imbalances requires shifts in the structure of the economy from low-end manufacturing to higher-end manufacturing and services, and from investment to consumption.”

The foundation of building China’s extraordinary GDP growth over the past 40 years has been the contribution of skilled foreign talent driven by unprecedented capital investment by foreign multi-national businesses. Foreign talent will play an integral role in helping China to continue its transformation to a first-world economy.

Bear in mind that the willingness of talent to move abroad to progress their career has been in decline for nearly 10 years. In a global survey of over 200,000 workforce respondents conducted by Boston Consulting Group and The Network released in March 2021, people’s willingness to move to another country for work declined by 13% between 2014 and 2020.

It is reasonable to conclude that the heavy-handed approach to dealing with COVID-19 which has been metered out by governments across the world, has further eroded the willingness of people to move abroad throughout 2021 and into 2022.

Arguably, China has been the epicentre of COVID-19 induced lockdowns. Over the past two years, China has used some of the strictest measures anywhere to keep COVID-19 out and long succeeded in holding numbers down. The emergence of the Omicron variant poses the biggest challenge to China’s zero-COVID strategy since the start of the pandemic.

The risk for China now, which did not exist pre-pandemic, is ironically the impacts which the government policy response worldwide to COVID-19 has had on talent mobility.

Lockdowns and the closure of international borders forced global talent to repatriate to their home country on masse, and then to work remotely from their usual workplace. Rapid adoption of new technologies allowed business to continue during lockdowns, often under extremely difficult circumstances.    

In an environment where global talent is in critical short supply, the workforce is entering a golden period where skilled labor can choose how, and where they work based on criteria informed by their experiences over the past 2 years of the pandemic. The rules dictating talent attractiveness are being re-written in real time.  

At a time when talent has an abundance of choice on where and how they choose to work, the decisions made by governments have a material impact on the global movement of skilled labor. Additionally, employers are obligated to consider not only the wellness of their people but also their safety and security.

Government decisions which in the past may have played a minor role in cross-border decisions will now be a factor in decisions made by multi-national businesses. The geo-political uncertainties are already resulting in an increase of people movement concessions in Free Trade Agreements between like-minded countries.

Make no mistake. Geo-politics is having a significant impact on the shape of the global world order as the world slowly recovers from COVID-19. Whilst geo-politics have always played a role in influencing cross-border movement, COVID-19 has raised the stakes significantly in a remarkably short time.

One of the numerous legacies of COVID-19 has been the rapid change inflicted on the workforce and workplace resulting from extended lockdowns and the closure of international borders. Many businesses needed to adapt their work arrangements to continue to deliver services, which fast-tracked the transition of the workforce to hybrid work arrangements, including remote working and the extensive use of video conferencing.

These changes to the workforce are now firmly entrenched and will be difficult for employers to wind back in an environment where talent is calling the shots. If China is to continue its relentless march to being the world’s largest economy, it too must consider its wider role as a member of the global rules based international order and its attractiveness to luring global talent.