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Over the weekend, mainland China experienced something it hasn’t seen in more than 30 years: Thousands of protesters flooding the streets, defying the Communist Party.
The protests had an immediate impact on global markets, and raised questions about the path forward for China’s increasingly sluggish economy.
What’s going on?
The protests began Friday after 10 people were killed in a fire in China’s Xinjiang province, where Covid lockdown restrictions reportedly hindered first responders from reaching the blaze.
The fire catalyzed three years’ worth of frustration over the country’s zero-Covid policy, which has seen millions of people locked down for weeks on end at various times.
The quarantines and testing protocols have taken psychological and economic tolls. Growth has slumped and unemployment is rising. Under lockdown, many residents complained of inhumane conditions, facing shortages of food and medicine. One human rights group reported at least five suicides in Lhasa, Tibet, where some residents have lived under a lockdown for more than 100 days.
People are at their breaking point, and their anger is directly targeting President Xi Jining and the Party leadership. During the first night of the demonstrations in Shanghai, a crowd shouted “Step down, Xi Jinping! Step down, Communist Party!”
Meanwhile, the prospect of social upheaval in the world’s second-biggest economy has sent a chill through global markets.
On Monday, the Dow fell more than 500 points, following declines in European and Asian indexes. Oil prices dropped sharply as investors feared that surging Covid cases and protests in China would sap demand from one of the world’s largest oil consumers. US oil hit its lowest price in nearly a year, falling 2.7% to $74 a barrel.
Officials in Beijing are in quite a pickle here.
To fix its economy, China needs to ease lockdowns to allow its people to get back to their lives.
But doing so — in a country that has almost no natural immunity to the virus and has shunned the idea of importing Western-made boosters — could lead to a deadly outbreak.
Xi, who just began an a third term and has doubled down on zero-Covid, doesn’t want to risk a public health disaster that would undermine his credibility. And certainly, cracking down on peaceful protesters and continuing the heavy-handed policy is an option — one that China has a long history of deploying. But all of Xi’s options are less than ideal for a leader who’s long been preoccupied with stability.
Related: Twitter searches for the protests in China returned a flood of spam, pornography and gibberish that researchers said may be a deliberate attempt by the Chinese government or its allies to drown out images of the demonstrations.
NUMBER OF THE DAY: $5 million
The label on a cup of Velveeta’s microwaveable mac and cheese says the food will be “ready in 3½ minutes.” One Florida woman is taking issue with that statement, to the tune of $5 million.
Yup, someone filed a proposed class-action lawsuit against Kraft Heinz, alleging that its Velveeta Shells & Cheese takes longer than advertised to prepare, court documents show.
Her attorneys argue that the three-and-a-half-minute promise doesn’t account for the other four steps required to prepare the dish: removing the lid and sauce pouch, adding water, microwaving, and stirring, according to court documents.
Kraft Heinz dismissed the lawsuit as “frivolous” in a statement.
ANOTHER CRYPTO BUST
Introducing the latest casualty of the financial contagion unleashed by the collapse of Sam Bankman-Fried’s empire…
The crypto lending firm BlockFi filed for bankruptcy today. Its collapse wasn’t a huge surprise in the crypto world — the firm has basically been on death watch for three weeks — but it’s still a significant player to be taken down in the FTX contagion.
Earlier this month, as FTX unraveled, BlockFi (think of it as a crypto bank — it gave out loans using digital assets as collateral) halted withdrawals, citing “significant exposure” to Bankman-Fried’s FTX exchange, as well as its sister hedge fund Alameda. FTX and Alameda, of course, are now bankrupt and practically synonymous with corporate mismanagement at the hands of the calculating oddball known as SBF.
There’s a kind of tragic interconnectedness to the way the dominoes are falling post-FTX. BlockFi was one of several recipients of SBF’s modern-day JP Morgan theatrics. Over the summer, as the value of digital assets sank, SBF swooped in, engineering financial lifelines for struggling enterprises.
For BlockFi, that amounted to a $400 million credit line from FTX.
There was a sense, before this month, that SBF was The Good Crypto Guy. That despite all the internet-bro-y-ness that is (rightly) used to malign the crypto faithful, there was something wholesome about the ragtag nerds who were risking their own necks for the greater good.
Obviously, we now know it was all all an act — a bold and admittedly effective strategy to distract investors from the reality that FTX and Alameda were built on a house of cards
(And again, I understand the crypto space in general and FTX in particular can seem like a confusing mess of internetty nonsense, so I’ve written a couple of dead-simple stories that attempt to put it all in plain English. This one is about cryptocurrencies. This one is about FTX. )
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