China's new COVID surge is Xi's biggest test yet

William Pesek is an award-winning Tokyo-based journalist and author of "Japanization: What the World Can Learn from Japan's Lost Decades."

China botched the first wave of COVID-19. First, it failed to warn the world what was coming. Next, it got defensive. Then Beijing circled the wagons in ways that wrecked the soft power its rapid growth and spending around the world had amassed.

Now, as the pandemic boomerangs back Beijing's way, President Xi Jinping's government is in the hot seat as rarely before to prove that China is ready for global prime time.

It is a very open question. The delta variant is proving just as impervious to Xi's state propaganda machine as China's vaccines. Until now, Xi's spin doctors got the globe to focus on how China's V-shaped recovery would save the day. And that China's vaccine diplomacy made amends for all manner of sins in late 2019 and early 2020.

Yet delta is a narrative Xi's censors cannot silence. Facebook and Google operate in Indonesia, the Philippines and Thailand, where Sinovac is flopping. Nor can Xi's censorship-industrial complex mask the big flaw in China's COVID-19 response.

Strict lockdowns, mass testing and travel bans were fine for the first iteration of COVID-19. Not for the wildly transmissible sequel. Delta, odds are, will be followed by other variants that find ways around Xi's lockdown strategy. China's relatively higher vaccination rates matter little if its immunization technology is not ready for battle. It needs a Sinovac 2.0, and fast. Or to make some frantic calls to Pfizer headquarters.

As this plays out, Xi's government is really on the clock. Lawmakers from Canberra to Washington are stepping up calls for Wuhan probes. Efforts to divine what happened there in late 2019 -- how the pandemic began, why Beijing prioritized silence over global health, how to stop it from happening again -- already have Xi's inner circle on its hind legs.

But trust is not something Xi is winning on the world stage. How Xi's government handles COVID 2.0 could form the basis of how global leaders, multinational companies and investors operate with China in mind going forward.

Xi's team loves to play the stay-out-of-our-internal-affairs card. But over the last few years, China's overreach -- and ham-handed attempts at retaliation when others do not toe the line -- has damaged the China brand, one dent at a time.

The list of provocations diminishing trust in Xi's Communist Party is too long to list here. Highlights include: Beijing's chilling crackdown on Hong Kong; moves to erase Taiwan; South China Sea provocations; punishing South Korea's economy over hosting a U.S. missile system; a Belt and Road Initiative infrastructure scheme leaving poorer nations beholden to the motherland; sharing Sinovac with neighbors before knowing its limits.

And then there is the money. Xi's hell-bent strategy to take tech billionaires down a few pegs disappeared more than $1 trillion of stock market capitalization. And that is just until now. Are Xi's regulators about to show the health care industry who is boss? The auto and aviation sectors? Might China's music, film and sports industries get the "spiritual opium" treatment?

Channeling Mao Zedong as Beijing pivots from sledgehammering Jack Ma's Ant Group and Didi Global to gaming giant Tencent Holdings hardly seems random. Xi's Big Tech putsch is a glaringly Maoist turn. Xi pledged to give market forces a "decisive" role. Yet Adam Smith has clearly left the building as Xi flirts with nationalizing the private sector's biggest success stories.

A badge of Mao Zedong is pinned to the tracksuit of a China women's team athlete on Aug 2: not a great look.   © Reuters

These are not acts of confidence or strength. They betray rigid patriarchy worried that tech disrupters will change the game on Mao's party. Xi appears more afraid of Ma's global celebrity than China Evergrande Group's old-economy debt troubles.

Notice that Chinese athletes in Tokyo are wearing Mao pins at Olympic medal ceremonies? In the year 2021? Not a great look. The same goes for Xi's government targeting some of the companies that the China Internet Investment Fund had supported. It sends a bizarre message to BlackRock, Credit Suisse, Goldman Sachs, UBS Group and other financial giants rushing to scale up hiring in Shanghai.

Botching this latest COVID wave could disrupt Xi's own Olympic dreams come February. Some nations dealing with a post-Tokyo infection surge might not send teams to China. If Xi's government is not transparent and cooperative this time, world leaders might be under pressure to boycott the Beijing Winter Olympics.

At first, it was reports of forced labor camps in the remote province of Xinjiang that complicated Beijing 2022. Now China might score an even more bungled own goal by again pretending that the pandemic is an internal issue.

Luckily for Xi's Maoist revival, the soulless International Olympic Committee gang will pretend it neither sees nor hears any evil to get their piles of money in Beijing. The rest of the world will not be so forgiving if China's main export is another new variant that makes hazmat suits the norm.

Granted, Donald Trump's disastrous presidency makes pleas for transparency and competence seem hypocritical. But Beijing is now on notice in ways Xi has never been before. How his party responds will send clear signals about China's readiness to be a global stakeholder -- and investment destination. Let the tests begin.