Macroscope | China can’t escape economic pain of its zero-Covid policy as case numbers rise and cities brace for lockdown
- As China faces its biggest Covid-19 outbreak yet, the economic impact of the government’s strict approach will make it difficult to meet annual growth targets
- There are signs the policy is being recalibrated to prepare for living with the virus, but the moderation will do little to ease growth pains in the near term
While these numbers still look tame relative to those of developed countries which have long given up fighting the virus, they are shockingly large for China with its “zero-Covid” approach, supposed to insulate the country from the pandemic.
Some policy mistakes – such as late and ineffective responses – and a lack of adequate appreciation for the higher transmissibility of the new variant are likely to blame for the current predicament.
China’s experience over the past two years shows that the zero-Covid strategy is the most effective when it is implemented swiftly at the start of an outbreak. Stamping out the infections before the virus has a chance to spread is key to keeping the overall cost of the strategy low even if it involves implementing some draconian measures for a short period.
The challenge now is that not only has the virus become more nimble and transmissible, China has also probably missed the optimal time to confine infections. With more than 20 provinces and regions reporting local cases, putting the genie back in the bottle will take greater efforts and incur heftier costs.