analysis | Why China is sticking to its ‘Corona Zero’ strategy

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Two years ago, China was praised by the World Health Organization (WHO) for its success in overcoming COVID-19. But claims of adhering to so-called Covid Zero policies are making most countries increasingly isolated as most countries give up harsher responses, with far more severe outbreaks and more deaths, and return to pre-pandemic lifestyles. . Their populations have built up significant levels of protection through previous infections and more effective vaccines. Chinese officials say a vaccine alone is not enough and strict regulations are needed to eliminate the virus to avoid a medical disaster. President Xi Jinping has promised to work to reduce the economic impact of the strategy, and Hong Kong is following along. However, the continued flare-ups, including expansions from financial capital Shanghai, are testing like never before, triggering a more defensive mood from above.

1. Does Covid Zero mean zero cases?

Ideally, it’s not that simple. Beijing’s perception of Covid hasn’t changed much since the virus first appeared in the central Chinese city of Wuhan. It is a public health threat that must be eliminated at all costs. That’s why China requires at least two weeks of quarantine for anyone arriving from abroad. All domestic outbreaks sprout through targeted testing, contact tracing and quarantine, and as a last resort, shut down entire cities. This approach, which became known as “dynamic elimination,” acknowledges that an infection has occurred, but aims to prevent further spread. Due to the highly contagious Delta and Omicron strains, China has gone less than a day with no new regional cases reported since October. At the beginning of April, the daily count crossed 20,000. This surpassed the early days of the epidemic in China, when testing was not readily available, and has since declined.

2. Why is China insisting?

Calculations, the benefits outweigh the costs. The government estimates that this strategy could have avoided 1 million deaths and 50 million diseases. Most have been confirmed to have died of Covid-19 on the mainland in the early days of the epidemic. This compares to nearly a million in the United States, which has less than a quarter of China’s population. Beijing used this figure to describe its governing system as superior. Covid Zero also allowed China’s economy to grow, the world’s second-largest economy, while other major economies contracted in 2020. Growth continued last year and 2022 is off to a stronger-than-expected start. However, the world repercussions of the Russian invasion of Ukraine. But those worries did not lead to easing. In March, President Xi said that China will “work to achieve the maximum prevention and control effect at the minimum cost and minimize the impact of the epidemic on economic and social development”. But by May, top leaders withdrew promises to reconcile the two goals and warned against questioning Xi Jinping’s zero-covid strategy.

3. Domestic impact?

As the virus became more contagious, outbreaks became more frequent, some of which resulted in hardcore lockdowns that forced most people to stay at home. A small number of people, such as Shanghai and the northeastern industrial province of Jilin, last more than a month, causing economic and social hardship and suffering for people with chronic diseases. In the western city of Xian, a woman died after a miscarriage and a heart attack unable to get emergency treatment. On the other hand, giant tech hub Shenzhen was relatively unscathed after a week of closure, with some factories continuing to operate on new closed-loop systems. With regular testing and temperature checks, employees are effectively encased in bubbles, traveling between company-run dormitories and factories, or sleeping on the work floor. Authorities in Beijing and other cities, including Hangzhou, which is home to tech giant Alibaba Group Holding Ltd., launched a test offensive and other restrictions shortly after the first case occurred, trying to avoid a complete lockdown. All the chaos and fears of infection weigh on the economy further. People avoided traveling, shopping, and eating out. Even partial closures have disrupted industrial supply chains. Economists have been consistently downgrading growth projections, and Morgan Stanley has downgraded its forecast for this year by 40 basis points to 4.2%, well below the government’s target of around 5.5%.

4. What are the obstacles to getting back to normal?

• Nearly 90% of the population has been vaccinated and more and more people have received booster doses, but a lower proportion of older adults. 82% of those 70-79 years old and about 51% of those over 80 years old, health officials said in mid-March. . (In Hong Kong, which had a similar problem with geriatric vaccination, as of April this year, of the more than 9,000 COVID-19 deaths in Hong Kong, people aged 65 and over accounted for more than 90%.)

• Many analysts point to the low efficacy of vaccines developed in China. The most widely used vaccine is the inactivated injection, which provides less protection against infection with the original strain of the virus in clinical trials than the mRNA vaccine developed by Pfizer Inc., BioNTech SE and Moderna Inc. mRNA injection is the backbone of immunity. It is available in many parts of the world, but not in mainland China.

• While the Chinese vaccine appears to prevent serious illness and death, the inactivated vaccine appears to produce less protective antibodies to the omicron variant after three doses than that induced by a Western-developed injection.

• Chinese health authorities have made it clear that vaccination alone is not sufficient because breakthrough infections are common even in Western vaccines. Researchers at Peking University have estimated that if China reopens in a similar fashion to the United States, it will face a “huge outbreak” with more than 630,000 infections per day.

• The implementation of hospitals around the world, both in resource-poor places like India and in developed countries, is a constant reminder of how China’s uneven hospital network could easily collapse due to a sudden spike in infections.

• Shifting tactics to allow the virus to infect large populations could make things worse ahead of the National Congress of the ruling Communist Party, which Xi Jinping plans to extend his reign later this year.

5. What is the cost for the rest of the world?

Covid Zero has had a ripple through the global supply chain. The outbreak temporarily halted production at the top automaker’s Chinese plant in the northern port city of Tianjin to allow people to undergo mass testing. Foxconn has temporarily shut down its Shenzhen plant, which makes iPhones. The month-long Xi’an shutdown disrupted major chip makers Micron Technology Inc and Samsung Electronics Co., while Toyota Motor Corp. and Volkswagen AG were forced to halt production at their factories in Jilin. But given how dependent the world is on China for everything from raw materials to final consumers and manufactured goods, abandoning this policy could cause far greater chaos, at least temporarily, if workers are too ill to go to work. . In a worst-case scenario where Omicron spreads out of control and China imposes a state lockdown, Bloomberg Economics and Bloomberg Intelligence estimate that this year could slow and shock China’s economic growth to 1.6%, a 40-year low. Waves through the world economy. Among the possible outcomes are falling commodity prices and a gradual pace of Fed rate hikes.

6. What is China’s ultimate goal?

Government officials have not explicitly stated when and how they expect the epidemic to end. In the meantime, China shows no sign of retreating from its strategy to contain each explosion as quickly as possible. People in the rest of the country can generally lead normal lives while local lockdowns cause economic chaos and social media dissatisfaction. China’s top virus expert said in March that China must stick to its strategy and fine-tune some measures to make it more targeted and deployed faster to combat Omicron. China’s National Health Commission Chairman Ma Xiaowei called for a “clear stance against the false idea of ​​living with the virus” in April. Some experts believe that the strategy will eventually collapse as the virus becomes so contagious that it becomes out of control. Another possibility is that new strains may emerge that are mild enough for the government to temper without harming the population. Some outside experts believe that this policy will be gradually dismantled rather than collapsed all at once.

7. What is the outlook for Hong Kong?

As China’s financial hub and gateway, China has prioritized aligning its policies with mainland China in an effort to reopen its borders. Successive outbreaks on both sides prevented that from happening. As Omicron swept Hong Kong earlier this year, public hospitals became overcrowded and the government’s priorities shifted to vaccinating the elderly and reducing the number of deaths. In March, city leaders, acknowledging that public tolerance was fading, stopped the mandatory city-wide testing plan and instead sent kits to all residents and asked them to test themselves at home. As the daily number of confirmed cases decreased, the city eased social distancing restrictions again in mid-April and in May. But officials say talks about reopening the border will have to wait, even as they try to make life easier for travelers.

• Bloomberg Opinion’s Shuli Ren examines how virus fears play a role in China, while Therese Raphael and Sam Fazeli look at why China is yet to relax.

• Bloomberg Economics and Bloomberg Intelligence analyzed three ways China could get out of Covid-Zero, and here are six indicators that it has arrived.

• Businessweek digs into the growing economic damage caused by Covid Zero and Big Take looks at the damage it causes.

• Additional QuickTakes on what you know about Omicron and Covid Therapy.

• Some of the strange things on the Chinese crosshairs.

• Bloomberg’s Resilience Rankings charts the best and worst places during the pandemic.

(Update on top leaders warning about giving up on Covid zero strategy in Section 2)

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