China’s economic opening up provides a blueprint for its exit from zero-Covid
- China’s exit from zero-Covid poses huge logistical challenges and health risks, but its centralised system of governance offers some advantages
- During its years of economic reform, centralised planning allowed China to open up city by city, gradually building confidence and containing risks
China’s exit from zero-Covid clearly carries public-health risks that must be managed, especially given low vaccination rates among the elderly. Less noticed, however, are the operational challenges this process raises.
The need to prevent such a demand shock explains why countries have largely taken a gradual approach to lifting pandemic-control measures. But for a country with strong centralised control, China has the advantage of staging its gradual reopening not only in a temporal sense, but geographically as well.
China’s economic reform and opening up over the past four decades offers useful lessons. Rather than opening the entire economy to the outside world in one fell swoop, China began by designating four mainland cities as special economic zones. Soon after, it opened up 14 other coastal cities. It then gradually replicated the now-proven model in the rest of the country.
From an operational standpoint, this gradual approach offered several obvious advantages. The central government was able to contain – and thus manage – the risks associated with market reform. Moreover, it was able to experiment, accumulate experience, and collect data, which built up people’s confidence and guided the expansion of reforms. And it was able to mobilise talent from across the country to support relevant initiatives.
China’s government can gather data about the impact of easing pandemic restrictions within these contained zones before loosening restrictions more broadly. If a healthcare crisis were to emerge in one of these zones, it would be contained, making the surge in demand for critical medical supplies and personnel much easier to meet, not least by ensuring that resources from areas still adhering to the zero-Covid policy could be reallocated.
Intuitively, resources should be pooled at a subnational level, with unmet demand in one region met by excess supply from neighbouring regions. In this way, resources would need to be carried over relatively shorter distances, making transport faster and cheaper.
But this approach also has a notable limitation: given that neighbouring regions tend to have strong economic ties, it makes sense for those near the special health zones to be next in line to have their pandemic restrictions loosened.
Once that happens, a rise in Covid-19 cases – and demand for medical resources in the neighbouring regions – can be expected. If their medical resources have already been sent to the special zones, they will quickly confront a shortage of medical supplies and personnel.
Given this, regional resource pooling should be complemented by a national-level system. That way, resources can be transferred across distant regions, which are more likely to be at different stages of reopening.
This larger-scale effort would require advance preparation and coordination between the central government and subnational governments at all levels. Local governments must identify “disposable” medical resources that, if contributed to the resource “pool”, would not cause a significant decline in the quality of local services.
The central government, for its part, must devise standard operating procedures to ensure that the different regions’ resource pools cooperate seamlessly.
In the meantime, the central government could create one or multiple centralised distribution hubs to hold medical resources for shipment to regional centres. It could also assemble a team of specialised medical workers to be dispatched to special health zones on demand. Fortunately, China’s highly centralised political system is well-suited for such large-scale and complex endeavours.
That said, China’s leaders must move much faster than they did four decades ago. With a carefully devised operational strategy, there is a good chance that they can pull it off.
S. Alex Yang is associate professor of management science and operations at London Business School
Angela Huyue Zhang is professor of law at the University of Hong Kong and the author of Chinese Antitrust Exceptionalism: How the Rise of China Challenges Global Regulation