Andy Xie

Macroscope | In the end, reality may force China to compromise on its ‘zero-Covid’ policy

China’s approach to containing its latest Covid-19 outbreaks is disrupting supply chains and could cause damage well beyond the country’s borders

While economic costs alone will not bring a change of direction when politics is driving policy, the reality of the virus’ infectiousness may compel Beijing to tolerate certain levels of infection

Reading Time:3 minutes

Why you can trust SCMP

A deserted street in Shanghai on April 9. The Shanghai government has announced tweaks to its lockdown policy, yet overall measures remained stringent as residents living in communities with Covid-19 cases in the past seven days are barred from leaving their homes. Photo: Bloomberg

Andy Xie

Published: 4:30pm, 13 Apr 2022

The Chinese economy is expected to take a heavy hit from the spate of Covid-19 lockdowns. As the Omicron variant of Covid-19 proves to be enduring despite the deployment of harsh lockdown measures, the economic disruption could expand even further in the coming weeks and months.

The disruption to the global supply chain could get worse, while the slow-motion bursting of China’s property bubble could turn into a rout. But despite the dire economic consequences, changing the “zero-Covid” policy would be very difficult before the 20th national congress of the Communist Party.

China’s zero-Covid policy achieved considerable successes during the first two years of the pandemic. As lockdowns contained the virus at home and stringent quarantine measures on inbound travellers kept the virus from arriving from abroad, China became a bubble of normal life.

Children at a playground inside a shopping complex in Shanghai on June 21, 2021. For two years, China’s zero-Covid policy was a success, keeping the country in a bubble of normal life. Photo: Reuters

This allowed China to continue normal production. As the pandemic disrupted production elsewhere, China’s exports surged and delivered good growth for the whole economy.

The good time was always dependent on China’s digital surveillance system spotting the virus faster than the virus spreading. With the arrival of the Omicron variant, the balance has gone the other way big time. It can spread several times faster than the original virus and, going by Shanghai’s data, most carriers appear to be asymptomatic. When the system identifies one case, it is already widespread.

The only response whenever one case pops up is total shutdown. Shanghai stayed with the old routine for a while and had to go for total lockdown later. Many cities are still doing what Shanghai was doing. This means that more cities will go into total lockdown soon.

When the virus is stamped out in one city, it can open only within because the virus is still out there elsewhere in the country. China can go back to a time before Omicron only after the virus is stamped out in the entire country. That could take many months, even if it is possible.

If this happens, China has to quarantine foreign visitors much longer than before as the old requirement of two weeks failed. That would further isolate the country from the world.