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  • Thanks to its zero tolerance for Covid-19 cases, China was the only major economy to grow in 2020.

  • While the rest of the world battled wave after wave of coronavirus, China's sealed borders,

  • rigorous testing and strict quarantine policies enabled life to proceed largely as normal.

  • However, the emergence of the highly contagious omicron variant and its sub-strains have the

  • potential to change all that.

  • So how long can China maintain its strict Covid policies?

  • And what matters most to the Chinese government?

  • China has gone to great lengths to keep Covid-19 at bay.

  • After the original strain of the virus ripped through Wuhan at the end of 2019,

  • the national government adopted one of the world's strictest approaches to tackling the pandemic.

  • Until recently, this strategy was extremely successful:

  • it kept case numbers down and national pride up.

  • The success of that strategy in sustaining extremely low levels of infection in comparison

  • to the failure of the liberal democracies,

  • including the United States, in handling the Covid outbreaks,

  • that convinced the central leaders that this is not just a success of the zero-Covid strategy.

  • It could be used to showcase the superiority of the Chinese political system.

  • So in a way, it's sort of like a projection of China's soft power.

  • But in March of 2022, China faced a major outbreak in its largest city Shanghai, a financial

  • hub with a population of 26 million people.

  • Covid-19 cases skyrocketed, and the city was locked down in April.

  • Shanghai's outbreak is the biggest since Wuhan 2020.

  • So just in terms of case numbers, it by far exceeds anything we've seen since then.

  • Shanghai is China's most international city.

  • It's a hub of manufacturing, so the impact on global supply chains could be quite substantial.

  • CNBC reporter Evelyn Cheng covered the outbreak from Beijing.

  • Shanghai is usually upheld as one of the most organized places in China.

  • The level of disorganization, the lack of preparedness,

  • and even how they're trying to organize distribution of vegetables, this is really

  • uncharacteristic of Shanghai.

  • In Shanghai, most people are being sent to these quarantine centers,

  • where reports say it's very cold, or there's no showers and very primitive.

  • The lockdown forced many factories to shut, while some opted to stay open by using a “closed-loop system.”

  • This is essentially a bubble, like the ones China used to host the Winter Olympics in Beijing.

  • Workers are tested frequently and can't leave the area unless there is an emergency.

  • For factory workers, that meant sleeping on the factory floor.

  • A lot of the factories are located in industrial parks, in sort of the suburban parts of major cities.

  • So, if you have all your workers on-site, and that site is basically cut off from the

  • neighboring towns, then you can keep on producing on that site.

  • Otherwise, Shanghai residents were confined to their homes.

  • Struggling to get food and other basic items due to logistics and supply chain issues,

  • residents turned to 'Group Buying.'

  • This is when a group of people get together, often in the same residential compound, to

  • buy groceries and other daily essentials in bulk.

  • So, the world began to wondercould the outbreak in Shanghai force the end of China's no-tolerance policy?

  • While the language has changed somewhat with talk of a “dynamic zero-covidapproach,

  • analysts tell me there has been no fundamental change in strategy.

  • They are fundamentally the same.

  • We thought that this is going to signal there's some significant relaxation of this zero-Covid strategy,

  • turned out we were wrong.

  • So why is China so reluctant to abandon its policy?

  • Well, easing restrictions bears major risks.

  • Leadership in Beijing is bent on avoiding a situation like the one in Hong Kong,

  • where the omicron variant ripped through the densely populated financial center

  • and overwhelmed the healthcare system.

  • Hong Kong was absolutely a cautionary tale for the mainland leadership about worst-case

  • scenarios for what an outbreak would look like on the mainland.

  • When hospitals become overloaded, it can create quite ugly scenes, quite chaotic scenes,

  • that mobilize public anger and undermine confidence in the government.

  • Thanks in part to China's zero-tolerance policy, the country is now uniquely vulnerable to the virus.

  • Because fewer people were exposed to Covid, China's population boasts lower immunity

  • from natural infection than other parts of the world.

  • On top of that, China has relied on homegrown vaccines from Sinopharm and Sinovac,

  • which offer little protection against infection from Omicron.

  • And the vaccination rate among China's elderly population is worryingly low.

  • The concern is that if China opens up, the healthcare system will be overwhelmed by a surge in cases,

  • and that will be dangerous politically and epidemiologically.

  • Even though China's existing vaccines provide better protection against severe disease;

  • the sheer scale of China's population means thousands would likely require hospitalization.

  • Its public health infrastructure and ICU capacity remain inadequate to respond to a surge in cases too.

  • Its number of intensive care beds per 100,000 people is just a fraction of other major economies.

  • That's even worse in rural areas.

  • Doctors also lack the practical experience that Western peers have after two years of

  • treating patients with the virus.

  • China could focus on a new vaccination campaign to boost immunity.

  • Chinese companies are racing to develop their own mRNA vaccine, but it remains to be seen

  • when and if a new shot will be ready.

  • Alternatively, China could look to deploy the mRNA vaccines used in the West.

  • At this point, I think it's quite clear that politics and nationalism have played

  • a role in the Chinese government's approval of foreign vaccines.

  • And it looks unlikely they'll grant approval for those vaccines, at least until a new Chinese

  • homegrown vaccine is on the market.

  • But China's commitment to zero-Covid has economic costs.

  • Its people are buying less, supply chains have been disrupted, and investors are leaving

  • the Chinese market in droves.

  • The issue of the pandemic response has been so politicized.

  • When it's used to showcase the superiority of the Chinese political system.

  • When it's framed as a competition between liberal democracy and an authoritarian system.

  • These political stakes become so high; the economic costs become secondary.

  • The idea of avoiding scenes of chaos is a key consideration for the leadership, perhaps

  • even more so than reducing case numbers or ensuring no one dies.

  • And I think that's why the zero covid policy remains in effect.

  • Most experts agree that the real milestone to watch is the 20th National Congress of

  • the Chinese Communist Party, due to take place at the end of 2022.

  • Changing policy at this point would inject potential instability in the months leading

  • up to this party congress.

  • The party is preparing for the leadership transition that is expected to occur in the 20th party congress.

  • They don't want any surprise now that would derail the transition that undermines President Xi's leadership.

  • As for the Chinese public, they've been mostly supportive of Beijing's zero-tolerance approach.

  • It was a source of national pride for the Chinese people that case numbers have been

  • low throughout the last two years

  • in a period when Covid has ravaged much of the rest of the world.

  • It was also advantageous from an economic perspective because

  • China was able to maintain production and, in some cases,

  • gain export market share while other countries suffered shutdowns.

  • But could food shortages, a struggling health system and controversial policies, like separating

  • Covid positive children from their parents in Shanghai, change that?

  • Despite all this discontent, dissatisfaction on the zero COVID strategy, the overall public

  • support for the strategy remains strong.

  • Especially in smaller Chinese cities or in the countryside, where people have only limited

  • access to alternative information.

  • There's a sense that public opinion may be shifting.

  • And the hardships we've seen in Shanghai,

  • whether it's people having trouble getting groceries or

  • whether it's the extreme lack of freedoms that people are suffering now,

  • entering, in some cases, more than 20 days in complete lockdown in Shanghai.

  • It's wearing on people's nerves.

  • The official figures show that deaths have been very, very low in Shanghai.

  • Although there is reason to distrust the official figures

  • but I think it still gives a broad indication of the seriousness.

Thanks to its zero tolerance for Covid-19 cases, China was the only major economy to grow in 2020.

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Why China isn't backing down on its zero-Covid strategy

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    たらこ posted on 2022/02/19
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