How long can China chase “zero COVID”? Here’s what the experts are saying.

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China is steadfastly sticking to its zero tolerance approach to COVID-19, even as the delta variant continues to penetrate its formidable defenses. Authorities are implementing increasingly aggressive measures – ranging from internal travel restrictions, instant lockdowns and mass testing of millions of people – to try to bring the virus under control.

Yet more parts of the country are struggling with epidemics than at any time since the deadly pathogen first emerged in Wuhan in 2019. Hundreds of locally transmitted infections have been found in around the two-thirds of its provinces.

The last of the great “zero COVID” refractories, China is increasingly isolated and its unpredictable brakes are starting to disrupt the world’s second-largest economy. How long can the vast nation maintain its strategy as the rest of the world learns to live with COVID-19, and what factors might force the country to reopen?

Health experts

“My personal guess is that China won’t reopen for another year,” said Chen Zhengming, professor of epidemiology at the University of Oxford.

The country’s success in suppressing the outbreaks has won public approval, he stressed, while places treating the virus as endemic are seeing “what the government fears – once you relax, the cases increase “.

“The vaccination rate in China is very high, but most are vaccinated with an inactivated vaccine” which is less effective than mRNA inoculation. “Without adequate coverage of boosters and a significant shift in outbreaks elsewhere, I think the chance of China reopening and dropping COVID zero is low,” he said. Otherwise, the Communist Party “is not going to change unless it comes to a situation where they cannot control [the virus] more.”

One way out of zero COVID may be to “pick a few places to start experimenting with controllable risks,” he said. Testing what happens after the extreme measures are dropped “will give people tremendous confidence,” he said.

But even if the government chooses to remain isolated for another three or four years, “China is such a big country, it could still hold itself fairly well inside,” he said.

Another reason to delay reopening is the healthcare system, according to Jason Wang, director of the Center for Policy, Outcomes and Prevention at Stanford University. “It is already difficult to get care in many cities,” he said. “A small increase could really exceed the capacity of the hospital and it could lead to social unrest. “

“It is difficult to predict how long” COVID zero will last, he added. “It can last a long time.”

Buyers stroll through a wet market in Guangzhou, China on October 14. | BLOOMBERG

Yanzhong Huang, senior global health researcher at the New York-based Council on Foreign Relations, does not expect any changes until the 20th Party Congress in late 2022 at the earliest. “The Chinese government does not and could not afford any risk before this. “

A change in tone in state media may signal that a government pivot is coming, he added. As long as reports remain so critical of the number of infections in more open countries, “it is very unlikely that they can gain the confidence of their people by suddenly changing policies.”

However, a winter spike in cases could still force the government to rethink in a matter of weeks, said Peter Collignon, an infectious disease physician and professor at the Australian National University Medical School.

“It’ll be around the time – January, probably – when they think, well, we’ve got a lot of cases here and we’re just going to have to live with COVID-19 and get it under control as best we can,” New Zealand, Australia and Singapore “have taken a very Chinese approach” to the virus, he added, but “it actually spread during their winter periods.”

Political observers

“It would be a major shock if the party gave in before the Winter Olympics and the 20th Party Congress next year,” said George Magnus, associate researcher at the China Center at the University of Oxford. “China regards its COVID record as a badge of honor,” and a change in strategy would be seen in Beijing as an embarrassment.

“It’s hard to see China running the risk of a slack before its vaccines have improved,” Magnus added. “I see no circumstance influencing the decision to persist with zero COVID and to keep foreign visitors largely away.”

Frank Tsai, lecturer on the Shanghai campus of Emlyon Business School and founder of consulting firm China Crossroads, agrees that the government will be “extremely reluctant to abandon zero COVID, in order to avoid any epidemic that undermines its legitimacy.” .

“China’s strong response to COVID has been one of the best arguments for its system of government, convincing both the Chinese themselves and many non-Chinese around the world,” he said. declared.

However, the nation “will have a harder time countering ‘anti-China’ rhetoric without the foreigners who have actually been here and can make its case.”

Market watchers

The transmissibility of the delta means that “China’s zero tolerance approach can become quite difficult, especially if other countries use a different strategy of ‘living with COVID-19’,” said Jessica Tea, investment specialist. at BNP Paribas Asset Management Asia Ltd.

The approach “could delay a full recovery in certain consumption of services, especially in the hotel sector,” she added. However, Tea sees stocks related to tech, life sciences and energy transition as areas of growth for 2022.

Seasoned investor Mark Mobius agrees that maintaining an elimination strategy will not kill Chinese investment opportunities. “You can cut China off completely from the world and you still have a very large domestic market which is very attractive. “

However, “if you see Hong Kong as the gateway to China – for many I would say most foreign investors – then the degree to which China is cracking down on and extending this to Hong Kong is not a very good thing. “, did he declare. . “We have to wait and see if it lasts much longer. I think that is definitely going to have a detrimental effect.

Jason Brady, CEO and fund manager at Thornburg Investment Management, said the political gap between Greater China and the rest of the world “will become more and more marked.” As the reality of the rampant coronavirus sets in, “investors must ask themselves what the world will be like in six months.”

Economists

China’s approach “may cap the upside potential of the economy, especially for the consumer and service industries,” said Shuang Ding, chief economist for Greater China and North Asia at Standard. Chartered Bank (Hong Kong) Ltd. disadvantage of an uncontrolled epidemic. He expects nation to stick with zero COVID “maybe until AFN’s conclusion [National People’s Congress] meetings in March.

After that, China could reconsider “based on the experience of other countries,” he said. “Especially those who have achieved herd immunity vaccination rates and have decided to treat COVID as endemic.”

Inoculating the population is essential, even with a non-tolerance approach, said Bruce Pang, head of macro and strategic research at China Renaissance Securities Hong Kong. “If China sticks to its zero COVID strategy, we believe that a sustained and dynamic recovery in China will not be visible without higher vaccination rates and the availability of booster vaccines. “

Travel professionals

“We really don’t know” when the country will reopen its borders, said Gary Bowerman, director of travel and tourism research firm Check-in Asia. “It will clearly not be until the Beijing Winter Olympics and that seems guaranteed. It could be the second quarter of next year – or maybe another year. “

“You look at the recent travel period for the October vacation and it was a bit disappointing. So we don’t know how strong travel confidence is, ”Bowerman said. When China reopens, he expects it to be “in a very gradual fashion.”

“The government has said publicly that it will continue to manage this fairly tightly at least until the middle of next year,” said Jeffrey Goh, CEO of Star Alliance of 26 airlines. But his organization is working with its Chinese members to “bring medical and scientific evidence to the table to persuade authorities to see things in a slightly different light.” Goh added that his OneWorld and SkyTeam counterparts are making similar efforts.

Goh said the alliance was “optimistic” and authorities could be persuaded to change course. “We have seen this work in Australia, New Zealand, Taiwan and Thailand,” he added.

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