The Economic Effects of China’s “Zero COVID” Policies

 The Economic Effects of China’s “Zero COVID” Policies

Written by: Will Smyczek

Although it is essential for China to keep its citizens safe and healthy, there is a certain point when changes need to be made to uphold economic growth and stability for the greater good of the citizens and people of the workforce.

The “Zero COVID” policies that China has implemented have damaged their economy and is something to keep an eye on for the rest of the world as well. If you are unfamiliar, these policies include mass testing, border restrictions, and strict lockdowns. They held a teleconference with more than 100,000 officials in China to discuss keeping the economy strong and focusing on growth looking into the future. 

So how bad is it? With a record-breaking number of students about to graduate from colleges, there is a youth unemployment rate of 18.2%, this will have a strong impact on these students as they enter the workforce and begin their careers. The timing couldn’t possibly be worse for them to graduate as many will likely miss out on opportunities or have to postpone prior career plans a few years when the economy might be stronger. 

With on-and-off lockdowns, due to the omicron variant spreading to China, affecting many cities, including the capital of China, Shanghai, factories have been shutting down, and later opening back up again for production. Citizens or “consumers” have been restricted to their homes as well. This has led to China’s GDP growing only 4.8% in the first 3 months of 2022, with the goal of 5.5%. Considering the lockdowns and current condition of China with the “Zero Covid” policies. The economy can certainly reach their economic goals if they decide to diminish these policies. 

Since these policies were implemented, the cases in China have made up only a small fraction of the amount compared to the USA, so they are clearly effective for keeping citizens safe, however the economic and social impacts will come back to bite them if they don’t address the other concerns that come along with this COVID prevention strategy. 

These policies can be pretty difficult on citizens with the contact tracing and mass testing. Let’s say you lived in an apartment in Beijing, if there were 300 people who lived in your apartment complex and only one resident tested positive, everyone would have to stay isolated at first and be tested every 48 hours. Roads have been blocked to prevent people from traveling. Some of these policies create great inconveniences that have a potent effect on citizen’s lifestyles. “There will likely come a point when the costs [of zero COVID] outweigh the benefits,” says Zhangkai Cheng, a respiratory specialist at Guangzhou Medical University. “Whether that point has arrived is up for debate.”

The World Health Organization had some concerns with these policies as well. "The virus is evolving, changing its behavior," said Dr Tedros Adhanom Ghebreyesu of the WHO. "With that... changing your measures will be very important." Although the omicron variant is more contagious, it comes with a lower risk of hospitalization. This backs up the point that it is vital to protect the safety of your citizens, but at the same time, weighing your options to make sure that what you are doing is most valuable is key.

Considering the greater likelihood of the omicron variant spreading, it simply doesn’t make sense to shut down large cities after only a handful of cases. This is a good concept to safeguard the health of citizens in China, but the economic and social punishments are far too severe to ignore. Dialing back these policies and making them a little bit less harsh will dramatically improve the economic state of China.

Sources Cited

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“China Quietly Plans a Pivot from 'Zero Covid'.” Science, https://www.science.org/content/article/china-quietly-plans-pivot-zero-covid.

“Foreign Investors Are Fleeing China.” The Economist, The Economist Newspaper, https://www.economist.com/finance-and-economics/2022/05/22/foreign-investors-are-fleeing-china?itm_source=parsely-api.

“How Xi Jinping Is Damaging China's Economy.” The Economist, The Economist Newspaper, https://www.economist.com/leaders/2022/05/26/how-xi-jinping-is-damaging-chinas-economy.

Mozur, Paul, and Alexandra Stevenson. “In China, Concerns Grow over the Economic Impact of 'Zero Covid.'.” The New York Times, The New York Times, 26 May 2022, https://www.nytimes.com/2022/05/26/world/asia/china-economy-zero-covid.html.

Song, Wanyuan. “China: Why Is the Who Concerned about Its Zero-Covid Strategy?” BBC News, BBC, 17 May 2022, https://www.bbc.com/news/59882774.